07/ 21/ 2005
by Glenn Townes
In the self-employment world, small-business owners are frequently inundated with ambiguous, new terms and phrases that either help or confuse them in their quest to build a booming, thriving business. One word that has been on the scene for years, but only recently resurfaced is "intrapreneurship." Sometimes referred to as "corporate renewal," intrapreneurship is the process by which large organizations seek to utilize, maintain or retain the edge in innovation and profit-making by asking employees to spawn businesses within the business. The concept has been around for more than 20 years and was originally coined by author and innovator speaker Gifford Pinchot in an early 1980s book about corporate intrapreneuring.
Generally, the process of intrapreneuring works like this: Someone within a corporation is passionate about an idea and eventually shifts it into the company’s venture division with the suggestion: "If you have a potential new business, isolate it from the rest of the organization so it won't be infected, but still give it enough space to grow."
Intrapreneurship and entrepreneurship have vast similarities and differences. Here are the most notable:
- Intrapreneurs are still company employees, but they are supposedly given free rein to run a particular aspect of the company, perhaps a new product line or subsidiary.
- Entrepreneurs are self-employed people running their own company.
- Intrapreneurs know that if they fail, the company is still going to ensure they have a paycheck, at least for a while.
- Because of the system in which they work, intrapreneurs are chosen based mostly on corporate standards, not entrepreneurial success.
- Entrepreneurs don’t necessarily have to worry about if they attended the right school or circulate in the right social circles––they’re worried about making enough money to meet payroll and pay other bills.
- Intrapreneurs are usually selected by a corporate hierarchy and don’t have to worry about building more structure they need to sustain a business (e.g. tech support, HR or marketing and sales).
- Entrepreneurs build all of that themselves.
One of the biggest differences is that intrapreneurs have at least a modicum of support from the primary organization; the entrepreneur doesn’t. Also, intrapreneurs must get final approval of an idea from a senior executive. Entrepreneurs answer to themselves.
What it takes
Some contend that being any kind of "preneur"–– entrepreneur, intrapreneur or socialpreneur –– requires the same mindset, as well as the skills to identify, develop, execute and manage new opportunities. Successful case studies about intrapreneurial ventures include Motorola, Intel Corporation, Honeywell and Southwest Airlines. Key reasons major corporations encourage intrapreneurship are:
•Technology and globalization are increasing competition. Companies that can pounce quickly on new opportunities will have an advantage over slower competitors.
•A recent McKinsey report shows that a company’s chances of holding on to a top position are fading. The key player in any industry will have a tougher time holding onto the top spot now more than ever. Leaders must become flexible and entrepreneurial.
•Employee loyalty is ending. If employees feel their great idea would be better received by the competition, they will leave more quickly than ever before. Take, for example, the case of Palm. The company grew large; it started stifling intrapreneurship, and the founders left to start Handspring. Then Palm realized its mistake and purchased the company back at a huge cost.
On the flip side, other small-business industry experts argue that the concept of "intrapreneurship" is nothing more than a myth academics and consultants create to sell books.
•People have to have ownership of the final product or service.
•The blood, sweat and tears investment isn’t required when a paycheck is guaranteed.
•The parent organization usurps intellectual property.
•There is no lifelong equity involvement possible.
Challenge of spurring new businesses
Finally, the real challenge for any major company trying to unleash new businesses is making people believe that it’s not unnatural. Organizations have to learn how to leverage competencies and assets already in-house. They cannot eliminate them completely or set them off on their own. Final credo for companies implementing intrapreneurship concepts are:
•Creating a climate where everyone has the potential to create new things.
•Going outside for talent and resources.
•Developing internal markets for ideas. That is easier to accomplish in small companies than in large ones, in part, because large companies have greater geographic differences and bureaucracies.
