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Home > Strategy > Intrapreneurship as a Competitive Advantage

Intrapreneurship as a Competitive Advantage


 

A company operates and thrives in the business environment it operates in. In simpler terms, the birth, growth and demise of a company is the result of action and reaction between the company and the various elements of this business environment. But, the changes in business environment can hit very hard on companies, so hard that they can result in the death of even the industry leaders.

In the year 1917, Bertie Charles Forbes compiled a list of 100 biggest companies in America. This list came to be known as “Forbes 100”. By the year 1987, 61 of these companies had ceased to exist and out of the rest 39, only 18 managed to stay in the top 100. The demise of more than 60% of the biggest companies in a matter of 70 years shows the vulnerability of companies to the business challenges.

Most companies start as entrepreneurial ventures and later tend to consolidate around their success. This shift in focus from innovation to management and control puts innovation and new ideas on the back seat. The strengthening of management and control processes leads to what has been described as the “Innovators Dilemma”- Companies which have been very successful in developing one business fail miserably in a new (sunrise) related business. This gives a chance for new players to establish business and compete successfully.

When it comes to facing new challenges emerging in the business environment, most companies develop the attitude of “We’ll cross the bridge, when it comes”. This generally doesn’t work in the corporate world. By the time companies arm themselves with the ammunition to fight new challenges; someone else has already made use of the opportunity. And even before you know, the competition eats away into your market share and profits.

Intrapreneurship as a Competitive Advantage:

The world of business gives rise to new challenges and opportunities everyday. The organization that does not devise ways and means to manage the challenges and avail the opportunities will not be able to effectively compete in the industry. Continuous innovation helps a company to not only mitigate the challenges but also make the best use of the new opportunities.

Innovation is not a one-off phenomenon; it’s a continuously evolving process. An intrapreneurial environment is the one where innovation prospers and an intrapreneurial organization is the one which creates an environment for employees to come up with new ideas, helps them in nurturing these ideas and rewards them suitably for successes.

Big problems start with small hiccups and big successes evolve from small opportunities. In an intrapreneurial organization the employees (or at least some of them at every level) are able to identify these hiccups and mitigate them before they become threatening problems. Similarly they identify the opportunities early on and weave successful ventures around these opportunities. Even if these are small changes, they help in the continuous improvement of the process or the product the employee is managing. This continuous discovery of new and improved ways and means of doing business goes a long way in keeping the company up to date and ahead of the competition.

Most people misunderstand entrepreneurs as businessmen or business owners who started their own business venture. Entrepreneurship or in this case Intrapreneurship has more to do with the thought process, it is a way of life for the entrepreneurial person. He not only executes a task but also wonders how best it can be executed? Or: Is there a better way of doing thing or using resources?

Many successful business initiatives have been started by entrepreneur-employees (or Intrapreneur) inside an established business. These initiatives gave the parent organizations much needed push to stay ahead of the competition.

Fostering Intrapreneurship in the organization:

The practitioners of management will agree that there is always a gap between the goals set up in a plan and the results achieved through that plan. This is because there is always a gap between what the organization leaders want to achieve and what their exiting set up can deliver. Many a times even if the organization has the capability to deliver, the external factors can change dramatically. For the plans to succeed and deliver the desired results, the organizations need to keep reviewing this gap and fill it as and when the deviations are detected. “Filling the gap” gives the intrapreneurial employee a chance to make use of his entrepreneurial instincts.

The Intrapreneur differs from an entrepreneur in a way that he works in the confines of the organization. Thus, the Intrapreneur and the organization cannot be separated. There are both advantages and disadvantages of working under the shadow of the existing organization. The Intrapreneur has the advantage of easy access to facilities and sponsors but has to work in coordination with the existing framework. He has to convince people around him, take approvals and request for deviations. He also has the advantage of getting mentoring from his seniors but, also can face the disadvantage of “micro-managing” by the superiors which can become a hindrance in the execution of his plans.

The intrapreneurial initiatives can be at the following four broad levels: Specific Project, Business Unit, Organization and The Industry. The intrapreneurial and innovative activities can be at the project level where the team members work with each other in the current engagement and bring out the best that can be done in the given constraints. They can come up with new and better ways of executing even the day to day activities. In the case the initiatives are spread across the Business Unit, it can affect multiple projects and bring in positive change in all the projects involved. When the initiative involves multiple Business Units, the whole organization is brought under the Intrapreneurial umbrella. There can be new ventures which might even change the positioning of the organization in the industry or even have the capability of changing the dynamics of the industry.

I have compiled a few important factors which need to be taken care of while fostering Intrapreneurship in the organization.

  • Insight and foresight: The leadership needs to have an insight into the existing capabilities and incapabilities of the organization and also have the foresight of where it aspires to be in future. For making Intrapreneurship an advantage over the competition, the organization must identify the needs of “tomorrow’s customers” or “tomorrow’s needs of current customers”. This gives a head start for meeting these needs in time and not feeling lost how to “cross the bridge” when it actually comes. The gap between the current abilities and the future offerings gives an opportunity window for nurturing entrepreneurial ventures within the organization, or the Intrapreneurial ventures.
  • Commitment: The most important factor for fostering Intrapreneurship in an organization is the commitment from the sponsors, intrapreneur and his team. The new initiative requires commitments for the required inputs. Access to capital, necessary approvals, deviation from the current rules and collaboration with other teams in the organization need firm support from the sponsors. Usually when such an initiative is started, the team members have to work for extra hours and beyond the specified job requirements.

The Intrapreneur brings a change in the status quo of business. The initiatives taken up at the BU or the organization level bring in a culture change for the employees. Most organizations resist change; the sponsors need to have the commitment and courage to bring about a change in the culture of the organization.

  • Reward new thoughts: The best way to encourage the intrapreneurial employee is to reward him for success, however small that success may be. One major misconception is that employees look for money as reward but money is not the only reward that these employees are looking forward to; they aspire for recognition, promotion and increased autonomy.

Not all initiatives succeed. The sponsors should be tolerant to failure. They should reward the successful initiatives but should never penalize the failures. Punishment and suppress creativity and innovation.

  • Keep Learning: Faster learning is s good substitute to better planning. As mentioned earlier in this article, sometimes, even if the organization has the capability to deliver, the external factors might change. These factors can be very dynamic and change from day to day. So, it is better to drive the initiative by vision and not be hard-fixed to the original plan. Always be open to criticism and seek feedback. Keep learning from day to day incidents and tweak the plans accordingly. The efficient management of the tactical activities ensures the success of the initiative.
  • Learn and Restart: Not all the initiatives started by an organization will succeed. Even the biggest organizations and the best leaders have had their worst falls. The intrapreneurial organization should make the best of even the worst failures. Do not consider a failure as a setback. As the management guru Ram Charan, in his book ‘Execution-The discipline of getting things done’ says “Failure drains the energy out of the organization, and repeated failure destroys it”. The commitment and mentoring (and not bullying) can reduce the rate of failure.

The learning from a failed initiative should be analyzed, retained and remembered. Having done that, start again. 

Intrapreneurship in the current economic context

Ideas, Innovation and New Ventures are among the hot discussion topics in the post-recession business world. Many proponents of entrepreneurship have the view that recession is the best time to plan and post recession the best time to launch new ventures. These are the times when employees and students across B-Schools are bubbling with ideas. Rather than focusing on cost cutting and scaling down operations, the companies need to identify these “entrepreneurial employees”, let them search for opportunities for innovation and give them a proper environment to flourish. And who knows one of these ideas may propel your organization to the “next level”.

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  1. Gurava
    January 3, 2011 at 8:02 am

    Very good. Very good articulation of entrepreneurship and its true meaning

  2. Harshdeep Rapal
    January 3, 2011 at 8:45 am

    Thanks a lot Gurava for the appreciation.

  3. Aseem Sharma
    September 5, 2011 at 8:30 pm

    Thought provoking , well researched and touches almost every aspect of Intrapreneurship. I would like to add a point and make an effort to throw some more light with regards to the relationship and difference between an Entrepreneur and an Intrapreneur. I believe Entrepreneurship is the next stage of Intrapreneurship. An Intrapreneur has access to many “readymade” resources and can leverage the same to nurture innovation and push forward ideas. An Entrepreneur has to create the resources and opportunities. In case an idea falls back, an intrapreneur has a back up and some sense of security. There is more scope for implementing risk management strategies to undo the damage. Such an environment encourages one to take a calculated risk. The scope of this sort of back up is limited in case of an entrepreneur.
    Another difference I observe is in terms of the exposure with regards to the full cycle (or rather “life” cycle) of an organization. There are many aspects like raising money, finding the very first customer, decisions regarding office space, money management, reaching a “self-sufficiency” stage which an intraprenuer does not goes usually through.

    Many of the intraprenuers as a matter of fact leverage on the contacts and relationships they build with customers , build up on their strength by launching ideas and products within an organization and consequently mature as entrepreneurs.

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