17 May 2006 Tom Nies
In an influential 1985 book, still relevant today, Gifford Pinchot III coined the phrase 'intrapreneurship' to describe the marriage of an entrepreneurial spirit - complete with its fierce independence and lack of deference to established views and the strictures of conventional wisdom - with the resources of a large corporation. While these two spirits may seem in conflict, they actually thrive in many of the world's best-run companies.
Intrapreneurship is a strategy for stimulating innovation by making better use of entrepreneurial talent. When effectively promoted and channelled, intrapreneurship not only fosters innovation, it also helps employees with good ideas to better channel the resources of a corporation to develop more successful products.
Some of the greatest business leaders of the past century made their early mark in business as intrapreneurs. Former General Electric chairman Jack Welch made a name for himself by building GE's engineering plastics business as if he were starting his own company. Lew Lehr, former chairman of 3M, similarly built his career on his intrapreneurial pursuit of 3M's expansion into the healthcare industry.
By fostering an intrapreneur ethic within a company, employees can be empowered and enabled to become company 'change agents' who are comfortable bringing new ideas forward and promoting their execution.
It is essential to create an elevating and encouraging environment that provides talented and entrepreneurially minded people with the freedom to innovate, whilst at the same time supporting them with the resources to quickly bring their innovations to market. For firms like my own, innovation and speed-to-market are two ways to compete successfully against large, publicly held companies. Creating, fostering and sustaining the right environment really are intrapreneurial imperatives.
INTRAPRENEURSHIP IN ACTION
A key element of intrapreneurship is the ability of a company to support, with economic and technical resources, expedited decision-making processes. Furthermore, it 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.
An example of how this has worked in practice in my own business, Cincom Systems is the development of our call centre offering. Despite a long background in working for software developers and large telecommunications firms, one of our staff brokered the marriage between Cincom's technology and customer base and the growing need to reduce the cost of customer service to create an outsource call centre business. I gave this vision my personal support by travelling to India to promote the opening of our call centre business there.
In such ways, companies can continue to find new means to leverage resources to create new business opportunities.
CREATING AN INTRAPRENEURIAL CULTURE
As someone who founded Cincom with '$600 and a card table', I will always be at heart an entrepreneur. So, I could never even imagine allowing us to become a company that doesn't support creative free spirits who also seek to pursue good opportunities, and in the process build new businesses within the company.
However, Cincom is in many respects also a conservative company. We don't take reckless risks and all initiatives require a solid business case. For intrapreneurship to work effectively, several important considerations should be taken into account that balance risk with reward, and opportunity with difficulty.
LISTEN – ALWAYS LISTEN
Intrapreneurs above all else thrive on the freedom which fuels their innate desire to innovate. This can be a handful for a manager who doesn't understand or respect the entrepreneurial nature.
For intrapreneurship to flourish in an organisation, leadership has to be willing to listen to and recognise good ideas whenever and from whomever they arise. This message must be constantly reinforced from the highest levels of the organisation.
The key is creating an environment where an employee's ideas, when properly presented, are taken seriously and then be properly supported and recognised. One never knows where good ideas will come from, especially in a corporate culture that supports intrapreneurship. An account representative could become the catalyst for revolutionising a company's entire business strategy when presented with the ongoing opportunity to approach company leadership with a proposal.
Beyond listening, it is critical to enable people to see their own ideas through, even if they must cross over into a new functional area and push themselves past any previous company achievements or organisational structure.
CUT THE RED TAPE
It is important to create an environment where anyone can come forward with an idea on how to improve any aspect of the business. It should not matter where that person fits on the organisational chart. If the idea is good, and the benefits and risks are clearly stated, that idea should get the green light - and the support it merits.
There must still be a business approval process, but it should be efficient. Projects that deserve support should be quickly expedited. So for example, if it is not necessary to wade through a lengthy buy-in process, then it may be better to avoid this than to miss than to miss a window of opportunity.
Companies can foster and encourage potential intrapreneurs by sending the message throughout the organisation that a case properly presented, which thinks through the issues, identifies and explains what can go wrong, what can go right, and how to put contingencies in place, is welcome. But, the process must be simple and flexible enough to move quickly - and then to later scale up rapidly when success develops.
FREEDOM TO FAIL
Many entrepreneurial careers are built on a succession of minor failures, with the accumulated lessons learned from each leading to ultimate success. It is important for companies to allow for a degree of inevitable failure around new projects and initiatives without sending the message that failure is not tolerated.
Companies must strive to provide a 'freedom to fail' culture and environment. Although failure resulting from poor planning and execution is not accepted, there should be no penalty for those who come forward with good ideas, assuming they've been well presented and competently executed.
An intrapreneurial culture must embrace constructive failure to score big victories. Many companies are filled with reliable 'singles hitters' who play it safe and never really aspire to greatness. Intrapreneurs, on the other hand, swing for the fences. Sometimes they strike out, but when they connect they like to hit it big.
Harry Truman once said, "It is amazing what you can accomplish if you do not care who gets the credit."
It doesn't do any good to encourage team members at all levels to bring innovative ideas to company leadership if the leaders then take those ideas and make them their own. Recognition is a key driver for us all. Leaders who seek to steal the recognition rightfully deserved by others find few followers.
So, one needs to make sure credit goes where it is due, and to share it widely. It costs nothing to admit that the £10 million idea came from the receptionist. No one is diminished as a result, and the company is £10 million richer for it. The receptionist becomes then even more eager to offer better future ideas. And, everyone else in the organisation is encouraged to follow the lead of that receptionist, and to help to improve the organisation. "Leaders deal in hope," as Napoleon noted. But in top performing organisations, "Leadership is always plural."
BE WILLING TO BREAK PRECEDENT
Every organisation must have processes and rules of procedure and behaviour. But when we catch ourselves saying, 'we've never done it that way before," or 'that's not how we do things', we should stop and reflect on whether we are saying this out of habit, or for good reason. Chances are we may be citing a rule that may no longer be appropriate for the new conditions and situations we are now trying to intrapreneurially develop. Maybe it's best, and even necessary, to sometimes break with past traditions and establish new precedents to respond to new opportunities.
The ability to differentiate between rules needed to guide and perform within the current business and rules which may restrict success in building a new business is what discernment and opportunity awareness are all about. Going forward is always a journey. And as journeys progress we need new signposts along the way which point the way forward on the next leg of our trip. These signposts are the rules and regulations for building new businesses within existing businesses.
Journeys require maps and itineraries; but sometimes we also need to take detours and alternative routes when unusual or unexpected opportunities and situations develop, as almost always happens.
To start a revolution of initiative and innovation, ignite the intrapreneurs and then get out of the way! Lift off generates a lot of heat.
Get out of the way!