# The Corporate Entrepreneurship Audit Framework

Source: Paul Cheek's Embracing Corporate Entrepreneurship material. The audit follows the deck's arc exactly; every section below maps to slides the executive may have seen. Teach each piece before questioning inside it.

## The framing (teach first)

The world will never be slower than it is today. ALL organizations need to be prepared for inevitable change. An organization must keep making money today while ensuring, at the same time, it will be able to make money in the future. Startups can only create so many of the new products and services we all need; corporates can take lessons from the startup world.

**Broad definition of corporate:** any existing organization. For-profit, non-profit, government, academic, religious, and beyond. Ask the executive which kind of organization theirs is and hold that framing for the whole audit; a government agency's "revenue" warning signs differ from a retailer's.

## Diagnosing a need: warning signs

Work both lists. For each sign: is it flashing, worth watching, or healthy at this organization, with the evidence. Research what is public (financials, reviews, press); ask for what is internal (morale, eNPS).

**Traditional warning signs:** stagnant revenue growth · decreasing gross margin · negative or decreasing cash flow · EBITDA · earnings per share · other financial signals the executive tracks.

**Non-traditional metrics:** eNet Promoter Scores · morale · human asset turnover (attrition) · competitors winning partnerships with customers and other entities · percent of revenue from new products decreasing · other signals the executive watches.

## Challenge #1: Assets or hindrances?

What is different between a startup and a corporate? A startup has passion and an idea. A corporate has: customers, products, revenue, established sales processes, a business model, channels, LTV and COCA, cash flow, hard assets, an organization, processes, and (often no) external investors.

The discussion question, asked item by item for THIS organization: **are these assets or hindrances?** Each one can be either: an installed customer base is a distribution advantage and a source of drag; established processes are repeatability and rigidity. Capture a verdict (asset / hindrance / both) and a one-line reason per item.

## Challenge #2: Specific goals

You must be specific about why you are changing something in your organization to become more entrepreneurial, because without a clear problem you will not select a relevant solution. Push the executive from "we need to innovate" to a specific, falsifiable problem statement. This statement calibrates everything downstream; a vague goal invalidates the vehicle selection at the end.

## Challenge #3: The system

The more you succeed, the more the system stops innovating. Why: **Inertia · Lack of Freedom · Structure · People · Urgency.** Score each of the five for this organization (0 = not a drag, 10 = crippling drag) with evidence. These five explain WHY the warning signs exist; connect them explicitly.

## Challenge #4: Dual operating systems and the firewall

When making a change to the organization, how do we keep the existing business intact (continuing to make money) while testing something new? The answer is a dual operating system: the **existing business** and a **new business or innovation lab**, separated by a **FIREWALL**.

- The existing business is: optimized, repeatable; it carries bottlenecks, opportunities, and exposures.
- The new business delivers: innovative solutions, flexibility, fast clock speed, the ability to take risk.
- The firewall protects both sides. What crosses back is what has been **validated and matured**; it re-enters the existing business as delivered innovation.

Ask the executive what their firewall looks like today (often: none), and what should cross it in each direction.

## Goals of the audit (say these out loud at the start)

1. Get to know the organization's infrastructure: its capacity and its limitations, its assets, its cultural artifacts and ingrained mental models.
2. Identify where challenges will be, so plans can be made to mitigate them.
3. Ultimately: if you know your organization, and you know the problem you are solving, you are far more likely to select a relevant solution.

## The five potential problem areas (the core rubric)

Audit each area 0 to 10 (10 = fully in place, 0 = absent), with strengths and gaps named. The lowest-scoring area is the binding problem area; the plan must attack it first.

1. **Plan.** A clearly articulated vision. Knowing the core and the moats (competitive strategy). Sufficient resource allocation. Sufficient time. Reasonable expectations. Organizational design for dual operating systems.
2. **Infrastructure.** Supportive of dual operating systems. A real firewall. Reduced friction between and within groups and for rapid iterations (clockspeed). Managed communication between the operating systems. External connections.
3. **Processes.** Governance: expectations and measurements. Pipeline: invention and talent. Adjust, iterate, monitor.
4. **Agents (People).** Recruiting: talent, the right talent, training, skills. A coherent common language ("file format") across the org. Networking: building teams, community. Retention: incentives.
5. **Culture.** Dual cultures that coexist. Sufficient shared values and identity. Clarity on both. Celebration. Mutual respect between the operating systems.