The basic concept of intrapreneurship is simple: it is entrepreneurship but done inside large organisations.
But if we look beyond the simple definition, it gets more complicated. Most companies appreciate that the key to lasting growth and profitability depends on optimising existing products whilst simultaneously embracing innovation. But often they appear to neglect the innovation part.
Alexander Osterwalder stated it well when he said:
“Organisations are streamlined to execute an existing business model, anything outside of that risks being shot down by “organisational antibodies”.”
What is intrapreneurship – a short history of the term
Even before Gifford Pinchot III in coined the term in 1978, one of the best-known success stories in intrapreneurship had started to take shape. In 1968 Spencer Silver, a scientist at 3M, developed a low-tack adhesive, which his colleague Art Fry turned into the now ubiquitous Post-it Note.
The term intrapreneurship was further popularised in 1985 through the TIME article “Here Come the Intrapreneurs”. In the same year by Steve Jobs did an interview for Newsweek in which he stated that “the Macintosh team was what is commonly known as intrapreneurship”. According to Jobs, the team separated themselves from the organisation, working in complete freedom and often flouting the rules, to achieve their vision. This added further kudos to the idea of intrapreneurship.
Fast forward to 2019, and according to Deloitte, 28% of multinational companies are engaged in intrapreneurial activity in some form.
What are the benefits of intrapreneurship?
With so many companies immersed in intrapreneurship, it begs the question: what is so good about it?
For the company, the benefits are many. It allows the development of new products with a competitive edge; it reduces the loss of valuable creative staff, and it creates the impression of cutting-edge thought-leadership. Overall it presents a chance to increase profitability and offers the opportunity for the business to break into new areas. As such it offers one of the few alternatives to mergers and acquisitions.
There are advantages for the intrapreneurial employee too. Compared to entrepreneurs, who build their startups with significant personal risk, an intrapreneur supported by their company has a reduced chance of failure.
In addition, the role of intrapreneur comes with a dynamic, passionate, exploratory environment. For the intrapreneur, this can lead to rapid career advancement and prestige without the risk of failure normally associated with entrepreneurship.
In an ideal case, an intrapreneur will have access to extensive financial, technical and human resources.
How to make intrapreneurship work inside large organisations
The reality is, there is no such thing as “entrepreneurship without the risk”.
It can be particularly hard to work on innovations when a company is doing well, and intrapreneurs may be perceived as a threat to the existing core business. There are several high-profile cases where intrapreneurship did not work out for the individual or the company.
Possibly the most infamous example is that of Steven Sasson. A life-long electronics engineer at Kodak, Sasson developed the first self-contained digital camera. But lack of support from the top-level management who thought of Kodak as a photographic film specialist rather than a camera maker ultimately resulted in the idea being shunned. Eventually, it became one of the most widely recognised missed opportunities in business history.
This highlights a major stumbling block in intrapreneurship: companies must balance the competing needs for future and current revenues in a sensible way. But their dependence on current revenue along with short-termism can stifle the long-term thinking and autonomy that intrapreneurs require to thrive.
Intrapreneurship examples that invest in future success
Many large companies have trialled internal initiatives to encourage innovation. Amongst the most popular ones are Google’s “20% Time” where engineers are encouraged to spend 20% of their time on projects that interest them; and Intel’s New Business Initiative, which is an internal pitching event at which winners receive funds for their idea.
However, the most successful companies at taking intrapreneurship to a new level are those that create systems and procedures that comprehensively support innovation.
Maybe the best-known example is 3M. Amongst the many initiatives they developed to support innovation are:
- The 15% Culture – any employee can set aside 15% of their time to innovate
- The 30% Rule – 30% of each division’s revenues must come from products introduced in the last four years; bonuses are based on this metric.
- Technology forums – an internal professional society for sharing ideas and knowledge
- Genesis Grant – an inventor can request seed capital from their business unit manager for the innovative idea
- New Venture formation – internal networking forums to recruit the right people for innovation projects
- Tolerance for failure – if the innovation fails to succeed, team members are protected and will get their previous jobs back
- Success awards – there are numerous awards at various levels to recognise individuals’ contributions as well as profit-sharing schemes
Intrapreneurs need to be able to connect and disconnect
Even though large companies are able to attract and pay for talent, simply relying on the genius of innovators is not enough. Connection is a critical component of real entrepreneurship. Simply put, both entrepreneurs and intrapreneurs need to be connected with others to be inspired and gather ideas.
At the same time, intrapreneurs need to also be able to disconnect from the corporate environment to a place where they can think and test creative ideas.
3M is a shining example of a company that allows innovative activities to flow from conception to implementation. This is true regardless of whether the idea originated as a serendipitous discovery or in deep technology research.
For radical ideas to flourish, you need individuals with the right skills and a nurturing environment.
Intrapreneurship education as an option to develop changemakers
Entrepreneurial employees want to have an impact and lead change in their organisation. To help them in their aims they can develop their mindset and knowledge by joining development programmes designed for entrepreneurs.
Some programmes such as the MSt in Entrepreneurship help intrapreneurs develop their entrepreneurial skills through deep emersion in entrepreneurial concepts. Learning amongst a cohort of entrepreneurs has the advantage of exposing the intrapreneur to new ways of thinking. In addition, bringing credible suggestions from well-researched sources to the table will help the intrapreneur, as well as the organisation, find the most workable way of innovating consistently.