Intrapreneurial strategy-making (ISM) is a generative process through which risky, innovative ideas are created in a dynamic manner and then implemented by employees. Dess et al. (1997) describe strategy-making as ‘‘a process that involves the range of activities that firms engage in to formulate and enact their strategic mission and goals’. Firms use a variety of approaches during the process of strategy-making.
The intrapreneurial mode of strategy-making implies independent behavior by innovative employees who are encouraged and sponsored by top management to experiment and take risks with, for example, product/service ideas. ISM can be described as a mode of strategy-making in which innovative employees come up with new ideas for products, services or processes which are entrepreneurial in nature, and which therefore emerge from within the firm.
Some firms prefer rational, more formal approaches, while others prefer the informality of participation between employees during their strategy-making process. Firms also often use different processes in different situations; for example, different processes in different business units or at different stages of their life cycle. The rational, formal strategy-making processes which were so popular with researchers and managers 40 years ago therefore seem less important nowadays and have been replaced by the recognition that firms will approach strategy-making in ways that best suit their unique circumstances. Several approaches to strategy-making have been described in the literature. These include the rational, adaptive, entrepreneurial, participative, symbolic, simplistic, transactive, command and political modes.
Most studies that investigate strategy-making behavior in small firms, agree that these firms do not engage in rational or formal strategy-making. Firm size has been found to influence strategy-making and firm performance. The general consensus is that larger firms are more likely to use rational processes while smaller firms are more likely to use adaptive or entrepreneurial processes or no strategy-making at all. Although ISM is hypothesized to exist in small firms and to contribute to performance in these firms, it is hypothesized that it will contribute more to performance in larger small firms with more resources.
Source: Martie-Louise Verreynne and Denny Meyer, MODELING THE ROLE OF INTRAPRENEURIAL STRATEGY-MAKING IN SMALL FIRM PERFORMANCE (https://espace.library.uq.edu.au/view/UQ:134154/ISMfinal.pdf)
Today’s managers, faced with rapidly changing and fast-paced competitive environments, arechallenged to manage a wide variety of discontinuities and disruptions. To cope with such challenges, existing largerfirms are increasingly turning to corporate entrepreneurship as a means of growth and strategicrenewal. The decision to adopt intrapreneurship must be considered astrategic choice.
As the entrepreneurial behaviour of individuals will take place in the existing firm, the entrepreneurialorientation will be termed intrapreneurial orientation.
The five key dimensions underlying theintrapreneurial orientation are:
- autonomy - independent action and self-direction
- innovativeness - new ideas, experimentation and creativity
- risk-taking - venturing into uncertainty and committing assets
- pro-activeness - acting in anticipation of future problems or needs
- competitive aggressiveness - strongly challenging competition to achieve entry or improve position.
Today’s managers, faced with rapidly changing and fast-paced competitive environments, are challenged to manage a wide variety of discontinuities and disruptions. To cope with such challenges, existing larger firms are increasingly turning to corporate entrepreneurship as a means of growth and strategic renewal. The decision to adopt intrapreneurship must be considered a strategic choice.
As no scale could be found to appraise the current intrapreneurial orientation of employees, the following composition for an intrapreneurial orientation scale was developed, based on the entrepreneurial orientation scales:
1. A culture of innovation
2. Ability to identify new opportunities
3. A high rate of new ideas introduction
4. An initiative, pro-active posture
5. A propensity to take risk
6. A competitive posture
7. When faced with risk, an aggressive, bold posture is adopted
8. A tendency to engage in strategic planning activities
9. An ability to persevere in making a vision a reality
Source: Hanelize Jacobs & Stephen Kruger, ESTABLISHING AN INTRAPRENEURIAL ORIENTATION AS STRATEGY:
A FRAMEWORK FOR IMPLEMENTATION
‘Cultivating’ entrepreneurs within!
According to the Organization for Economic Cooperation and Development, only about 7% of the U.S. population can accurately be defined as an entrepreneur amongst the employed. Does that mean that only those who are on their own can embody the skills of entrepreneurialism? Not at all.
In fact, a growing trend in many corporate cultures is to foster their own internal entrepreneurial, or intrapreneur, programs with their current employees. An intrapreneur program is something you can adapt for your organization and it can be a great thing for both your employees and your business.
Here are five key strategies for cultivating intrapreneurs on your own team.
1. Actively Promote Conversations
Entrepreneurialism thrives on ideas and innovation born out of conversations. If you want to start encouraging intrapreneurs within your ranks, give them the dedicated space and structure to have the right kind of conversations.
Uninterrupted time to tackle problems in small, highly functioning teams can be a great chance to creatively problem solve without the pressure of worrying about corporate hierarchy or oversight, which tends to stifle innovative exchanges.
How big of a hindrance to progress can corporate hierarchy really be for employees? The top three reasons people listed for leaving their jobs were split between:
Disliking their boss
A lack of empowerment
Feeling frustration over internal politics
If someone finds internal politics challenging enough that they’re willing to quit their job, imagine how powerfully those structures might be impeding innovation within your current ranks?
This isn’t to say all staff members on your team are capable or have the desire for intrapreneurial tasks, but it can foster a feeling of empowerment for those who express interest and identify themselves as being up to the challenge. It can encourage conversations and innovation within your team outside of the traditional organizational structure.
In hierarchal meetings, subordinates with great ideas may not chime in if they feel it will risk a backlash or if there’s a perception it’s outside of their position’s jurisdiction. Open up the conversations on a non-hierarchal track so ideas at all levels can come to light as a part of your dedicated intrapreneur track.
2. Act on Ideas
Ideas are great, but ideas without action aren’t going to get you very far. The next step in a strategy that promotes intrapreneurship is to dedicate an appropriate amount of resources in the form of time, budget and skill from your team to properly start to act on the best innovations.
Many large companies like ATT, LinkedIn and Google have their own internal incubator programs to foster innovation and give their employees the structure and power to act on those ideas. A surprising innovation incubator example you may want to emulate comes from Whirlpool.
Huffington Post reports that Whirlpool claims most of their ideas come from structured ideation sessions and that they open up the idea process to all employees who want to contribute. “Employees follow a specific ideation process that goes as follows: idea generation, basic business case formation, competition for the development of the idea, testing and experimentation, and finally, large-scale commercialization,” says the article.
This is a great way to provide structure and guidance while allowing employees to bring innovation forward and into actualization. Consider what structure you could lay out to formalize an intrapreneur incubator program at your organization if there isn’t a structure in place already. You’ll need to formalize the plan to bring it to executives for approval, as well as explain it to employees, so get a good framework prepared in advance.
3. Allow for Failure and Risks
Entrepreneurship is all about risks and learning from failures. You absolutely must have a corporate culture and policy that allows for failures and you must be willing to allow your employees to take certain kinds of risks if you want your intrapreneurship program to be successful.
Maintain a degree of accountability, and understand that every successful venture requires risk and will encounter some degree of failure. Employees need to be empowered to take those risks.
4. Give Real Ownership
With a great program comes great responsibility. By giving your employees the option of participating in an intrapreneurship program and allowing them to make decisions, you’re also giving them accountability and real ownership over their ideas.
They should be accountable for basic business structure, logic and sound decision making that goes into their ideas to really have ownership. Like the structure of the Whirlpool program, ask those with great ideas for innovations to come up with a formal business case formation for their idea.
Challenge them to pitch and present in competition for the development of their idea and consider milestones and checkpoints for progress. Just as an entrepreneur would need to formally pitch and organize their thoughts for funding or financial backing, you can encourage ownership and big-picture thinking by requiring a formal process for your intrapreneurship program.
This can result in greater job satisfaction for your employees, personal as well as professional growth for them, and potentially innovative solutions for your company.
5. Reward Innovation
In the previously cited Forbes article, another top reason employees claimed was the catalyst for their quitting was a lack of recognition or reward for a job well done. To truly make a program of innovation work, consider how to reward your intrapreneurs when their hard work results in something great for the business.
Innovation Excellence supports this theory explaining that today’s most innovative companies like Dreamworks and Google build rewards into their intrapreneurship programs to foster the continuation of great ideas. These can range from financial incentives and company options or shares to less tangible rewards like the opportunity to name products or services they’ve been responsible for creating.
The range of rewards will vary depending on the contribution and your business’s bottom line, but consider a variety of tiers for rewards to show your intrapreneurs that they are appreciated
As the entrepreneurial behaviour of individuals will take place in the existing firm, the entrepreneurial orientation will be termed intrapreneurial orientation.
A Beginner’s Introduction to Institutional Innovation
Written by Joe Agoada and Jennifer Estevez, Co-facilitators of TC108a: Intro to Intrapreneurship
In·tra·pre·neur·ship (n) 1) Successful adaptation of entrepreneurial attitudes and strategies inside of a bureaucratic organization. 2) Implementation of start-up practices within a large organization, producing valued innovation.
Where does the term intrapreneurship come from?
The word “intrapreneurship” sounds like a new term, but it in fact has some history to it. The term was first discussed in a 1978 piece by Gifford and Elizabeth Pinchot titled “Intra-Corporate Entrepreneurship (Some Thoughts Stirred Up by Attending Robert Schwartz’s School for Entrepreneurs)”. Norman Macrae’s 1982 Economist article, “We’re all Intrapreneurial Now” further explores intrapreneurship and gives naming credit to the Pinchots. However, the word seems to have gone into relative hibernation until the dot.com bubble burst and Silicon Valley innovators started to look beyond the newest internet start-up for growth in the technology sector.
Intrapreneurship vs. entrepreneurship, per Guy Kawasaki
For a modern understanding of intrapreneurship, we can look at one of its most vocal proponents: author, motivational speaker, and venture capitalist Guy Kawasaki. Kawasaki was an early employee at Apple and a “chief evangelist” at the company for years. With his 2004 book, Art of the Start, he began making direct references to intrapreneurs and has recently become a more vocal advocate. For example, he wrote this July 2013 blog post on LinkedIn on “The Art of Intrapreneurship”. Here’s an excerpt:
- “There are lots of guys and gals inside established companies who are as innovative and revolutionary as their bootstrapping, soy-sauce-and-rice-subsisting, external entrepreneur counterparts. This is for these brave souls who face a different kind of reality and must practice the art of entrepreneurship inside a company—or “intrapreneurship.'”
- “From the outside looking in, entrepreneurs think intrapreneurs have it made: ample capital, infrastructure (desks, chairs, Internet access, assistants, lines of credit, etc), salespeople, support people, and an umbrella brand. Guess again. Intrapreneurs don’t have it better; they simply have it different. Indeed, the reality is that they probably have it worse because they are fighting against ingrained, inbred, and inept management.” – Guy Kawasaki
Bottom line: intrapreneurship is difficult, challenging, and nuanced.
Defining intrapreneurship: the starting point to inspiring institutional innovation
Understanding exactly what intrapreneurship is can be a starting point in igniting growth and innovation within institutions. Harnessing the intrapreneurial approach can empower workers of any generation to advance their careers while improving their organizations. Intrapreneurship is especially helpful for junior-level employees and mid-level managers wanting to overcome the obstacles associated with getting consensus and support for innovative new ideas in the workplace. Getting employees to understand the concept of intrapreneurship is the first step to empowering a new cadre of innovators within institutions; nurturing intrapreneurship just may be the key to powering the global economy forward.
Learn more about intrapreneurship.
Join us with Ashoka Changemakers and other past, current, and aspiring intrapreneurs across the world that are sharing and learning the tools and techniques to innovate within their organizations for social change in TC108: Social Intrapreneurship – Innovation Within Institutions. The course begins February 24 – March 21, 2014. Enroll now to lock in your early bird discount and group rate!
About Joe Agoada
Joseph Agoada is the Resource Mobilization Coordinator for the UNICEF New York HQ Social and Civic Media Section in the Division of Communication. He has held this post since August of 2011 when he also founded and launched UNICEF-GIS. Prior he implemented UNICEF’s World Cup in My Village in Rwanda and Zambia. Between 2008 and 2009 he worked directly for Amy Smith, founder of the MIT D-Lab as a course administrator and then conference organization for the 2009 International Development Design Summit. In 2008 he was named an International Youth Foundation a Global YouthActionNet Fellow and in 2012, and a Google Personal Democracy Forum Fellow. He is a graduate of the University of Wisconsin-Madison and Johns Hopkins School of Advanced International Studies and currently resides in Washington, D.C.