Concept Of Intrapreneurship

Concept of Intrapreneurship Very simply put, Intrapreneurship is Entrepreneurship practiced by people within established organisations. That really begs the next question...

CONCEPT OF ENTERPRENEURSHIP: 1. Entrepreneurship is the process of creating value by bringing together a unique package of resources to exploit an opportunity. 2. Entrepreneurship is the pursuit of opportunity without regard to resources currently controlled. From both definitions above, we can note that Entrepreneurs are opportunity driven. Opportunity comes from changes in the environment, and one characteristic of Entrepreneurs is that they are good a seeing patterns of change. It is also evident that Entrepreneurs are not resource driven - while the manager asks, "Given the resources under my control, what can I achieve?" the Entrepreneur asks "Given what I want to achieve, what resources do I need to acquire?"

Difference between Intrepreneur and Entrepreneur: Intrapreneur is a person who focuses on innovation and creativity and who transforms a dream or an idea into a profitable venture, by operating within the organizational environment. Intrapreneurs, by definition, embody the same characteristics as the Entrepreneur, conviction, passion, and drive. If the company is supportive, the Intrapreneur succeeds. When the organization is not, the Intrapreneur usually fails or leaves to start a new company. An Intrapreneur thinks like an entrepreneur seeking out opportunities, which benefit the corporation. It was a new way of thinking, in making companies more productive and profitable. Visionary employees who thought like entrepreneurs. IBM is one of the leading companies, which encourages INTRAPRENEUR.

MAIN DIFFERENCE BETWEEN ENTERPRENEURSHIP AND INTRAPRENEURSHIP:

There are, of course, a few things that are different between Intrapreneurship and Entrepreneurship. For starters, the Intrapreneur acts within the confines of an existing organisation. The dictates of most organisations would be that the Intrapreneur should ask for permission before attempting to create a desired future - in practice, the Intrapreneur is more inclined to act first and ask for forgiveness than to ask for permission before acting. The Intrapreneur is also typically the intra-organisational revolutionary - challenging the status quo and fighting to change the system from within. This ordinarily creates a certain amount of organisational friction. A healthy dose of mutual respect is required in order to ensure that such friction can be positively channeled. One advantage of Intrapreneurship over Entrepreneurship is that Intrapreneur typically finds a ready source of "free" resources within the organisation which can be

applied to the opportunity being exploited. Intrapreneurs seek out the organisational slack or fat, and co-opt it into Intrapreneurial ventures. However, innovation tends to be come harder as an organisation gets larger for the following reasons: •

1. The larger a company gets, the harder it is for anyone to know what everyone is doing. 2. The specialisation and separation that help business units maintain focus also hamper communication. 3. Internal competition magnifies the problem, because it encourages groups to hoard, rather than share what they've learned." (Hargadon, A. and Sutton, R.I., 2000, "The Knowledge-brokering", Harvard Business Review, May-June 2000, pp158-166)

IMPORTANCE OF INTRAPRENEURSHIP NOWADAYS: No-one needs another web page telling them that the world is changing now faster than ever before. Organisations are finding it harder and harder to survive by merely competing. They are, therefore, increasingly looking towards their Intrapreneurs to take them beyond competition to create new businesses in new markets. •

"As competition intensifies, the need for creative thinking increases. It is no longer enough to do the same thing better... no longer enough to be efficient and solve problems. Far more is needed. Now business has to keep up with changes... And that requires creativity. That means creativity both at a strategic level and also on the front line, to accompany the shift that competitive business demands... from administration to true entrepreneurship." Edward de Bono

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"Develop success from failures. Discouragement and failure are two of the surest stepping stones to success. No other element can do so much for a man if he is willing to study them and make capital out of them." Dale Carnegie

According to Gary Hamel, innovation will be the critical element in creating wealth in the future. (Marrs, D., 2000, "Old Companies given Second Chance", Business Day, September 21, 2000, pp20)

CAUSES BEHIND RETARDATION OF INTRAPRENEURSHIP: The primary factors retarding Intrapreneurship are: The costs of failure too high, and the rewards of success are too low. Intrapreneurs need to be given the space in which to fail, since failure is an unavoidable aspect of the Intrapreneurial process. This is not to say that organisations should simply condone failure, but rather that organisations need to begin to measure and attribute failure to either Intrapreneur fault, or circumstances beyond the Intrapreneurs control - and punish and reward accordingly. Similarly, the rewards for success are usually inadequate - few organisations provide rewards for Intrapreneurs that even closely approximate the rewards available to the Entrepreneurial

counterparts. Most incentivisation systems need to be upgraded accordingly. •

"Enron: If we've broken a paradigm, it's the compensation paradigm. We pay people like entrepreneurs. A lot of companies talk about intrapreneurship and ask people to take risks, but if those people succeed they get nothing more than a small bonus, and if they fail they get fired." "You can't create wealth unless you are willing to share it." Fortune Magazine (Gary Hamel, 2000:120, in Fortune Magazine, June 12, 2000)

Inertia caused by established systems that no-one is willing to change. Most organisations are governed by implicit and explicit systems, and in many cases people are reluctant to change them. Intrapreneurs are met with "this is the way we've always done it around here", "if it ain't broke, don't fix it", and "changing it now would just take too much effort..." Many organisations use their existing systems to prove they already have the "right answer" (see above), effectively dousing creativity. Hierarchy. Organisational hierarchies are what create the need to ask for permission - the deeper the hierarchy, that harder it is to get permission for anything new. Hierarchies also tend to create narrow career paths and myopic thinking, further stifling creativity and innovation. People lower down in the hierarchy have a tendency to become dis-empowered through having to ask permission, eventually developing the "victim mentality" that causes reactivity. Why do many Intrapreneurs remain within bureaucracies despite these factors? One reason may be for the thrill of outwitting the Pointy-Haired Boss (ref: Dilbert comics). Each of the elements above can become deeply ingrained into the culture (the symbols of acceptable behaviour) of the organisation. Consequently, bureaucratic behaviour may remain entrenched despite management's overt attempts to create an Intrapreneurial organisation. What then can organisations do to encourage Intrapreneurship? Here, the old adage applies: "You get what you measure." (A little bit of measurement based incentivisation wouldn't hurt either.) Organisations, therefore, need to find ways to measure and reward Intrapreneurship - both in terms of its frequency, and the rigour with which it is pursued. Organisational processes and structures are required to foster Intrapreneurship, just as they are for any other aspect of the organisation.

REASONS BEHIND INTRAPRENEURSHIP INITIATION: •

"The best innovators aren't lone geniuses. They're people who can take an idea that's obvious in one context and apply it in not-so-obvious ways to a different context. The best companies have learned to systemise that process." (Hargadon, A. and Sutton, R.I., 2000, "Building and Innovation Factory", Harvard Business Review, May-June 2000, pp157)

EXPERT OPINION ON ITRAPRENEURSHIP: In my mind, Intrapreneurship at a group level is inextricably intertwined with organisational learning. I therefore end with a quotation from Gandhi which sums up the spirit of Entrepreneurship as well as any does: •

"Live as if to die tomorrow. Learn as if to live forever."Mahatma Gandhi

REALITIES OF INTRAPRENEURSHIP: “intrapreneurship” is nothing more than a myth that academics and consultants create to sell books. Their contention is that the ownership of the final product or service does not rest with the intrapreneur; since the paycheck of the intrapreneur is not tied to the success of his venture, the blood, sweat, toil and tears are not invested at the same level; the parent organisation usurps intellectual property and that there is no lifelong equity involvement possible. ADVANTAGES OF INTRAPRENEURSHIP: Having said that, intrapreneurship does have a lot to recommend it. Given that technology and globalisation are driving competition, it is only agile organisations that can pounce quickly on new opportunities, which will retain an advantage over slower competitors. MODERN TRENDS: A case in point is the hand-held device giant, Palm. As the company expanded, it began stifling intrapreneurship, and the founders left to start Handspring, which is when Palm realised its mistake and purchased the company back at a cost of close to $170 million. Business transformation in the IT space is not just about the numbers game any more but about differentiation through customer relationships and operational excellence. Tom Nies, CEO of Cincom and one of the longest-serving active CEOs in the IT industry, feels that the advantage of intrapreneurship lies in the ability of a company to utilise its larger economic and technical resources to expedite decision-making processes. However, he points out that an organisation “should be able to demonstrate the willingness to break

with traditions by embracing initiatives that run counter to the way the company had done things in the past.” This also entails a change in the way that profits are shared because the kind of involvement that an IT organisation requires for an effective business transformation, can only come if every employee truly has a stake in the business and not just as an employee but as a stakeholder with a share in the profits. In other words, by creating entrepreneurs within the business, or “intrapreneurs” by introducing profit-sharing in a more immediate context. INTRAPRENEURSHIP AS A SOURCE OF INNOVATION: It is this “intrapreneurship” then, which will drive innovation and growth. How does one foster it? Intel seems to have worked a way around it. They established an in-house “new business initiative” in 1998 to bootstrap new businesses that employees propose by financing businesses that the company’s own employees start. The Xbox story is a similar one. Game designer Seamus Blackley had joined Microsoft in 1999 after a big project of his failed. At Microsoft, he was able to develop his concept in relative freedom and get credit for it. This open policy has paid off for GTE’s Information Systems Division, as a company and for individual employees. The program was developed by a former GTE employee, Anthony Spadafore, who left GTE to form his own consultancy program, Pathfinders, which works towards developing self-directed employees. Spadafore extensively counselled the volunteer employees in this new way of thinking and working. From the initial group eight new projects were proposed and a number of them funded. As a direct result of this, a number of employees have defined totally new career paths for themselves and the programme has totally redefined how GTE does business. ADVANTAGES OF APPLYING INTRAPRENEURSHIP: Key learnings from companies that have successfully implemented intrapreneurship in business encompass several elements, including identifying and fostering employees who have what are considered to be intrapreneurial traits; developing an intrapreneurial process for

part or all of a business, and developing innovation through rewarding intrapreneurial behaviour. CONTRIBUTION OF INTRAPRENEURSHIP TOWARDS INDUSTRY: Ultimately intrapreneurship links innovation and business transformation to create a sustainable profit-sharing model that, in turn, works towards creating a stable organisation and industry.