Intrapreneurship

Intrapreneurship is the act of behaving like an entrepreneur while working within a large organization. Intrapreneurship is known as the practice of a corporate management style that integrates risk-taking and innovation approaches, as well as the reward and motivational techniques, that are more traditionally thought of as being the province of entrepreneurship.

Definition

Pinchot (1984) defined intrapreneurs as “dreamers who do. Those who take hands-on responsibility for creating innovation of any kind, within a business”.[1] In 1992, The American Heritage Dictionary acknowledged the popular use of a new word, intrapreneur, to mean "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".[2] Koch (2014) goes further, claiming that intrapreneurs are the “secret weapon” of the business world.[3] 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.[4]

History

The first written use of the terms ‘intrapreneur’, ‘intrapreneuring,’ and ‘intrapreneurship’ date from a paper[5] 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.[6] 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 creation of PR1ME Leasing within PR1ME Computer Inc. (from 1977 to 1981). This academic research was later published as a case study by VDM Verlag as Intrapreneurship Success:A PR1ME Example. The American Heritage Dictionary of the English Language included the term 'intrapreneur' in its 3rd 1992 Edition, and also credited[7] Pinchot as the originator of the concept. 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,[8] which quotes him as saying, “The Macintosh team was what is commonly known as intrapreneurship;only a few years before the term was coined—a group of people going, in essence, back to the garage, but in a large company."

Employee intrapreneur

"Intrapreneurship refers to employee initiatives in organizations to undertake something new, without being asked to do so." [9] 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. (See also Corporate Social Entrepreneurship: intrapreneurship within the firm which is driven to produce social capital in addition to economic capital.) Employees, such as marketing executives[10] 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 (trying things until successful, learning from failures, attempting to conserve resources, etc.) adds to the potential of an otherwise static organization, without exposing those employees to the risks or accountability normally associated with entrepreneurial failure.

Another 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.

According to Pinchot,[11] intrapreneurs are both employees and leaders of a 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.

Examples

One of the most well-known examples of intrapreneurship is the "Skunk Works" group at Lockheed Martin. The group was originally named after a reference in a cartoon, and was first brought together in 1943 to build the P-80 fighter jet. Because the project was to eventually become a part of the war effort, the project was internally protected and secretive. Kelly Johnson, later famous for Kelly's 14 rules of intrapreneurship,[12] was the director of this group.

Another example could be 3M, who encourage many projects within the company. They give certain freedom to employees to create their own projects, and they even give them funds to use for these projects. (In the days of its founders, HP used to have similar policies and just such an innovation-friendly atmosphere and intrapreneurial reputation.) Besides 3M, Intel also has a tradition of implementing intrapreneurship.Google is also known to be intrapreneur friendly, allowing their employees to spend up to 20% of their time to pursue projects of their choice.

Other companies such as Xerox, Virgin, Siemens and Microsoft are also looking for unique solutions to promote CE in their own businesses, e.g. by developing separate research and development departments. Siemens-Nixdorf took a different approach, designing a 2-yearcorporate program to turn 300 managers into intrapreneurs, skilled in spotting new business opportunities with notable potential.[13]

Challenges

The biggest challenge for intrapreneurs is dealing with the “Corporate Immune System”.[14] This expression means that corporate organizational structures such as bureaucracy, hierarchy, rules etc. do not support intrapreneurial culture and behaviour. Many companies struggle with applying the concept of intrapreneurship into their daily routines due to high levels of defined tasks and schedules that deter opportunities for serendipity and for new ideas to be recognised.[15] Kawasaki (2006) also highlights the lack of rewards for entrepreneurial behaviour as a demotivating factor to search for new ideas.[16]

Failure, or fear of failure, is another reason for organisations not becoming more entrepreneurial. Wladawsky-Berger (2010) found that firms act to protect resources by avoiding risk and penalizing failure.[17] This resonates with the framework proposed by Ahuja and Lampert (2001) that explains why companies fail to develop breakthrough inventions.[18] According to the framework, there is a tendency in large firms to favour familiar and mature technologies, and also search for new ideas that are similar to existing solutions. The authors propose investing in developing novel and emerging technologies, because this will increase the likelihood of breakthrough inventions. However their model lacks how to build upon the ideas. On the contrary, Ireland et al (2009) present a model that conceptualises the CE strategy. Their model considers three main elements: entrepreneurial vision, organisational structure and behaviour, all of which influence and complement each other.[19] The authors claim that these factors have to be adapted at three levels: at the organisational level, at the level of top-managers and at the level of other employees. It means that an effective CE strategy cannot be dictated by top-managers, only instigated by them. In doing so, they have to create CE strategy from interactions between entrepreneurial vision, pro-entrepreneurial architecture and entrepreneurial behaviour.

Jones and Butler (1992) stated that due to organisational size, age and complex functions, entrepreneurship and management are often separated.[20] Their different levels of tolerance for risks (i.e. managers tend to avoid risks, while intrepreneurs work under uncertain conditions) generally result in managers penalizing failure. In addition, the lack of rewards and bureaucracy lead to outside entrepreneurship. Consequently, intrapreneurs often quit their jobs and set up their own businesses.[21] Behrens and Patzelt (2015) claims that this could be prevented by choosing managers with failure experience in their previous positions.[22] Smedley (2013) also suggests that creating structure for new ideas depends on managers personal experience and attitude. He gives an example of SAP, a company who claims to celebrate failure.[23] One of the recognized approaches to achieve this is through an “I wish/ I like session”: the “I like” statements recognizes new projects, while the “I wish” statements consider how things can be done in a different way.

See also

Notes

  1. ↑ Pinchot, G. 1984. Who is the Intrapreneur? In: Intrapreneuring: Why You Don't Have to Leave the Corporation to Become an Entrepreneur. New York: Harper & Row. pp. 28 – 48
  2. ↑ https://www.ahdictionary.com/word/search.html?q=intrapreneur&submit.x=38&submit.y=27
  3. ↑ Koch, C., 2014. Rise of the intrapreneur. Director Magazine. Available at: http://www.director.co.uk/the-rise-of-the-intrapreneur/#respond [Accessed April 9, 2015].
  4. ↑ Pinchot, G. 1984. Who is the Intrapreneur? In: Intrapreneuring: Why You Don't Have to Leave the Corporation to Become an Entrepreneur. New York: Harper & Row. pp. 28 – 48.
  5. ↑ Pinchot, Gifford & Pinchot, Elizabeth (Fall 1978) Intra-Corporate Entrepreneurship Tarrytown School for Entrepreneurs
  6. ↑ Macrae, Norman (April 17, 1982) Intrapreneurial Now The Economist
  7. ↑ 1992 Intrapreneur The American Heritage Dictionary of the English Language. 3rd ed. Boston: Houghton
  8. ↑ ? (September 30, 1985) [Jobs talks about his Rise and Fall] Newsweek Magazine
  9. ↑ Intrapreneurship Conceptualizing entrepreneurial employee behaviour. http://www.entrepreneurship-sme.eu/pdf-ez/H200802.pdf
  10. ↑ Kotler, P., Marketing Management: Analysis, Planning and Control, 13th edition, Prentice-Hall, Englewood Cliffs, N.J. 2009.
  11. ↑ Pinchot, G. 1984. Who is the Intrapreneur? In: Intrapreneuring: Why You Don't Have to Leave the Corporation to Become an Entrepreneur. New York: Harper & Row. pp. 28 – 48.
  12. ↑ http://www.jamesshuggins.com/h/u-2a/u-2_kellys_rules.htm
  13. ↑ Altringer, B., 2013. A New Model for Innovation in Big Companies. Harvard Business Review. Available at: https://hbr.org/2013/11/a-new-model-for- innovation-in-bigcompanies/ [Accessed March 1, 2015].
  14. ↑ Pinchot, G. 1984. Who is the Intrapreneur? In: Intrapreneuring: Why You Don't Have to Leave the Corporation to Become an Entrepreneur. New York: Harper & Row. pp. 28 – 48.
  15. ↑ Schleisinger, L. & Kiefer, C. (2014). Act Like An Entrepreneur Inside Your Organization. Harvard Business Review. [online]. 14th July 2014. Available at: https://hbr.org/2014/07/act-like-an-entrepreneur-inside-your-organization. Accessed 25th February 2015
  16. ↑ Kawasaki, G. (2006). How to Change the World: The Art of Intrapreneurship. [online] Available at: http://blog.guykawasaki.com/2006/01/the_art_of_intr.html. Accessed 8th February 2015.
  17. ↑ Wladawsky-Berger, I. (2010). Entrepreneurship and Innovation in Large Companies. [online]. Available at: in http://blog.irvingwb.com/blog/2010/10/entrepreneurship-andinnovation-in-large-companies.html. Accessed 25th February 2015.
  18. ↑ Ahuja, G. & Lampert, C.M. 2001. Entrepreneurship in the large corporation: A longitudinal study of how established firms create breakthrough inventions. Strategic Management Journal, 22, pp.521–543.
  19. ↑ Ireland, R.D., Covin, J.G. & Kuratko, D.F. 2009. Conceptualizing Corporate Entrepreneurship Strategy. Entrepreneurship Theory and Practice, 33 (1), pp.19–46.
  20. ↑ Johnson, L. (2010). Risk-takers rarely fit corporate culture. Financial Times. [online]. 1st June 2010. Available at: http://www.ft.com/cms/s/0/2909d95a-6daa-11df-b5c900144feabdc0.html#axzz3RC9D0wdi. Accessed 8th February 2015.
  21. ↑ Clarke, C. (2013). Masters in Management: Seeds of innovation. Financial Times. [online]. 15th September 2013. Available at: http://www.ft.com/cms/s/2/619ad1dc124f-11e3-8336-00144feabdc0.html#axzz3R4XmBRmy. Accessed 8th February 2015
  22. ↑ Behrens, J. & Patzelt, H. 2015. Corporate Entrepreneurship Managers’ Project Terminations: Integrating Portfolio-Level, Individual-Level, and Firm-Level Effects. Entrepreneurship Theory and Practice, 12, pp. 1-28.
  23. ↑ Smedley, T. (2013). Intrapreneurs’ come to the rescue. Financial Times. [online]. 13th March 2014. Available at: http://www.ft.com/cms/s/2/556c3a46-8fdf-11e3-aee900144feab7de.html#axzz3R4XmBRmy. Accessed 8th February 2015

External links

Look up intrapreneur in Wiktionary, the free dictionary.