Intrapreneurship
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Intrapreneurship involves entrepreneurial behavior within an existing organization. It allows organizations to benefit from innovation while drawing on existing resources. To foster intrapreneurship, organizations should establish an environment that encourages risk-taking, experimentation, and multidisciplinary teamwork. They should also implement reward systems for intrapreneurs and have top management support for entrepreneurial activities. Successfully establishing intrapreneurship involves securing commitments, identifying ideas, setting expectations, developing support structures, and implementing an evaluation system.
Intrapreneurship
- 2. INTRAPRENEURSHIP DEFINED: Intrapreneurship is the act of behaving like an entrepreneur while working within a large organization. Intraprenuers are usually highly self-motivated, proactive and action- oriented people who are comfortable with taking the initiative, even within the boundaries of an organization, in pursuit of an innovative product. Intrapreneurship refers to entrepreneurship within an existing organization or business structure. Existing businesses have the financial resources, business skills, and marketing and distribution system to commercialize innovation successfully. Often the bureaucratic structure, emphasis on short-term profits, and structured organization inhibit creativity. Some corporations have tried to establish an Entrepreneurial spirit in their organization, some in the form of strategic business units (SBUs.)
- 3. CONTI… It is practiced by employees within an established organization using a systemized business model. Employees, perhaps engaged in a special project within a larger firm are supposed to behave as entrepreneurs, even though they have the resources and capabilities of the larger firm to draw upon.
- 4. EMPLOYEE INTRAPRENEUR An employee Intrapreneur is the person who focuses on innovation and creativity and who transforms a dream or an idea into a profitable venture, by operating within the organizational environment. Thus, Intrapreneurs are inside entrepreneurs who follow the goal of the organization Capturing a little of the dynamic nature of entrepreneurial management (trying things until successful, learning from failures, attempting to conserve resources, etc.) adds to the potential of an otherwise static organizations without exposing those employees to the risks or accountability normally associated with entrepreneurial failure
- 5. CAUSES FOR RECENT INTEREST IN INTRAPRENEURSHIP Interest in intrapreneurship has resulted from events occurring on social, cultural, and business levels. •There is an increasing interest in "doing your own thing." Individuals frequently desire to create something of their own. They want responsibility and want more freedom in their organizations. •Intrapreneurship is one method for stimulating and capitalizing on those who think that something can be done differently and better. •Hyper competition has forced U.S. companies to focus on new product development and increased productivity.
- 6. CONT… Entrepreneurial endeavors consist of four key elements. New business venturing refers to the creation of new business within an existing organization. Organizational innovativeness refers to product and service innovation with an emphasis on development and innovation in technology. Self-renewal reflects the transformation of organizations through the renewal of the key ideas on which they are built. Proactiveness includes initiative and risk taking, as well as competitive aggressiveness
- 7. CORPORATE VERSUS INTRAPRENEURIAL CULTURE Smaller, aggressive, entrepreneurial firms are developing more new products and becoming dominant in certain markets. Many companies are attempting to create the same spirit, culture, and rewards of entrepreneurship in their organizations. The typical corporate culture has a climate and reward system that favors conservative decision making. Emphasis is on gathering large amounts of data as the basis for a rational decision. Risky decisions are often postponed until hard facts are gathered or a consultant is hired. Often there are so many approvals required that no individual feels personally responsible for the project.
- 8. CON… The guiding principles in a traditional corporate culture are: Follow instructions given 1. Do not make mistakes 2. Do not fail 3. Do not take initiative 4. Stay within your turf and protect your backside 5. This restrictive environment is not conducive to creativity, flexibility, and risk taking
- 9. CON… The guiding principles of intrapreneurs Aspects of an Entrepreneurial culture are quite different: 1. Develop visions, goals, and action plans 2. Be rewarded for actions taken 3. Suggest, try, and experiment 4. Create and develop 5. Take responsibility and ownership
- 10. CLIMATE FOR INTRAPRENEURSHIP In establishing an Intrapreneurial environment, certain factors and leadership characteristics need to be present. The first of these is that the organization operates on the frontiers of technology. Since research and development are key sources for new product ideas, the firm must operate on the cutting edge of technology and encourage and supporting new ideas instead of discouraging them. Second is experimentation, or trial and error, is encouraged. Successful new products usually do not appear fully developed; instead they evolve. A company wanting to establish an intrapreneurial spirit has to establish an environment that allows mistakes and failures. Without the opportunity to fail, few corporate intrapreneurial ventures will be developed.
- 11. CONTINUE.. Third an organization should make sure that there are no initial opportunity parameters, such as turf protection, inhibiting creativity in new product development. Fourth, the resources of the firm need to be available and easily accessible. Often, insufficient funds are allocated not to creating something new but instead to solving a problem that have an immediate effect on the bottom line. Some companies, such as Xerox, 3M, and AT&T have established separate venture capital areas for funding new internal ventures.
- 12. CONTI.. Fifth a multidisciplinary team approach needs to be encouraged. One key to Intrapreneurial success is the existence of "skunkworks" involving key people. Developing the needed team work for a new venture is further complicated by the fact that a team member’s promotion within the corporation is related to performance in the current position, not in the new venture. The corporate environment must establish a long time horizon for evaluating the success of the overall program.
- 13. CONTINUE.. Sixth the spirit of intrapreneurship cannot be forced on individuals; it must be voluntary. Most managers in a corporation are not capable of being successful intrapreneurs. Those who do emerge from this self selection process must be allowed the latitude to carry a project through to completion. An intrapreneur falls in love with the new venture and will do almost anything to ensure its success.
- 14. CONT… The seventh characteristic is a reward system. The intrapreneur needs to be appropriately rewarded for the energy and effort expended on the new venture. An equity position in the new venture is one of the best motivational methods. Eight a corporate environment favorable for intrapreneurship has sponsors and champions throughout the organization that supports the creative activity and resulting failures. Finally the intrapreneurial activity must be whole-heartedly supported by top management.
- 15. INTRAPRENEURIAL LEADERSHIP CHARACTERISTICS There are certain individual characteristics needed for a person to be successful Entrepreneurs, including: 1. Understanding the environment 2. Being visionary and flexible 3. Creating management options 4. Encourage teamwork while employing a multi-disciplined approach 5. Encouraging open discussion 6. Building a coalition of supporters, and persisting
- 16. ESTABLISHING INTRAPRENEURSHIP IN THE ORGANIZATION To establish an intrapreneurial environment, the organization must implement a procedure. This can be done internally, but it is easier to use an outsider to facilitate the process. This is particularly true when the environment is very traditional. There are some steps involved in it. Step 1: The first step is to secure a commitment to intrapreneurship in the organization by top, upper, and middle management. Without top management commitment, the organization will never be able to make the necessary changes. Once top management has committed to intrapreneurship for a sufficient length of time, the concept is introduced throughout the organization. This is effectively accomplished through seminars. General guidelines need to be established for intrapreneurial venture development. Next, intrapreneurial leaders need to be identified, selected, and trained.
- 17. CONTINUED.. Step 2: Ideas and general interest areas should be identified, along with the amount of risk money that is available. The overall expectations and target results should be established, specifying time frame, profitability requirements, and impact of the organization. A mentor/sponsor system needs to be established.
- 18. CONTINUED.. Step 3: A company needs to use technology to make itself faster and more flexible. Technology has allowed small companies to act like they are big ones. Large companies can use technology to make them responsive and flexible. Step 4: The organization can use a group of managers to train and share their experiences with other members. These sessions should be conducted one day per month for a specified period of time. Information about intrapreneurship and about the company’s specific activities should be well publicized.
- 19. CONTINUED.. Step 5: The organization needs to develop ways to get closer to its customers by tapping the data base, hiring from smaller rivals, and helping the retailer. Step 6: An organization must learn to be more productive with fewer resources. With middle management cutbacks, more control has been given to lower levels of the organization. The span of control should be increased.
- 20. Step 7: The organization needs to establish a strong support structure. Because they do not immediately affect the bottom line, intrapreneurial activities can be overlooked and receive little funding. These ventures require flexible, innovative behavior, with the intrapreneurs having total authority over expenditures and access to funds. Step 8: The support must involve trying the rewards to the performance of the intrapreneurial unit. This encourages team members to work harder and compete more effectively. The equity portion of the compensation is particularly difficult to handle.
- 21. CONTINUED.. Step 9: The organization needs to implement an evaluation system that allows successful units to expand and unsuccessful ones to be eliminated.