An intrapreneur is an inside entrepreneur, or an entrepreneur within a large firm, who uses entrepreneurial skills without incurring the risks associated with those activities.
Intrapreneurs are usually employees within a company who are assigned to work on a special idea or project, and they are instructed to develop the project like an entrepreneur would. Intrapreneurs usually have the resources and capabilities of the firm at their disposal.
The word intrapreneur is coined in 1980s by a management consultant Gifford Pincho. Companies that are in great need of new innovative ideas use intrapreneurs.
Today, instead of waiting until the company is in a bind, most companies try to create an environment where employees are free to explore ideas. If the ideas look profitable, the person behind it is given an opportunity to become an intrapreneur.
Intrapreneur (in-tra-pre-neur) is a person within a large corporation who takes direct responsibility for turning an idea into a profitable finished product through assertive risk – taking and innovation.
1. Introduction to Intrapreneur 2. Meaning of Intrapreneur 3. Definitions 4. Characteristics 5. Need for Intrapreneurship
6. for Developing Intrapreneurial Perspective. 7. Intrapreneurial Process. 8. Types 9. Intrapreneurial Climate
10. Fostering Intrapreneurial Culture 11. Intraprenurial Activities 12. Promoting Intrapreneurship 13. Barriers 14. Examples.
Intrapreneur: Introduction, Meaning, Need, Process, Types, Barriers and Examples
Intrapreneur – Introduction
The term ‘Intrapreneur’ was coined in America in the late seventies. Several senior executives of big corporations in America left their jobs to start their own small business because the top bosses in these corporations were not receptive to innovative ideas.
These executives turned entrepreneurs achieved phenomenal success in their new ventures. What is more that they are causing a threat to the organizations they left? Such Intrapreneurs breed the innovative entrepreneurs who inaugurate new products.
Intrapreneurs introduce new products services and processes which enabled the company to grow and succeed in a changing environment. Pinchot, suggested the creation of a system which will provide selected executives a status within the corporation similar to that of an entrepreneur in the society. Such people are ‘Intra-corporate entrepreneurs’ or ‘Intrapreneurs’.
These entrepreneurs are known as intrapreneurs. Gifford Pinchot wrote his famous book Intrapreneuring in 1985, and used the term ‘intrapreneurs’ to describe the persons who resigned their well-paid executive positions to launch their own ventures. Pinchot had suggested in his work that the well-established firms should learn to make use of prevailing entrepreneurial talents to avoid stagnation and decline.
Intrapreneurs introduced new products, services, and processes which enabled their companies to grow and succeed in changing environment. What was, therefore, needed was a system and an organization culture within a large organization that would allow the executives to operate like entrepreneurs.
These persons are driven not by monetary gain but by a deep desire of personal achievement. Therefore, companies should provide such people with adequate financial resources and the autonomy necessary for the development and application of their ideas. Pinchot suggested the creation of a system that would provide select executives a status within the corporation similar to that of an entrepreneur in society. He described such people as intra-corporate entrepreneurs or ‘intrapreneurs.’
Many American companies have started following Pinchot’s advice. Perhaps, one of the few companies which had been practising the intrapreneurs concept, much before Pinchot propounded it was International Business Machines (IBM), the computer giant. It adopted the concept of Independent Business Units (I.B.U) by encouraging its own employees to promote industrial units.
Similarly, General Motors (G.M) launched Saturn Corporation as an entrepreneurial subsidiary, headed by some of its executives aimed at promoting new ways of making, selling, and servicing cars. Many other American companies like Dupont, AT&T, Texas instruments Data General are also promoting intrapreneurs in their own way. AT&T has setup the Epic Centre for Entrepreneurial Venture.
The first written use of the terms ‘intrapreneur’, ‘intrapreneuring,’ and ‘intrapreneurship’ date from a paper written in 1978 by Gifford Pinchot III and Elizabeth Pinchot.
Later the term was credited to Gifford Pinchot III by Norman Macrae in the April 17, 1982 issue of The Economist.
The first formal academic case study of corporate entrepreneurship or intrapreneurship was published in June 1982, as a Master’s in Management thesis, by Howard Edward Haller, on the intrapreneurial.
The term “intrapreneurship” was used in the popular media first in February 1985 by TIME magazine article “Here come the Intrapreneurs” and then the same year in another major popular publication was in a quote by Steve Jobs, Apple Computer’s Chairman, in an interview in the September 1985 Newsweek article.
Intrapreneur – Meaning
An intrapreneur is an inside entrepreneur, or an entrepreneur within a large firm, who uses entrepreneurial skills without incurring the risks associated with those activities. Intrapreneurs are usually employees within a company who are assigned to work on a special idea or project, and they are instructed to develop the project like an entrepreneur would. Intrapreneurs usually have the resources and capabilities of the firm at their disposal.
Entrepreneurs and intrapreneurs vary in their level of focus. Whereas an entrepreneur envisions a company from start to finish, an intrapreneur has a much broader vision for an established company. Because the intrapreneur works on solving bigger issues within the business, he/she typically has more directly applicable skills for given tasks and takes more risks within the context of his/her job.
Important characteristic of intrapreneurs is their courage and flexibility to think outside of the box, which allows them to work on ideas that may change strategic direction. Even though many managers are afraid of radical changes, they are often the only way to help companies grow. This is exemplified by Wipro in India, a small vegetable company that ended up being a software outsourcing powerhouse. Another example is Tony Hsieh of Zappos, who started as a commercial footwear vendor and became the CEO of Zappos, which has expanded into an online customer experience company.
Intrapreneurs often remain hidden and unrecognised, because they often display behaviour contrary to what is considered as “corporate”.
The word intrapreneur is coined in 1980s by a management consultant Gifford Pincho. Companies that are in great need of new innovative ideas use intrapreneurs. Today, instead of waiting until the company is in a bind, most companies try to create an environment where employees are free to explore ideas. If the ideas look profitable, the person behind it is given an opportunity to become an intrapreneur.
Intrapreneur (in-tra-pre-neur) is a person within a large corporation who takes direct responsibility for turning an idea into a profitable finished product through assertive risk – taking and innovation.
In late 1970s several senior executives of big corporation in U.S.A. left their jobs to start their own small businesses because the top bosses of these corporation were not receptive to innovative ideas. These executives turned entrepreneurs achieved phenomenal success in their new ventures. These type of entrepreneurs came to be known as intrapreneurs.
In India too, many corporations identified the intellectual workers with achievement character and entrepreneurial talent in them and provided them infrastructure facilities motivated them to start satellite units, with a condition that they have to supply the required components to the parent unit without sacrificing the quality. Later on these satellite units have emerged as independent units and functioning successfully.
Some of the large scale and medium scale units started identifying its workers, mostly machinists, operators etc., with talent and gave them education at the cost of organization and made them the owner of the machine which he is operating, with a condition that he as to supply the parent organization the required component in required quantity on time and of the required quality. This made the parent organization relieved from planning the process and control.
At the same time the worker who got the machine became a loyal to the parent organization and use the facility to earn more after satisfying the need of the parent organization. He works in the same shed and with his fellowmen but the difference is he is the owner of the machine. As such there is no specific term coined to represent these types of people. But they may be called as “intra entrepreneurs”.
Entrepreneur – “Entrepreneurs are the persons who initiate, organize, manage, and control the affairs of a business unit that combines the factors of production to supply goods and services, whether the business pertains to agriculture, industry, trade or profession”.
Intrapreneur – “Intrapreneur (in-tra-pre-neur) is a person within a large corporation who takes direct responsibility for turning an idea into a profitable finished product through assertive risk-taking and innovation.”
Intra Entrepreneur – “The employee of a firm, educated by the management and provided him the machine on which he was working with a condition that he should satisfy the need of the parent organization and use free time to earn money by undertaking private orders.”
Intrapreneur – Definitions
Pinchot defined intrapreneurs as “dreamers who do. Those who take hands-on responsibility for creating innovation of any kind, within a business”.
According to The American Heritage Dictionary intrapreneur, means “A person within a large corporation who takes direct responsibility for turning an idea into a profitable finished product through “assertive risk-taking and innovation”.
Koch defines intrapreneurs as “persons who are the “secret weapon” of the business world. Based on these definitions, being an intrapreneur is considered to be beneficial for both intrapreneurs and large organisations. Companies support intrapreneurs with finance and access to corporate resources, while intrapreneurs create innovation for companies”.
Similar to how entrepreneurs experiment, an intrapreneur possesses the freedom and autonomy for professional growth. An intrapreneur has the independence to analyze and understand trends necessary for planning the company’s future. Intrapreneurs synthesize their findings and determine methods for staying ahead of their competitors.
The intrapreneur is not to be confused with the “innerpreneur”, Inerpreneur is a person who aims at personal fulfillment more than at economic gains when creating a business.
Intrapreneur—An Emerging Class:
Intrapreneurship is defined as entrepreneurship within an already existing organization. It is also referred to as corporate entrepreneurship. A typical example would be that of Dr. Pawan Goenka, who designed and developed the immensely successful Scorpio model for Mahindra and Mahindra (M&M) and redefined the way new car design and development was done. He utilized his vast experience of working with General Motors (GM) in the US prior to joining M&M.
Under his leadership, M&M launched a slew of new products such as Pik-Up, Marshal, Armada 98, Bolero, and Loadking. His best acknowledged contribution is that of the Scorpio project, which brought laurels to M&M, both in India and abroad. The company built this brand-new vehicle with virtually 100 percent supplier involvement from concept to reality for $120 million, including improvements to the plant. This is about one-fifth of the cost incurred to design and develop a car from scratch anywhere else in the world.
Intrapreneur – Characteristics
There are many characteristics of an intrapreneur:
1. Creates new ventures – Giving birth to new businesses within the existing organizations is the typical characteristic of an intrapreneur.
2. Innovates products/services – A tendency towards technological leadership by way of continual innovation of products/services is desirable on part of an intrapreneur.
3. Innovates processes – Under fiercely competitive business landscape, business processes need to be reinvented time and again by the intrapreneurs for better efficiency, productivity, and quality.
4. Proactive – Intrapreneurs attempt to lead rather than follow the competitors through their pro-activeness.
5. Risk-taking – Intrapreneurs have a risk-taking attitude with regard to investment decisions and strategic actions under situations of uncertainty.
6. Renews organizations – An intrapreneur is expected to transform the organizations through renewal of key ideas on which they are built.
7. Competitively aggressive – An intrappreneur has the propensity to directly and intensely challenge his organization’s competitors to achieve entry or to improve position.
Various researchers have identified the following characteristics that help intrapreneurs to succeed:
i. Being visionary
iii. Encouraging teamwork
iv. Build a group of supporters
A person capable of establishing a new venture in an existing company has to be a visionary leader. He ought to have great dreams to be converted into reality. He has the ability to dream great things and communicate these to his colleagues in such a fashion that they would like to be a part of the dream. An intrapreneur is a leader, with dreams, who overcomes all obstacles in selling and achieving the same. To be able to have his vision shared by others he needs a thorough understanding of the environment.
This requires a high level of creativity and the same is lacking in larger organisations. Intrapreneurs challenge the beliefs and assumptions of their organisations and this creates an opportunity of doing something new. Creativity and understanding of the internal environment of the organisation and external business environment help in setting up the intrapreneurial ventures.
Intrapreneurs are flexible and open to change. This characteristic helps them in creating various management options that lead to new business activities. They have an ability of encouraging ream work. Any new venture needs multi-disciplinary skills ranging from finance, operations to marketing and legal. Intrapreneurs prefer creating multi-disciplinary teams where open discussions are supported.
Though this generally goes against the management concept of specialisation and routine departmental structure of the corporations and their reporting system, yet the freedom to disagree and to critique an idea helps in reaching the best solution. The constructive disagreement and diverse skills of a multi-disciplinary team helps in pre-thinking and elimination of possible causes that may lead to the failure of a new venture.
The degree of openness in the team depends upon the openness of the intrapreneurs. This openness helps in establishing a strong group of supporters within the organisation. The intrapreneurs are required to take extra pains in building this support base by continuously encouraging the team members. As the usual motivators of career path and job security are absent in intrapreneurial ventures, a good intrapreneurs makes everyone a hero and thus survives by cultivating a base of supporters.
Last but not the least, is persistence. One is most likely to face obstacles and frustrations in intrapreneurial activity of starting something new. Only the persistence of a leader will take you through.
Intrapreneur – Need for Intrapreneurship
There are numerous reasons attributing to growing interest in Intrapreneurship based on a number of issues facing organizations.
i. Business Growth:
There is a strong correlation between Intrapreneurship and rate of business growth. It helps the organization to fight through competition and nurture best talents. The employees stay motivated and align their individual goals with organisational goals. It acts as a balancing factor. The employees put in their best to innovate whilst being employed. It creates a win-win situation for all stakeholders.
ii. Sustain Innovation:
It helps organizations to innovate over the long term. Every organization needs to adapt with changes overtime and intrapreneurs change the very fabric of a workplace. Conducive work environment fosters creativity and helps the firm to gain through its employees. It helps them hire and maintain the best and most talented. It makes the employees feel “important” and leads to efficiency and positive incremental returns.
iii. To Develop Human Capital Par Excellence:
It changes the way people think and act, changing the operational aspects of an organization, and changing the culture. Intrapreneurs have a synergy effect because it pushes the all employees to think beyond standardized procedures and tests the limits of organizational systems and processes. Resources aim at developing and reinventing themselves instead of settling in set molds. It is the way to move forward.
iv. Learning Organization:
The aim of intrapreneurship is to harness the capabilities that enable organizations to change. The intrapreneurs act as catalyst for that change and help in promoting learning spirit in the organization.
v. Receptive of Change:
Change is permanent and so is human resistance. Intrapreneurial leaders are change agents. They illuminate new traces. They become the catalysts of change they wish to see. Employee supported change (bottom up) is easier to implement than top down implementation.
Intrapreneur – 4 Main Elements for Developing Intrapreneurial Perspective in an Organization
Elements for Developing an Intrapreneurial Perspective in an Organization:
Kuratko and Hornby (1996) have suggested the following elements for devising corporate intrapreneurial strategy:
i. Developing the Vision:
The first step of developing the intrapreneurial strategy is to share the vision of the management with its employees. The resources need to understand organizational vision in order to exploit their creative talents for the benefit, of the organization. Companies need to be flexible in providing creative freedom to its employees, provide incentives for entrepreneurial projects and aim at synergizing corporate behavior.
A shared vision approach is a prerequisite to attract and sustain talented pool of resources and utilize them towards achievement of organizational objectives
ii. Developing Innovation:
The next step is to inculcate innovation as an integral part of their corporate strategy. Innovation may not always be systematically planned rather at times it may be radical and might disturb the existing standardized processes. The transition from manual records to soft copies in computers, from greeting cards to e-greetings has not been overnight. Moreover, all experimentation may not yield successful results still innovation needs to be supported by the management
iii. Development of Venture Teams:
Authors have stressed about role of collective entrepreneurship instead of being the sole vision of founder or top managers only. The company can create teams of highly talented, self-motivated and self-committed resources having a shared vision. “The Macintosh team was what is commonly known as intrapreneurship… a group of people going, in essence, back to the garage, but in a large company.”
When Steve Jobs and a group of twenty Apple employees separated themselves from the remaining organization in order to develop the world-famous Apple Macintosh computer, they operated with complete freedom, often neglecting organizational rules and structures for the sake of the vision. Jobs’ and his team’s intrapreneurial efforts resulted in radical product and service innovations, an outcome traditional R&D labs often fail to generate.
iv. Structuring for an Intrapreneurial Climate:
An ideal organization should to allow intrapreneurship to blossom. It needs to have participatory ways of management, flexible decision-making processes favouring adaptation and define roles and accountabilities clearly. Managers should be open and adaptable. They must allow people to do mistakes and to learn from them. The organisations need to be Agile in this rapidly change world.
Intrapreneur – Intrapreneurial Process
The processes of intrapreneurship involve both analytical and creative activities.
According to Pierce and Dunham, the intrapreneurial process takes place in four sequential steps:
Step 1 – Solo Phase – During this step, the typical entrepreneur works alone. The first task for the intrapreneur is to clearly identify the intrapreneurial idea. Then, the idea is developed and subjected to three feasible tests.
i. Will the idea provide identifiable benefits to the customer or clients?
ii. Is the idea compatible with the organization’s resources and overall strategy?
iii. Is the idea and its potential implementation compatible with the entrepreneur’s personal character and skills?
Step 2 – Network Phase During this step the entrepreneur shares the idea with other organizational members, seeking feed and suggestions for improvement of the idea.
Step 3 – Boot Legging Phase During this step, the entrepreneur begins to form a project team and some levels of product prototype development outside the normal operational mode of the company.
Step 4 – Formal Team Phase During this step, the idea becomes a formal organizational venture with formal organizational support.
Intrapreneur – Classified into 4 Types: Employee Intrapreneur, The Creator Intrapreneur, Doers Intrapreneurs and Implementers Intrapreneurs
According to Pinchot, intrapreneurs are both employees and leaders of large organizations that act similar to entrepreneurs in terms of e.g. self-motivation, creativity and pro-activity. Pinchot claims that while intrapreneurs must be leaders, they differ very much from managers. Strong leadership skills are needed to strengthen teams and to persuade others to follow and execute their ideas.
Leadership skills are also important to support rapid decision making under uncertainty. Managers, on the contrary, consider more risks than uncertainty and often work within established patterns. Moreover, traditional managers get their authority from the above; intrapreneurs, by contrast, start without the recognition of the same degree of power.
Intrapreneurs are able to search for opportunities and shape them into high-potential innovations through teamwork and with access to corporate resources. This assumes the right conditions of good leadership, communication and the appropriate environment to support creativity, these are essential for entrepreneurial outcomes to take place.
The intrapreneurs may be classified as follows:
(i) Employee Intrapreneur:
Employee intrapreneur refers to employee initiatives in organizations to undertake something new, without being asked to do so. Hence, the intrapreneur focuses on innovation and creativity, and transforms an idea into a profitable venture, while operating within the organizational environment.
Thus, intrapreneurs are inside entrepreneurs who follow the goal of the organization. Intrapreneurship is an example of motivation through job design, either formally or informally.
Employees, such as marketing executives or perhaps those engaged in a special project within a larger firm, are encouraged to behave as entrepreneurs, even though they have the resources, capabilities and security of the larger firm to draw upon. Capturing a little of the dynamic nature of entrepreneurial management adds to the potential of an otherwise static organization, without exposing those employees to the risks or accountability normally associated with entrepreneurial failure.
(ii) The Creator Intrapreneur:
He/she is the person with the innovative ideas. Creators may be easier to spot. They are the idea generation people, mostly in the discovery phase. They see possibilities. They are high on learning and love change. They are always looking for ways to do things better. They are big-picture thinkers and often are able to see the gestalt.
They are independent and prefer to work in less structured environments. On the downside they can get bored easily and find it difficult to stay focused on the details because they are always thinking of the next idea. Creators develop the ideas that fuel innovation.
(iii) Doers Intrapreneurs:
These persons are focused on achieving objectives. They are the task-oriented individuals mostly in the incubation phase. They understand the big picture and can get involved in the details when they need to. They are assertive and take responsibility for their actions. They have good communication skills and are effective in instructing others.
They are not afraid to stand up to authority or challenge the status quo. They are less concerned about structure and organizational obstacles that get in the way. They know what needs to be get done. They just go it. Doers are task-oriented and dedicated to their work.
(iv) Implementers Intrapreneurs:
They are the individuals who make things happen. They are focused on closer and are mostly involved in the execution phase. They know how to get things done or figure out how to get them done. They are goal-oriented, creative, and competitive.
They have good planning and negotiating skills. They work well in high-pressure situations. They are good at taking the initiative, negotiating, and motivating others. They have the execution skills required to drive projects to completion.
Intrapreneur – Intrapreneurial Climate: 10 Characteristics of a Good Intrapreneurial Climate
Having understood the difference between intrapreneurial and managerial cultures, the question arises, how to develop the intrapreneurial climate in an organisation?
Good intrapreneurial climate is identified by ten characteristics as follows:
1. Intrapreneurial organisations have a climate of encouraging new ideas. As research and development is the key source of new products, such organisations often operate on the frontiers of technology. Most organisations, looking after high sales volumes and growth in return on investment, discourage new ideas as these tend to hinder immediate increase in sales and ROI. However intrapreneurial climate supports or rather encourages new product and process ideas.
2. Such organisations encourage trial and error and experimentation. It is expected that any new product will require sufficient amount of trial and errors. A new product is rarely a success at the first attempt hence experimentation is encouraged and in the process failures tolerated. Intrapreneurial climate allows mistakes and failures in implementing innovative ideas. Such failures do not have a serious impact on the career prospects of intrapreneurial managers as failures are considered a part and parcel of establishing successful new products or ventures.
3. The organisation should not insist on any pre-conceived initial parameters, as this inhibits creativity for developing new products or processes. Protecting various turfs in an organisation may frustrate the potential intrapreneurs to establish new ventures. Consider a case when a manager’s initiative for a new product is rejected on the ground that the said project falls under the preview of a different department or a subsidiary.
4. The organisation should be able to allocate sufficient resources to the new projects without much of red tape. The resources should not only be available for intrapreneurial activities, but the same should be easily accessible. Allocation of insufficient resource for a new venture is the sure way of killing the same. Even when the resources are available sometimes the reporting requirement become obstacle in obtaining them and it can be a very frustrating experience.
5. Intrapreneurial environment encourages multi-disciplinary team approach. Cross functional teams facilitate efforts to integrate activities associated with different organisational functions, such as – design, manufacturing and marketing. In addition, new product development processes can be completed more quickly and the products more easily commercialised when cross-functional team work effectively.
Using cross-functional teams, product development stages are grouped into parallel or overlapping processes to allow the firms to tailor its product development efforts to its unique core competencies and to the needs of the market. Team leaders are encouraged to include members with different background of knowledge and skills. An employee’s contribution in different multi-disciplinary teams is considered as an asset and valued favourably for promotions and career advancement.
6. The corporate environment must establish long term time horizon for evaluating the success of the overall program as well as the success of each individual venture. The company should be willing to commit funds for a longer period of 5 to 7 years for setting up intrapreneurial ventures. Intrapreneurial investment by the corporate has the same time horizon as that of venture capital in a startup project or any other risk financer of an entrepreneurial venture.
7. Spirit of intrapreneurship comes voluntarily and cannot be forced upon the employees. There is a difference between a corporate leader and an intrapreneurial leader. One cannot be a substitute for another. It may be difficult to select an intrapreneurial manager based upon his performance as a traditional manager.
Organisations should allow the intrapreneurs to emerge by a self-selection process and allow them the latitude to carry a project through its completion. Instead of delegating responsibility to different specialists for different stages of a product, an intrapreneur who has fallen in love with his newly created internal venture is, supported by the multi-disciplinary team of specialists, and allowed to carry on with the project.
8. The organisational reward system has to be different from that of a traditional organisation. It should be one that explicitly supports innovation. Intrapreneurs need to be appropriately rewarded for their extra effort and risk taking in setting up new ventures. The reward should be explicitly based on achieving the pre-determined goals.
9. The corporate climate that encourages intrapreneurs has sponsors and champions in the organisation who support the creativity and resulting failures. They also provide flexibility in planning to such an extent that if needed the organisational objectives are modified or new ones added. Normal corporate cultures evaluate managers on their ability to come close to the corporate objectives while intrapreneurial climate allows them the flexibility of changing the corporate objectives to include the proposed new ventures.
10. Last but not the least is that any intrapreneurial activity must be whole heartedly supported by the top management.
Intrapreneur – Fostering Intrapreneurial Culture
If the large companies want to be entrepreneurial, they are required to develop the organisations such that the employees can, want and know how to be intrapreneurs.
A four point program is suggested to achieve the same:
1. Corporate Strategy should Aim at Developing Intrapreneurial Confidence:
The corporate strategies should be formulated so as to inspire confidence in the employees to undertake innovative and entrepreneurial activities. If employees have to feel comfortable in taking initiative and acting independently, they should have shared values and a common purpose.
Having the clear picture of corporate objectives and strategies gives employees a confidence to drive towards their ideas. It ensures that they are creating value for the organisation and thus feel comfortable in taking appropriate risk. The familiarity with the common purpose and value system gives general direction and confidence to the intrapreneurial leaders.
In developing the corporate strategy and shared values an intrapreneurial leader involves employees and ensures that the strategy is properly communicated to all concerned. Using their everyday experiences employees gather information about the market place and thus help in responding to events at a faster speed. So employers at all levels are encouraged to provide inputs to strategic process.
2. Big Corporate to Learn to Act Like Small Enterprises:
Intrapreneurial organisations ensure that strategic decisions are executed swiftly. Present businesses are embedded in a complex system of networks, where traditional hierarchical behaviour patterns do not suffice. Organisations are to act on a global scale and yet maintain nimble and flexible structures, and maintain the ability to react quickly to the changing environment.
Large corporate should capitalise on its giant size yet maintain the focus of a growing small enterprise by maintaining the right balance between investment and risk, long and short-term development, global and local operations. Big organisations should realise that drive is the essential to intrapreneurial behaviour. If the staff has a greater sense of teamwork and responsibility, they develop higher creativity and collaboration where by the ideas easily get fructified. Creating the feel of a small organisation without sacrificing the benefits of size is not just about structure.
It is the responsibility of the leader to delegate authority to encourage this type of initiative, and thus providing freedom to managers to think and act like entrepreneurs. Large organisations are often broken down to smaller units by dividing their constituent businesses. This promotes the key managers to the lop positions in the subdivided businesses and it is the greatest incentives to make them perform with greater zeal. ABB has incorporated some 1400 units as companies in their own right.
3. Assure Intrapreneurship is Valued:
Intrapreneurial organisations create an environment that assures the employees that intrapreneurship is appreciated and valued. They should be convinced that intrapreneurial behaviour does not carry a very high risk. The organisations, in their value system, should inspire a desire for change, a mindset of break through thinking and a culture of creativity and innovation.
The performance appraisal and reward system should be modified to include intrapreneurial activities. Many companies have introduces an appraisal system that includes change and innovation as a key element. They have built measures of innovation along with financial and market results. It is equally important how this change is communicated to the concerned employees.
4. Encourage Diverse Thinking:
Intrapreneurial culture becomes-more creative and innovative when the organisation has people with diverse viewpoints, perspectives and experience. It is a proven fact that diversity of thought enhances creativity and ability to generate not only a larger number of solutions but even better solutions. In an organisation people, who are continuously dissatisfied with the way the company is running, add to the diverse thinking and are hence a valuable asset? Organisations must recognise and protect these germs of dissatisfaction, as they are source of continuous improvement.
A diverse work force with varied background helps the companies to recognise and respond quickly to the needs of a complex market. Recruiting people with variety of ethnic backgrounds often increase the diversity in an organisation. Some inject young blood for this purpose and others seek out perspectives from outside their state or even national borders. For this reason Bharati Enterprise continuously hires new people at the highest levels – “We believe that new faces are good around the decision-making table,” says the group Chairman Sunil Mittal.
Another approach is to make use of the diversity present in a company’s virtual network of alliance partners, other organisations and people connected with these. The forms of collaborations like joint ventures, partnership with university also add to diversity in thinking.
To infuse diversity of experience and thinking amongst the existing employees, instead of working in a single department and specialising on one function alone, many organisations make them work on a series of diverse assignments. In India senior IAS officers are trained in this way. It keeps employees exposed to fresh challenges and environments.
Finally an intrapreneurial manager should always be ready to receive new ideas and viewpoints.
Intrapreneur – Intraprenurial Activities
Intraprenurial activities move beyond new business venturing and include four key demerits:
i. Corporate venturing
Corporate Venturing includes creating new businesses for an existing organisation. It refers to creating something new of value either by redefining the company’s current product or service or by developing a new market or by forming autonomous units under the same organisation. Formation of new corporate ventures is the most salient manifestation of Intrapreneurship. Organisational Innovation means a technological innovation affecting a product or service.
It is manifested in product improvement, new product development, and a new method of production or a new procedure of business operation. Self- renewal means transforming an organisation by renewing the key ideas that form the basis of an organisation. It is a strategic renewal that redefines the business concept and includes reorganisation of the business culture through organisational change.
Pro-activeness is initiative and complete aggressiveness of the top executives. It includes risk taking boldness. Pro-active organisations believe in experimentation and take risk in pursuing bold and aggressive opportunities. The pro-active organisations tend to be leaders by innovations rather than fallowing their competitors.
Intrapreneur – Promoting Intrapreneurship
Apparently there are only two ways by which Intrapreneurs emerge in an organisation. Intrapreneurship cither emerges as a spontaneous team or is created by a formal venture team.
The Spontaneous Team/Autonomous Strategic Behaviour:
This normally happens in organisations where there is a poor intrapreneurial culture. When an organisation lacks a policy and a formal system to encourage innovation and empower teams for developing new ventures, enterprising mangers may form informal relationships. A few close associates work together on new ideas.
The same at a later stage develop into a new venture within the organisation. Autonomous strategic behaviour is a bottom up process in which product champions pursue new ideas, often through a political process, by means of which they develop and coordinate the commercialisation of a new good or service until k achieves success in the market.
Pinchot has identified four stages of developing such spontaneous teams:
It is the solo phase where an adventuresome individual Works alone, conceives the idea and mulls over it till he develops a confidence in the practicability and use of the idea to the extent to share the same privately with one or two close associates. During this phase the innovator is not seen mixing with others, he may be working alone in the laboratories; workshops even after office hours or may be carrying the files home.
A product champion is an organisational member with an entrepreneurial vision of a new good or service who seeks to create support for its commercialisation. Product champions play critical roles in moving innovation forward. The person is very secretive about the idea in the solo phase.
In the second phase the innovator after he is convinced of his idea discusses the same with friends and seeks support and advice from experts. He looks for the sponsors in the organisation who may back his idea and provide resources. It is the networking phase to find sponsors and allies. The preliminary reason for this “no business idea takes root purely on its own merit; it has to be sold.”
The third phase is called bootleg phase. When an informal team begins to form. The team works on developing the idea without any approval or sanction from the organisation. The innovator is no longer ploughing a lonely furrow. The team works to gather market information, lines up production resources, and prepares a prototype. After gathering the required information the team prepares a project feasibility report also called business plan.
This report is similar to the one submitted by an entrepreneur to the financers of his venture. The business plan is put up to the corporate management for a formal approval of the project and allocation of resources. Thus a firm’s technological capabilities and competences are the basis for new products and processes.
It is known as the formal team phase and starts with the formal corporate approval for the project. The resources are allocated and the team members get a formal authority to manage the project within the specified budget. To be effective, an autonomous process for developing new products requires that new knowledge be continuously diffused throughout the firm.
In particular, the diffusion of tactic knowledge is important for development of more effective new products. The Japanese culture is high on uncertainty avoidance. As such, research has found that Japanese firms are more likely to engage in autonomous behaviour under conditions of low uncertainty.
Formal Venture Units/Induced Strategic Behaviour:
Induced Strategic Behaviour is a top down process where the firm’s current strategy and structure foster product innovations that are closely associated with that strategy and structure. In this form of venturing innovation is filtered through the firm’s structural hierarchy. This normally happens in organisations with a well-developed intrapreneurial culture. Such organisations have a formal mechanism that allows creative persons to build legitimate teams in the beginning of the innovative process.
The initial teams are not unofficial. However the innovation process starts with a solo phase where the individual conceives a creative idea, mulls over it and matures the idea to what is known as a pre-feasibility stage. As in the spontaneous team innovator does not operate in a clandestine manner, but with the due knowledge and permission of the corporate management. The pre-feasibility reports lacks the details of a business plan but gives enough information to the management to take an informed decision to support the idea or not.
The second phase starts with the formal recognition of the idea. An intrapreneurial team is established to develop the idea to the project stage and implement the same. The team is responsible for the market research, development of the prototype, testing and preparing the detailed project report or the business plan. The budget is sanctioned for these activities and funds are provided as seed or risk capital.
The intrapreneurial team often reports to a sponsoring manager who tracks the effort. A review committee critically evaluates the detailed business plan and if satisfied sanctions resources for the implementation of the project. In-case the idea does not find favour at this stage the seed money provided till now is written off. The funds are now provided as development budget for final development of the new venture.
The third phase is the implementation phase where the team once again refines the proposal to implement the project. The team is bestowed with all the required authority and budgetary support is sanctioned for setting up of the new venture.
Establishing Intrapreneurial Ventures:
Irrespective, how the intrapreneurial ventures are developed, by the spontaneous or the formal process, the corporate have three distinct methods of establishing the new units. These are setting up of a new division, integrating the new product in the existing operation, or spinning of the new project into a subsidiary of the existing company.
Setting up of a new division leads to the horizontal expansion with diversification and causes least disruption to the existing operations of the company. Integration of the new product in the existing operations is often a painful process and is adapted only when there is a great similarity with the old products or when the old products are to be phased out.
There are two reasons for going the subsidiary route:
(i) The objectives of the new venture are different from the existing corporate objectives;
(ii) The intrapreneurs are offered an equity stake in the project.
Intrapreneur – Barriers to Intrapreneurship
There are definite reasons why large corporations have trouble staying entrepreneurial.
(a) The Inherent Nature of Large Organisations:
As a company grows larger addition layers of management are added in order to keep the organisation manageable. Once the entrepreneur loses contact with workers, it is difficult to ensure that appropriate level of entrepreneurship exists within the organisation.
Multiple layers of management also create too many levels of approval between the innovator and the person in charge of resources. Each level has the potential to kill the project before it gets funded. As the business grows, need to control performance also grows and rules and standards become more important than entrepreneurial behaviour.
Another problem is the corporate culture. The guiding principles in a traditional corporate culture are – Fallow the instructions given; do not make any mistakes; do not fail; do not take initiative but wait for instructions and stay within your turf. This restrictive environment is, of course not conducive to creativity, flexibility, independence and risk taking which are essential for intrapreneuring.
(b) Need for Short-Run Profits:
Apart from those characteristics inherent to large corporations that make entrepreneurship difficult is the need of most publically held ventures to show short-run profits. Established corporations thrive on short-run profits, they are an organisation’s measures of success. Corporations must also secure short- turn profits in order to keep stock prices up and attract investors.
Thus there is constant pressure on top management to devise strategics for short-run performance rather than long-run investment. Entrepreneurial ventures, on the other hand, may lose money for some time. Their key to survival is cash-flow. They need to attract money into the venture without guaranteeing the investors a sure return.
(c) Lack of Entrepreneurial Talent:
There are very few true entrepreneurs in large organisations. Typically, they are not attracted to large organisations in the first place. Large organisations do not encourage them. They see the entrepreneur as loner rather than a team player and as an eccentric who is interested in pet projects rather than in getting corporate work done. Entrepreneurs are often viewed as cynics, as rebels, or as free spirits, who are late and do sloppy work that does not conform to standards set by the corporations. This forces the entrepreneurial person to leave the big corporations and look for alternatives.
(d) Inappropriate Compensation Methods:
Most organisations have few methods to compensate creative employees. Wages for the employees are based on productivity by input/output measures rather than by innovation in products or processes. Even though monitory rewards may not be especially important to entrepreneurial individuals, some mechanism of rewarding innovation must be evident if innovation is to be continued. Non-monetary rewards are also typically missing from corporate structures.
Intrapreneur – Examples of Famous Intrapreneurs
i. Post-It Notes, Intrapreneurs:
Spencer Silver and Art Fry, Company – 3M, Launched in 1980- The Post-it, now as indispensable to the typical office worker as a chair and desk might never have made it to the market without 3M’s longstanding ‘bootlegging’ policy. The company’s programme allows employees to spend up to 15 per cent of their time at work developing their ideas. That’s how 3M scientist Spencer Silver invented a light, repositionable adhesive in 1968, although he was unsure how best to use it. He gave a series of seminars, explaining the advantages of his adhesive to co-workers, but he was unable to drum up much enthusiasm for his not-so-sticky note.
Five years later, Art Fry, one of Silver’s colleagues, noticed that his bookmarks were constantly falling out of his hymnals during choir practice. He remembered Silver’s seminars, and in that ‘Eureka’ moment, the Post-it was born. The product languished until a marketing manager, Bill Shoonenberg, designed a campaign called the ‘Boise Blitz’ to drive sales and blanketed the state of Idaho in Post-its. The sticky notes went national in 1980 and quickly became an office-supply and household standard.
ii. Sony PlayStation, Intrapreneur – KenKutaragi, Company – Sony Computer Entertainment Inc., launched in 1994:
Ken Kutaragi was working in Sony’s sound labs when he bought his daughter a Nintendo game console. Watching her play, he was dismayed by the system’s primitive sound effects. He realized that a digital chip dedicated solely to sound would improve the quality of the games — and the product itself. Keeping his job at Sony, Kutaragi developed the SPC7000 for the next generation of Nintendo machines. Sony executives nearly fired him after discovering his sideline project, but the then-CEO Norio Ohga realized the value of his innovation and encouraged Kutaragi’s efforts.
With Sony’s blessings, Kutaragi worked with Nintendo to develop a CD-ROM-based Nintendo. But Nintendo decided not to go forward with it, so Kutaragi helped Sony develop its own gaming system, which became the PlayStation. The first PlayStation made Sony a major player in the games market, but the PlayStation 2 did even better, becoming the best-selling game corsole of all time. Kutaragi founded Sony Computer Entertainment, one of the Sony’s most profitable divisions.
A classic case of intrapreneurs is that of the founders of Adobe, John Warnock and Charles Geschke. They both were employees of Xerox. As employees of Xerox, they were frustrated because their new product ideas were not encouraged. They quit Xerox in the early 1980s to begin their own business. Currently, Adobe has an annual turnover of over $3 billion.
A lot of companies are known for their efforts towards nurturing their in-house talents to promote innovation. The prominent among them is “Skunk Works” group at Lockheed Martin. This group formed in 1943 to build P-80 fighter jets. Kelly Johnson was the director of the project, a person who gave “14 rules of intrapreneurship”.
At “3M” employees could spend their 15 per cent time working on the projects they like for the betterment of the company. On the initial success of the project, 3M even funds it for further development.
Genesis Grant is another 3M intrapreneurial program which finances projects that might not end up getting funds through normal channels. Genesis Grant offers $85,000 to these innovators to carry forward their projects.
Robbie Bach, J Allard and team’s XBOX might not have been feasible without the Microsoft’s money and infrastructure. The project required 100s of millions and quality talent to make the product.