Intrapreneurship (Encyclopedia of Management)
Intrapreneurship describes the process of developing new products, services, and lines of business within an existing company. It is perhaps best understood as a form of internal entrepreneurship that takes place with the encouragement and support of management. An employee who takes responsibility for developing an innovative idea into a marketable product is known as an intrapreneur. Management consultants Gifford and Elizabeth Pinchot coined the term in 1976 and helped popularize the concept of intra-corporate entrepreneurship in their pioneering book Intrapreneuring: Why You Don't Have to Leave the Corporation to Become an Entrepreneur (1985).
The Pinchots and other experts recognized that entrepreneurial ventures often lost their innovative edge as they grew into established companies. In order to help organizations remain creative and competitive as they grew, the consultants came up with guidelines and models to foster this entrepreneurial spirit among employees. "There are many advantages in working with intrapreneurs in any organization. Given the business environment in this day, any organization needs people who can bring in new ideas and see them through," Emily Hwengere wrote in the Financial Gazette. "Without intrapreneurs who can identify and exploit new opportunities, organizations will naturally die." One of the most commonly cited intrapreneurship success stories is 3M Corporation, which has a policy that allows employees to spend 15 percent of their working hours developing their own business or product ideas. This policy led to the creation of Post-It-Notes and other successful products by 3M employees.
Experts recommend that business organizations create a culture that provides employees with both freedom and encouragement to develop new ideas. They emphasize that support for intrapreneurship must start with top executives and work its way down in the form of policies, programs, and reward systems. "The real challenge for any company trying to unleash new businesses is that people have to believe that this is not an unnatural act," Gary Hamel explained in Inc. "This is what's going to have to happen in companies-bringing ideas, capital, and talent together from all across the corporate entities. Companies have to learn how to leverage the competencies and the assets that they already have within." Some companies foster intrapreneurship by encouraging employees to form competing teams that function like small businesses or internal vendors. Other companies create formal innovation programs to ensure that every new idea receives a fair hearing. In some companies, upper management behaves like a venture capital firm, evaluating and providing financial support for promising new ideas.
Employees who succeed as intrapreneurs tend to possess many of the same talents and traits as traditional entrepreneurs as well as a commitment to the organization and its goals. Working within an existing companyather than launching an independent start-up businessffers a number of advantages to such individuals. Access to the company's resources increases their chances of success, for example, while maintaining a salaried position provides them with added security in case of failure. Intrapreneurs also gain experience that they can apply to future entrepreneurial ventures, as well as a stimulating work environment. In this way, supporting intrapreneurship can help companies retain valuable employees. "One of the most wonderful things organizations have going for them is that people already have an intrinsic desire to go beyond-to learn, to grow, and to aspire to possibilities within themselves," according to Jacqueline Byrd and Paul Lockwood Brown, authors of The Innovation Equation.
Numerous books, articles, Web sites, and work-shops exist to provide advice for companies and employees hoping to take advantage of the opportunities presented by intrapreneurship. In general, such sources recommend that intrapreneurs be willing to take risks, find an internal champion from senior management, negotiate measures of success for their project, ensure that the project is given adequate time to succeed, and select fellow employees who can contribute needed skills. Some of the major factors that inhibit intrapreneurship include resistance to change in organizations, a corporate bureaucracy that slows down project approval, a refusal to allocate resources to new ideas, a lack of training and support for employees, low rewards for success coupled with high costs of failure, and performance evaluation based solely on job descriptions. "When you set up a new unit, be careful that you steer a line between two paths," Hamel explained. "Totally isolating it, which is fine if it isn't at all related to what you're doing, and giving it a bear hug, where you hold on to it so tight that it can never escape the gravitational pull of old beliefs."
Byrd, Jacqueline, and Paul Lockwood Brown. The Innovation Equation: Building Creativity and Risk-Taking in Your Organization. Pfeiffer, 2002.
Fattal, Tony. "Intrapreneurship at Work: Championing Projects to Push Innovation in Your Company." CMA Management, November 2003.
Hwengere, Emily. "Factors that Inhibit Intrapreneurship." Financial Gazette, 30 May 2002.
"Intrapreneurship: Spinning Off a New Company." Inc., September 2000. Available from <<a href="http://pf.inc.com/articles/2000/09/20222.html">http://pf.inc.com/articles/2000/09/20222.html>.
King, Carla. "Intrapreneurship: Heady Business." Sun Micro-systems. Available from <<a href="http://developers.sun.com/toolkits/articles/intrapreneur.html">http://developers.sun.com/toolkits/articles/intrapreneur.ht... >.
Pinchot, Gifford, and Ron Pellman. Intrapreneuring in Action. Berrett-Kohler, 2000.
"Small Business Notes: Intrapreneurship." SmallBusinessNotes.com. Available from <<a href="http://www.smallbusinessnotes.com/choosing/intrapreneurship.html">http://www.smallbusinessnotes.com/choosing/intrapreneurship... >.
Intrapreneurship (Encyclopedia of Small Business)
Intrapreneurs are employees who work within a business in an entrepreneurial capacity, creating innovative new products and processes for the organization. Intrapreneurship is often associated with larger companies that have taken notice of the rise in entrepreneurial activity in recent years; these firms endeavor to create an environment wherein creative employees can pursue new ways of doing things and new product ideas within the context of the corporation. But smaller firms can instill a commitment to intrapreneurship within its work force as well. In fact, small businesses, which originate as entrepreneurial ventures, are often ideally suited to foster an intrapreneurial environment, since their owners have first-hand knowledge of the opportunities and perils that accompany new business initiatives. "For larger companies, intrapreneuring is a way to recapture the spirit that put them on the road to success in the first place, " observed Nation's Business. "For smaller companies, it can be a way of maintaining the entrepreneurial drive that gave them birth."
Intrapreneurship practices have developed in response to the modern world's rapidly changing marketplace. "While businesses of varying sizes have long had internal units for development of new products, many found such arrangements were inadequate in today's business environment, " contended Nation's Business. "Creative young people chafed under corporate bureaucracies and frequently left to develop their ideas as entrepreneurs. Their former employers lost not only highly promising talent, but also a chance for profitable new lines. Intrapreneuring in its current form represents the determination of such employers to solve their particular brain drain problem. They are doing so by creating the environmentnd providing the incentivesor entrepreneurship within their existing business operations."
Internal corporate "incubators" are one innovative example of this trend. In these programs, employees can use the company's resources (including their already established name and reputation, as well as management experience, financial assistance, and infrastructure) to build and promote their own new business ideas. These and similar arrangements enable companies to stem the loss of ambitious and talented employees to entrepreneurial ventures. Entrepreneurial-minded employees, meanwhile, "get the challengend the profitsf creating their own 'companies' with little of the risk they would face on their own, " observed David Cuthill in Los Angeles Business Journal.
ORGANIZATIONAL CHARACTERISTICS THAT ENCOURAGE INTRAPRENEURSHIP
The single most important factor in establishing an "intrapreneur-friendly" organization is making sure that your employees are placed in an innovative working environment. Rigid and conservative organizational structures often have a stifling effect on intrapreneurial efforts. Conservative firms are capable of operating at a high level of efficiency and profitability, but they generally do not provide an environment that is conducive to intrapreneurial activity (and organizations that do not encourage creativity and leadership often alienate talented employees). But as Erik Rule and Donald Irwin stated in Journal of Business Strategy, companies that establish a culture of innovation through: 1) formation of intrapreneurial teams and task forces; 2) recruitment of new staff with new ideas; 3) application of strategic plans that focus on achieving innovation; and 4) establishment of internal research and development programs are likely to see tangible results.
Other keys to instilling an intrepreneurial environment in your business include the following:
- Support from ownership and top management. This support should not simply consist of passive approval of innovative ways of thinking. Ideally, it should also take the form of active support, such as can be seen in mentoring relationships. Indeed, the small business owner's own entrepreneurial experiences can be valuable to his firm's intrapreneurial employees if he makes himself available to them.
- Recognition that the style of intrapreneurialism that is encouraged needs to be compatible with business operations and the organization's overall culture.
- Make sure that communication systems within the company are strong so that intrapreneurs who have new ideas for products or processes can be heard.
- Intelligent allocation of resources to pursue intrapreneurial ideas.
- Reward intrapreneurs. All in all, intrapreneurs tend to be creative, dedicated, and talented in a variety of areas. They are thus of significant value even to companies that do not feature particularly innovative environments. Their importance is heightened, then, to firms that do rely on intrapreneurial initiatives for growth. Since they are such important resources, they should be rewarded accordingly (both in financial and emotional terms). For while intrapreneurs may not want to go into business for themselves, they still have a hunger to make use of their talents and a wish to be compensated for their contributions. If your small business is unable or unwilling to provide sufficient rewards, then it should be prepared to lose that intrapreneur to another organization that can meet his/her desires for professional fulfillment.
- Allow intrapreneurs to follow through. Intrapreneurs who think of a new approach or process deserve to be allowed to maintain their involvement on the project, rather than have it be handed off to some other person or task force. Ensuring that the individual stays involved with the initiative makes sense for several important reasons. The intrapreneur's creativity and emotional investment in the project can be tremendously helpful in further developing the process or product for future use. Moreover, they usually possess the most knowledge and understanding of the various issues under consideration. Most importantly, however, the small business enterprise should make sure that its talented and creative employees have continued input because not allowing them to do so can have a profoundly morale-bruising impact.
Carrier, Camille. "Intrapreneurship in Large Firms and SMEs: A Comparative Study." International Small Business Journal. April-June 1994.
Carrier, Camille. "Intrapreneurship in Small Businesses: An Exploratory Study." Entrepreneurship: Theory and Practice. Fall 1996.
Cutbill, David. "Incubators: The Blueprint for New Economy Companies." Los Angeles Business Journal. March 27, 2000.
Huggins, Sheryl E. "Internal Moonlighting: Use Your Day Job to Branch Out on Your Own." Black Enterprise. October 1997
"Intrapreneurship: A Welcome Trend in the Business World." Nation's Business. June 1986.
Millner, Marlon. "Intrapreneurship: Techie Turns System He Built for Former Employer into a Small Business." Washington Business Journal. May 1, 1998.
Oden, Howard W. Managing Corporate Culture, Innovation, and Intrapreneurship. Greenwood Press, 1998.
Pinchot, Gifford, and Ron Pellman. Intrapreneuring in Action: A Handbook for Business Innovation. Berrett-Koehler, 1999.
Pryor, Austin K., and E. Michael Shays. "Growing the Business with Intrapreneurs." Business Quarterly. Spring 1993.
Rule, Erik G., and Donald W. Irwin. "Fostering Intrapreneurship: The New Competitive Edge." Journal of Business Strategy. May-June 1988.
Shatzer, Lisa, and Linda Schwartz. "Managing Intrapreneurship." Management Decision. Annual 1991.
Intrapreneurship (Encyclopedia of Business)
Coined by Gifford Pinchott in 1986, "intrapreneur" refers to someone who possesses entrepreneurial skills and uses them within a company, instead of using them to launch a new business. Intrapreneurslso called corporate entrepreneursan help established companies implement innovative policies and procedures or introduce innovative products or services. Intrapreneurs, however, must have a fair amount of latitude within a company in order to effect any significant changes. Workers who earn the title "intrapreneur" usually go well beyond their narrow job descriptions, providing invaluable help in innovating some aspect of their companies.
Intrapreneurship differs from entrepreneurship in that intrapreneurs constantly must overcome barriers and negotiate obstacles and have opportunities to work with greater financial, technological, and human resources offered by an established company. In contrast, entrepreneurs largely work independently and often lack the resources of large companies. People with entrepreneurial skills also may choose to work within a company because they value job security, would like to practice launching a new business inside a company before launching one outside, and wish to take advantage of a company's established marketing channels.
Companies benefit from intrapreneurship because it can function as a means of overcoming aspects of corporate bureaucracy that impede innovation, allowing companies to remain creative and hence competitive. Moreover, intrapreneurship can remedy the loss of challenging and rewarding jobs, which can lead to greater job satisfaction and productivity.
Workers who are given freedom to experiment are often associated with the innovation process and the development of new products, services, or businesses within corporations. Intrapreneurship researchers refer to this freedom to experiment as innovative culture. According to Howard Oden in Managing Corporate Culture, Innovation, and Intrapreneurship, research indicates that intrapreneurship succeeds when companies provide their innovators with support, encouragement, and an atmosphere that promotes innovation. Specifically, Oden enumerated a host of attributes often found in innovative cultures, including:
- Long-term strategic and cultural leadership: upper-level management provides long-term strategies and challenging goals for the company's innovation.
- Promotion of innovation and intrapreneurship: the company encourages new ideas and new ways of doing things at all levels and promotes risk taking.
- Flexibility and adaptability: the company does not have a hierarchical structure, rather a flat structure, and the innovation process involves different teams of workers, not different levels of management.
- Collaboration and teamwork: the company encourages teamwork and collaborative innovation.
- Ongoing learning: workers are expected to improve their skills and learn new ones continuously.
- Toleration of failure: since some innovations fail to bear fruit, companies must accept failure as part of the innovation process in order to keep intrapreneurs free from the fear of failure.
Companies that foster innovation usually possess these and other related characteristics that allow intrapreneurs to seek solutions and generate new ideas, processes, products, or services, while not disrupting the regular flow of business. Although innovation can and does occur in any environment, too rigid and authoritarian corporate cultures definitely can stifle the initiative and creativity of intrapreneurs.
Intrapreneurs must possess a variety of skills themselves in order to be innovativeo matter what the corporate culture is like. In general, intrapreneurs have many of the skills that entrepreneurs haveuch as market savvy, intuitiveness, creativity, leadership skills, and the ability to work independently and collaboratively. They notice opportunitiesor new products, services, businesses, and so forthnd they pursue them. In addition, they also must have a certain amount of political savvy and be able to negotiate agreements with resistant or skeptical coworkers and managers, according to Lakshmanan Prasad in SAM Advanced Management Journal. Intrapreneurs must play organizational politics and reconcile the interests of different company teams or departments in order to bring about their innovations.
While many workers can develop technical plans for innovations, far fewer can have them implemented. Hence, intrapreneurs must possess strong social skills and knowledge of company politics and power, which entails identifying influential coworkers, managers, and groups within a company, evaluating their likely responses, and developing strategies to influence them.
The intrapreneurial process begins with a new idea or an innovation, and follows the steps of development, implementation, and modification. Intrapreneurs may conceive of an innovation serendipitously or deliberately. Either way, after intrapreneurs have an idea for an innovation they must begin to develop ithether a product, service, procedure, or companyy determining its feasibility. They assess the market and need for the innovation to determine if implementing it will pay off. Once intrapreneurs are certain they can feasibly introduce the innovation, they make general plans to execute the innovation, develop the innovation, and test it.
If the innovation withstands development and testing, then intrapreneurs implement the innovation. To ensure that the innovation will be successful, however, intrapreneurs gather feedback and make any necessary modifications to the innovation in order to improve it.
Oden identified a number of strategies or techniques for intrapreneurs, which allow them to be innovative and creative while functioning inside a corporation. Wall Street Journal columnist Timothy D. Schellhardt included some of these techniques in his article "Small Business: David in Goliath," where he referred to them as part of his "Intrapreneur's Ten Commandments":
- Seek approvals creatively: ask managers for small decisions, to keep the importance of the decisions minimal and to help ensure approval. In addition, use customers and suppliers interested in the potential innovation for leverage in obtaining approval.
- Find and use allies: recruit the support of employees within the company, especially ones with knowledge and skills relevant to the innovation as well as ones with considerable influence in the company.
- Establish coalitions: intrapreneurs can realize their goals by forming coalitions to support their innovations. Coalitions involve both supportive coworkers and managers or executives.
- Persuade management to be flexible: with the help of customers, allies, and coalitions, intrapreneurs should strive to change rigid company policies in order to facilitate innovation and they should point out to senior-level managers that the policies and procedures that work for a mature company, product, or service are not necessarily suitable for a budding company, product, or service.
- Share credit: intrapreneurs should recognize all those who participate in an innovative project to promote further collaboration in the innovation process.
- Control time expectations: keep projects low profile until research and development is completed and the innovation is nearly ready for the market.
Bygrave, William D. The Portable MBA in Entrepreneurship. New York: Wiley, 1994.
Kuratko, Donald F., and Ray V. Montagno. "The Intrapreneurial Spirit." Training and Development, October 1989, 83.
Oden, Howard W. Managing Corporate Culture, Innovation, and Intrapreneurship. Westport, CT: Quorum Books, 1997.
Prasad, Lakshmanan. "The Etiology of Organizational Politics: Implications for the Intrapreneur." SAM Advanced Management Journal, summer 1993, 35.
Schellhardt, Timothy D. "Small Business: David in Goliath." Wall Street Journal, 23 May 1996.