‘Intrapreneurs’ give new focus to corporate culture
While we often consider entrepreneurship to be associated predominantly with new start-ups, larger firms are adopting more innovative and enterprising approaches to management in order to compete effectively in fastchanging global markets. One of these approaches is the development of entrepreneurship within a corporate environment (or intrapreneurship).
Research has shown that intrapreneurship is not easy. There are considerable differences between an intrapreneurial and a traditional corporate culture, with the latter tending to favour caution in decisionmaking.
Large businesses rarely operate on a “gut feeling” for the marketplace, as many entrepreneurs do. Instead, large amounts of data are gathered before any major step is taken, not only to make rational business decisions, but also to use as justification if the decision does not produce optimum results. Risky decisions are often postponed until enough hard facts can be gathered or a consultant hired to provide extra advice and information.
As a result, large firms will often face difficulties in attracting suitably entrepreneurial staff who tend to prefer the risk and adventure associated with small business ownership.
In addition, large organisations may discourage the employment and advancement of entrepreneurial individuals, as their presence within a large company could alienate other important managers, especially if the latter’s career development depends on conforming to accepted corporate structures and norms.
Unsurprisingly, the hierarchical nature of large corporations is rarely conducive to entrepreneurial behaviour, with considerable “distance” between top layers of management and the lowest level of the workforce, resulting in an impersonal relationship between management and staff.
If a shopfloor worker in a manufacturing plant comes up with an idea to improve the production process, permission to develop the idea usually comes from three or four levels of authority higher up, with each level having the potential to reject the proposal before it reaches someone with the responsibility and authority for funding.
The nature of corporate culture itself – where job descriptions are rigidly enforced – may also stifle innovation. The established procedures, reporting systems, lines of authority and control mechanisms of a traditional hierarchical organisation are there to support the existing management structure, not to promote creativity and innovation.
So what can a large organisation do to encourage greater entrepreneurial behaviour?
Many entrepreneurs desire to be “their own boss”, with responsibility for the destiny of their company; and their equivalents within large organisations – intrapreneurs – also wish to have sole control over the destiny of their particular idea.
In many cases, intrapreneurship is stifled because the authority to develop innovation is often several management levels above that of the innovator, and with restricted access.
If intrapreneurship is to work within large organisations, then intrapreneurs need to be given the power to make decisions within their project remit, which may include having the necessary authority to source people and resources from outside the parent organisation.
Short-termism in performance standards may also adversely affect the development of intrapreneurial projects, many of which are longterm in nature.
In many large organisations, short-term profits are the main measurement of a company’s success, as they support the share price and thus attract new investors. This puts pressure on managers to devise short-term strategies rather than look to long-term investment in speculative activities.
Given this, an intrapreneurial climate requires companies willing to invest money with no expectation of return for five to 10 years. It is also important that ideas are allowed to develop fully and that resources allocated to such projects are not withdrawn before that idea has progressed to commercialisation.
As we all know, risk is often linked with entrepreneurship and innovation and yet large companies, by their very nature, will be risk-adverse as the concept of personal failure is anathema to the culture of traditional organisations.
To foster an intrapreneurial climate, a tolerance of risk and failure through experimentation should be encouraged. If a large company wants to develop an entrepreneurial spirit, it has to establish an environment that allows mistakes in developing new innovative ideas. While this is in direct opposition to the established promotion and career system of the traditional organisation, entrepreneurial activities within larger firms will not develop without the opportunity to fail.
Perhaps the most famous example a large organisation adopting a truly intrapreneurial approach is that of Google’s “20% time” where employees are given one full day per week to work on a Google-related project of their own choosing or creation.
The results of this bold experiement have been incredible, leading to new products such AdSense, Gmail, Google Maps, Google News and Google Talk, all of which have added massive real value to the bottom line of the business.
Entrepreneurship need not be limited to smaller firms. With the right strategies, larger businesses can develop a culture in which entrepreneurs can develop their ideas for the benefit of the firm and, ultimately, its overall performance.