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The description of intrapreneurship as an attitude and business culture, how intrapreneurship can be fostered inside traditional corporations and the importance of intrapreneurship for consultancies are part of the white paper senior innovation consultant Daniel Hofmann from mantro.net wrote.
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A DETAILED INTRODUCTION TO THE TOPIC OF INTRAPRENEURSHIPAND THE FACTORS IMPORTANT FOR SUCCESSFUL IMPLEMENTATION
By Daniel hofmann
INTRAPRENEURSTHE UNSUNG HEROES OF LARGE COMPANIES
REALIZE YOUR COMPANY’S
FULL POTENTIAL
2
AN IMPORTANT ASPECT OF CONSULTING is to understand the political structures and fabric of
your customers, and to identify the key players within the
project and the company. The best projects far too often
fail because of power struggles in upper management.
This makes it all the more important to identify “accom-
plices” in the form of well networked idea drivers early
on and get them on board. These persons are of primary
importance, especially for internal marketing, because
they have already earned the trust of their colleagues and
in the best case management as well. Their motivation
and the will to change and improve things can be equated
with entrepreneurship, with the difference that they are
full-time employees. This led to the terms intrapreneur
and intrapreneurship.
NOTHING NEWThe entrepreneur in large enterprises is not a new phe-
nomenon. Intrapreneurs have already brought numerous
innovations to market, such as the PostIt from 3M and the
Sony PlayStation. However, the names of the inventors
remained concealed behind the company names. These
unsung heroes are getting more and more important, es-
pecially in the digital transformation age, since they drive
digitalization in companies.
If the intrapreneurs fail then so will the company.
INNOVATION CONSULTINGAs innovation and strategy consultants, we also consider
it our responsibility to promote intrapreneurship in com-
panies and attract attention to the work of intrapreneurs
within companies and in the public eye.
In the following we are first going to examine the defini-
tion and origins of intrapreneurship, and then discuss the
fundamental elements for introducing and promoting
intrapreneurship within companies.
3tel. +49 89 416 177 00 l email: [email protected]
THE CHALLENGES FACED BY COMPANIEShave changed significantly in the last 20-30 years. Speed and
innovativeness were added to values such as efficiency and struc-
ture. Innovative solutions are in demand in order to develop new
market potential, notwithstanding saturated markets.
Today people take centre stage in this development as human
capital instead of merely a cost factor.
Menschen sind flexibel und erzeugen aus People are flexible and
generate valuable information from knowledge. Knowledge work
therefore found its place in the world of business. It was apparent
early on however that knowledge work is difficult to measure or
compare, and that large gaps can form when employees leave the
company.
This is where intrapreneurship comes. It provides approaches for dealing with this newly developed situation and describe the be-haviors of employees that exhibit entrepreneurial thinking. They act independently and take responsibility for implementing inno-vative ideas in their company. They take risks, act as idea drivers and motivators and normally participate in the possible profits. But they always remain part of the company framework.
INTRAPRENEURSHIP, ORIGIN AND DEFINITION
4
IN DETAIL„INTRAPRENEURSHIP IS BOTH A SCIENCE AND AN ART.“
(2011, K. Desouza)
Science based on the underlying processes, art based on the ac-
companying ones Creativity and unpredictability. No company is like
another, which is why each needs its own strategy to introduce and
promote intrapreneurship.
This is not a single tool but rather an attitude and school of thought.
IDEA FINDING
ABILITIES OF THE EMPLOYEES
RESPONSIBILITY, THAT HAS TO BE TAKEN BY THE EMPLOYEES
AVAILABLE CAPITAL
PROCESS TO TURN IDEAS INTO REALITYj
BASIC ELEMENTS
5tel. +49 89 416 177 00 l email: [email protected]
Even a small idea can develop into a lucrative business. This is why
companies should capture the definition of an idea clearly and, in
particular, communicate it internally. Failing to do so means that
valuable thoughts of the employees may be lost because they
fail to pursue many flashes of inspiration or because these are
rejected by others as uninteresting.
LIFECYCLE OF AN IDEAAn idea is usually condemned to fail from the outset. When an em-
ployee comes up with an idea, the superior either reviews it based
on some predefined indicators or makes a subjective evaluation.
Then the superior may take the idea to the department manager,
who in turn goes to the division manager and so on, until the idea
in the best case scenario reaches the executive board at some
point. The topic is exposed to subjective opinions and criticism
again at every stage. If the idea appears too unusual, let alone to
risky, the person in question will be hesitant to endorse or even
actively support it. The fear of being made a scapegoat in case of
failure is enough to let the idea die through premature and insuf-
ficiently considered rejection.
MARKET FORCES The concept of intrapreneurship introduces market forces in-
stead of the multi-level hierarchical decision making process just
discussed. Here the goal is to develop a situation similar to the
market inside a company so that potential is promoted, new ideas
are supported and budgets approved for intrapreneurs.
Since innovations always have some-
thing to do with risk as well, companies
should offer an incentive system for their
employees that encourages them to take
certain risks and not only develop ideas
but to also promote and support them.
The system may include monetary but also
non-monetary incentives. Idea contests
or internal exhibitions can make potential
ideas accessible for all employees.
A person inspired by an idea can support
it as an idea sponsor and is backed by
the employer in doing so. This sort of job
enrichment helps staff develop a greater
enjoyment of their work and their personal
sense of purpose is enhanced. Usually
the employees of a company are capable
of more than just their everyday work.
Discovering and promoting these abilities
is another aspect of intrapreneurship.
INTRAPRENEURSHIP AS A SOURCE OF INNOVATION IDEAS AS VALUABLE COMPANIONS
INCENTIVESQUID PRO QUO
6
INTRAPRENEURSHIP AS A SOURCE OF INNOVATION
POSSIBLEAPPROACHES
FOR THE IDEATION PROCESS
CREATIVE WORKSHOPSNo matter what methods are applied for the workshops, the key success factor is an
experienced moderator who is able to establish a friendly and also creative and
productive atmosphere.
w
CUSTOMER AND MARKET ANALYSES FROM NEW PERSPECTIVESAn independent view of the market and the company makes it possible to establish
analogies with other industries and therefore realize entirely new possibilities.
CO-CREATION There are numerous possibilities for introducing co-creation in companies, for example
though the development of a platform for employees or by networking with potential
partners for the further development of an idea.
INTRODUCTION OF AN INNOVATION FUNNELA successfully implemented innovation funnel makes it possible to filter out the ideas
with the greatest potential from a multitude and prioritize these based on the
company strategy.
7tel. +49 89 416 177 00 l email: [email protected]
INTRAPRENEURSHIP IN THE ORGANISATION EMPLOYEES AND ABILITIES
Companies and especially large enterprises forget over time how
they managed to get big: through innovation, drive and the readi-
ness to assume risk.
TALENT SEARCH A lot of time and money is invested in searching for talent at high-
er levels. The goal is to retain talented individuals over the long
term, realizing their full potential in order to drive the company
and obtain a competitive advantage. Yet these initially enthusiastic
new employees also have to follow old processes and approaches
shortly after they are hired. Their ideas and suggestions are often
seen as disruptive. It quickly becomes clear to them that climbing
the career ladder is more a question of time rather
than performance.
With the digital generation in particular, young people coming into
companies are accustomed to working on their tasks with the help
of the internet, for example through forums, knowledge portals
etc. This open communication approach is not compatible with
the previously accepted rigid and strictly hierarchical structures.
To keep the best of this generation in a company, one has to pro-
vide them with suitable platforms for their work and offer them
conditions similar to the market. Fixed career paths are no longer
mapped out either. Those who perform well should also be able
to advance quickly.
Employees should not be treated as property but supported and
developed, otherwise they will not remain loyal to the department
or company for long. This can be promoted even with simple
means such as granting more freedom in the workplace.
GOOGLE employees invest 70% of time in their job as such,
20% in ideas that have something to do with their field of
work and 10% in totally different ideas.
By officially making 30% available for the development of
ideas, the employees are actively encouraged to actually
utilize this time without having to expect consequences.
30%OF WORKING TIME
For years already, 3M has been giving its employees 15% of
their time for the development of ideas that have nothing to
do with their work, but could be beneficial to the company.
This encourages the employees to look beyond their own
field of work.
15%OF WORKING TIME
8
INTRAPRENEURSHIP IN THE ORGANISATION
FOCUS NOT JUST ON R&DCompanies should avoid the mistake
of limiting themselves just to their R&D
department. R&D usually focuses on “big
ideas” and what are called mega-trends.
However, these will only become impor-
tant in five to ten years as a rule. Momen-
tum is essential, especially in digitalized
markets. Given the pace and changeability
of modern markets, companies who do
not manage to be successful today and
develop innovative solutions will find it
difficult to gain benefits from their R&D
department and its ideas in five years.
INVOLVING ALL EMPLOYEESAll employees should be involved in com-
ing up with ideas. Especially those who
work with various products and processes
every day (e.g. human resources, procure-
ment etc.) can contribute innovative ideas
and suggestions for improvements. Here
it is important to also permit ideas that
have nothing to do with the company’s
core business. Managers often focus on
internal topics while disregarding external
impulses.
This reinforces top-down thinking and
further limits innovation in a company.
Good ideas do not have to be sales-cen-
tered. Competitive advantages can often
be developed in departments that are not
sales-driven as well. A generally more open
innovation culture will automatically shift
the focus from maintaining the market
position to developing new business areas.
EMPLOYEE FEARTHE DEATH OF INNOVATIONEmployees are often afraid of taking
responsibility. This is why new ideas may
not even be proposed or supported in the
first place.
One of the fundamental elements of
intrapreneurship is to promote a sense of
responsibility and readiness to assume risk
among employees.
9tel. +49 89 416 177 00 l email: [email protected]
SUPPORTING EMPLOYEESSupporting employees, identifying their potential and developing it can be
promoted through various measures:
NEW WORKING ATMOSPHERETake employees out of their familiar corporate environment and allow them
to develop in a new working atmosphere.
LEARNING TO IDENTIFY POTENTIALTake seminars on assessing employee potential.
ANALYSISIdentify and promote employee potential (perform employee analyses).
FRESH BREEZERecruiting strategies – innovation instead of the norm. Career changers bring new
mindsets and modes of operation with them, and approach old problems from a new angle.
SOCIAL IMPACTInspire enthusiasm and transform employees into multipliers and intrapreneurs,
who in turn share their knowledge with their colleagues (social impact).
10
Successful intrapreneurship requires
employees to take responsibility and man-
agers to give it. An intrapreneur cannot
be appointed by company management.
Roles and work sections are defined inde-
pendently of hierarchical structures.
FAIL-FASTAs described above, it should be clearly
communicated to employees that perfor-
mance and taking responsibility will be
rewarded and not punished. Clear rules of
conduct have to be defined for managers:
tolerance and the willingness to take risks
should be promoted and demonstrated.
Establishing a fail-fast culture, which
means accepting failure in the develop-
ment of innovations, is one of the greatest
challenges for the German economy. Mis-
takes are part of innovation just as much
as success. Only by trying things out is it
possible to determine early on whether
they work and are further developed.
Threatening consequences should be
avoided under all circumstances since this
provokes fear and can restrict entrepre-
neurial thought and action.
SPONTANEOUSNESS & AMBITIONIntrapreneurship is intended to reveal the
innermost motivations. This means an
intrapreneur cannot simply be appointed
nor responsibility assigned arbitrarily. As-
suming responsibility and the willingness
to accept the consequences of one’s own
performance must be based on sponta-
neousness. Those who consciously decide
to assume a central role through personal
incentive are able to ensure the necessary
commitment and reliability. It is unlikely
for persons who voluntarily assume the
position of intrapreneur to attempt blam-
ing others for possible failures. Rather they
develop the ambition of classic founders
and entrepreneurs, who are defined by
the will to carry on and the desire for their
idea to succeed. In the interest of their
goals, they are willing to not only perform
the tasks assigned to them but to promote
topics beyond their own field of respon-
sibility. Therefore the role of the intrapre-
neur is not defined by the assignment of
tasks and the decision-making authority of
a superior. The intrapreneur is dedicated
to the cause, thinks strictly in terms of
results and seizes upon tasks for which
responsibility has not been defined yet or
that take too much time to complete.
QUESTIONING THE CULTUREIn order to truly promote entrepreneur-
ial action, a company has to perform an
integrated review of itself and put its own
culture to the test. The desire for more
active employees must be accompanied by
establishing the required general condi-
tions.
The challenges identified above such as
taking responsibility, the willingness to
take risks and the competence of em-
ployee across department boundaries are
company values. Such values are hardly
widespread in the most common forms of
organization today, which focus primarily
on the efficiency of processes.
To combine diametrically opposed ap-
proaches, the topic of intrapreneurship
is not considered the responsibility of a
few employees but the attitude of a whole
company. The required transformation
can be promoted with the help of change
management. One needs to analyze which
employees and structures are ready for
intrapreneurship already – and which
are not. The conclusions that are drawn
demand an effective communication strat-
egy. Openness is an important principle
here: in communication and in regards to
pending changes. When company manage-
ment demonstrates what is relevant and
important in the future, then employees
can accept that.
In addition to an open communication cul-
ture, employee participation in important
company decisions is frequently cited as a
success factor. The goal of intrapreneur-
ship is to develop employees into internal
entrepreneurs. Involving them is essential
in order to reach this goal.
This can cause employees to truly become
interested in the success and strategy of
the company, rather than just going with
the flow.
RESPONSIBILITY AS THE KEY
INTRAPRENEURSHIPAS AN ATTITUDE
11tel. +49 89 416 177 00 l email: [email protected]
ASSIGNMENTTHE ASSIGNMENT OF RESPONSIBILITYalways poses a major challenge for companies. Improving internal communication
is an easy way to eliminate many problems:
SEMINARS (UNDERSTANDING ENTREPRENEURIAL THINKING, LEADERSHIP
AND MANAGEMENT CONDUCT TO SUPPORT INTRAPRENEURS)
SUPPORTING EMPLOYEES AGAINST SUPERIORS
ESTABLISHING BETTER COMMUNICATION BETWEEN EMPLOYEES
AND STAKEHOLDERS
12
PROVIDING CAPITAL
INTRAPRENEURSHIPAS A PROCESSBudgets are allocated early on in most companies. Here the bud-
get figures from prior periods and internal political power play a
major role. Hierarchical structures frequently offer little freedom
for risky new ideas.
Disruptive innovations typically produce new market conditions
by changing existing markets or allowing new ones to emerge. But
since budget allocation is based only on historic values, potential
is wasted. Companies usually invest their capital in secure transac-
tions since losses from failed investments are revealed in control-
ling – quite unlike the unrealized profits.
CAPITALISTS AND ANGELS Venture capitalists and angel investors use a different approach.
They know that “no risk” also means “no opportunity”. But they
want to invest in opportunities. To minimize the overall risk,
they usually invest in more than one company at the same time.
Companies can use this approach as well. Internal venture capital
budgets are known under the term corporate venturing.
The process to allocate the funds is very similar to that in the open
finance market. Internal venture capitalists are provided with a
fund (pot of money) for meaningful investment. Their success
just like in the open market is measured according to the overall
development and yield of the fund. Intrapreneurs are comparable
to the founders of start-ups in this case. Initially their task is to sell
their idea to the venture capitalists through good planning and
convincing effort, persuading them to make an investment. Once
this is accomplished, the intrapreneur can start working on the
idea and developing a product.
SHOW ME THE MONEYDEBT OR EQUITY CAPITAL?
CAPITAL AND BUDGET MATTERS CAN MAKE A MAJOR CONTRIBU-TION TO THE INTRODUCTION OF INTRAPRENEURSHIP THROUGH THE USE OF MODERN APPROACHES:� Introduction of shared value propositions
� Corporate citizenship concepts
� Development of internal venture capitalists
13tel. +49 89 416 177 00 l email: [email protected]
GRANTING FREEDOMBut how can the employee in a tightly
organized structure that is streamlined for
efficiency position an idea with the venture
capitalist? Making time and resources
available is the solution. Employees need
the opportunity to work on and further
develop ideas. This requires working time.
Companies such as Google make up to
30% of the weekly working time available
to their employees for working on their
own ideas. More flexible solutions are
conceivable as well. In addition to time,
the idea driver also needs resources and
other colleagues for further development.
Therefore access to colleagues in technol-
ogy or sales to evaluate the chances of
success for an idea in the early phase is of
elementary importance.
Introducing staging processes can ensure
that the time invested in development is
controlled and projects with little chance
of success are identified and stopped early
on. This means ideas have to regularly
pass through quality gates and develop a
higher level of maturity. Those who miss
the targets cannot pursue their idea and
are no longer permitted to invest time in
it. This gives the company certainty that
no idea remains entirely disregarded while
money, time and resources are invested in
topics that promise a chance of success.
EXCUBATIONTransforming employees into internal
entrepreneurs can result in the actual
founding of new companies. Then the in-
trapreneur not only assumes responsibility
within the organization. As a partner of the
spin-off, he also shares in the entrepre-
neurial risk. At the same time he partici-
pates even more in the success of the idea.
The parent organization can also reap
benefits from such a spin-off. Integration
into the own processes does not have to
be as stringent as with internal projects.
At first glance this causes inefficiencies.
But upon further reflection, it can result in
greater freedom for further development
and scaling, especially in case of ideas that
are not aligned with the company’s own
core business.
PROCESSES – IMPORTANT SUCCESS FACTORSThe success of introducing intrapreneurship stands and falls with the processes. This is
why companies should focus on the optimization of the existing processes and the intro-
duction of new, more innovative processes early on:
• Close customer contact and customer-centered process models
• Process optimization for more entrepreneurial thinking
• Introduction of cooperation instead of conflict (essential for enabling innovation)
• Freedom of opinions and ideas instead of hierarchical restrictions and
• social blockades
• Iterative prototyping and the performance of user tests, directly with the user
14
Intrapreneurship is both attitude and
company culture. The active will of com-
pany management to break away from
old structures and ways of thinking is the
critical success factor for the introduction
of intrapreneurship. Promoting entre-
preneurial action among the employees
requires establishing the right
general conditions.
The first intrapreneurs in a company are
often seen as agitators by their colleagues.
If those pioneers fail to receive very strong
support from the executive or manage-
ment, the entire program will not be ac-
cepted by the employees.
Management therefore needs to commu-
nicate that questioning what is established
and being inconvenient is desired. Open-
ness about the internal handling of new
ideas and direct interaction with custom-
ers and the market take centre stage in
the communication strategy.
Changes will also occur in terms of content
and modes of operation. When employees
are permitted to think more freely they
will choose new ways to reach their goals.
Insisting on fixed processes and methods
would therefore be counterproductive
for intrapreneurship.
But since intrapreneurs are after all still
employees, limits need to be set as well.
Intrapreneurs can and should not be
equated with the founders of start-ups.
They have consciously chosen a career in
an existing company. Therefore they can-
not expect the same degree of freedom as
founders. The right measure of freedom
and obligation will decide whether a
company benefits from intrapreneurship
or not.
Digitalization and the related market
changes can represent a great opportunity
for companies. They have the ability to
take the important step in the direction of
intrapreneurship, improving their overall
position. Should they miss this opportunity
and fail to develop their organization ac-
cording to modern markets, they will face
an uncertain future. The leading talents
will choose other organizations, and other
companies will develop better solutions for
their customers.
Intrapreneurship offers companies a
unique opportunity to make themselves fit
for the future. Are you ready?
- Daniel Hofmann (2015)
CONCLUSION
DANIEL HOFMANN
SENIOR INNOVATION CONSULTANT
Daniel’s roots are in digital and
electronic media (M.A.). As Senior
Innovation Consultant, he accom-
panies a wide variety of projects for
large international corporate groups.
He was able to accumulate experi-
ence with various work and com-
pany cultures abroad, starting with
his activities for mantro.net, among
others in Australia and Norway.
Combining these experiences, his
impressions as an external consul-
tant in companies and his work as
an intrapreneur within mantro.net
developed into a pronounced inter-
est in the intrinsic promotion of in-
novation in large enterprises. Daniel
has been intensively examining the
topic of intrapreneurship since then.
He attempts to promote it within his
projects and to build general aware-
ness of the topic.
THE AUTHOR
15tel. +49 89 416 177 00 l email: [email protected]