Download Intrapreneurship

Intrapreneurship
Making Big Companies
More Entrepreneurial
Corporate Entrepreneurship
Due to:
 Rapid technological change, consumer demand for
variety, quality, customization and convenience
 Short business cycles
 Move from physical to intellectual assets
 The increase in strategic alliances with small firms,
outsourcing and downsizing
Large firms are changing the way they
structure their processes in order to be more
responsive to market needs, competitors’
strategies, and the initiatives of small
businesses
Requirements for Corporate
Entrepreneurship
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Instilling the appropriate CULTURE
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Having a flexible structure
Promoting certain behaviors: Independence & Risk-taking
Developing a reward system
Implementing ENTREPRENEURIAL STRATEGIES
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Corporate Venturing
Venture Capital Support
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Investing in projects, funding product development
Management as Champions of Innovation
Sponsoring Independent Entrepreneurs
1. Creating The Appropriate Culture
Large organizations:
 Layers of hierarchy, inflexible structures, low level of
employee participation, high level of political activity
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Intrapreneurial organizations:
 Based on the need to build and foster innovation and
creativity  to keep up with competition
 Tries to model the entrepreneurial environment by
encouraging employees to get involved in management
 This requires a conducive environment by encouraging
flexibility, independence, and risk-taking
 Intrapreneurship is developed through the organizational
structure (how the firm is structured to coordinate its efforts),
the types of the behaviors that are rewarded, and the types of
career development & reward systems that are utilized
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Creating The Appropriate Culture
(A) Organizational Structure
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An entrepreneurial structure is flexible, has few levels of
hierarchy and allows employees to participate in the decision
making process
Flat structure: facilitates close connection with the
customers, eliminates needless roles that slow down the
process (e.g. separate unit for quality inspection), and
develops a close-knit group
Small autonomous units: often found in manufacturing
environments and/or multi-business organizations (a
grouping of small organizations, each responsible for all the
activities of the business) e.g. J&J, GE, 3M
 Improves strategic decision making (close to market
relationship)
 Facilitates product innovation (speed)
Creating The Appropriate Culture
(B) Promoting Intrapreneurial Behavior
Behavior that is rewarded will be repeated
 Risk taking: encouraging the development of new ideas is
essential -- must be willing to accept failure, success does
not come without failure
 Innovation is a prime ingredient in market success
(especially in industries driven by rapid technological
change)
 Encouraging this environment includes, accepting a trial and
error approach, and using brainstorming sessions to
generate new ideas
 Empowerment: giving employees the freedom to make
decisions increases the flexibility of the firm, improves
customer response time, and increases product innovation
(e.g. Toyota - suggestions & assembly line)
Creating The Appropriate Culture
(C)Career Development & Reward Systems
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The goal is to reward employees for their efforts
and to make them feel as an integral part of the
organization
 Monetary = Equity, stock options, cash gifts,
bonuses
 Intrinsic = Promotions, free time, recognition,
access to funds and resources
Ex. IBM introduced a “Fellows Program” in 1963 to
recognize outstanding technological accomplishment
– rewarded with 5 years total support to start
something new
2. Corporate Venturing
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The development of a ‘skunk works’ / ‘leaky roof’ (e.g. sink or
swim environment @ Saturn)
The recreation of the business’ earlier days of being an outof-the-basement project – i.e. Risk
Used to instill a sense of urgency to the employees -- to
motivate the innovative process
Used to remove the project from the bureaucracy and politics
of the large organization environment
Provides a high level of freedom, closeness (identification
with a goal), rationed resources, motivation to succeed
3. Venture Capital Support
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Funds set aside for the development of
entrepreneurial/intrapreneurial initiatives
Budgets must be established for the purpose of
funding internal and external entrepreneurial
activities (e.g. J&J has $300mil VC funds, Virgin group,
Xerox, AT&T, Campbell Soup, Bombardier)
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Commitment must be long-term and part of the
strategic process -- a means of obtaining a
competitive advantage
Examples  outsourcing, skunk works, internal
projects (TQM), sponsoring independent
entrepreneurs (a good source of innovation)
Venture Capital Support
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Opposing view:
Harold Geneen, ex-chairman 3M, says large
corps should not take such risks because
investors expect 10% ROI…
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these activities compromise potential return
employees should not be compensated at the
same level as owners
WHAT DO YOU THINK ?
4. Management As Champions Of
Innovation
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New ideas can only be brought to fruition if given the
required support
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Bob Molenda’s vision is was kept Art Fry’s “Post-it”
notes project at 3M from being killed due to
budgetary constraints
This support is best found with a sponsor or
champion, an individual with the decision-making
ability to commit resources to the idea
The required qualities of the sponsor include:
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Power: level in the formal hierarchy, ability to supply
needed resources (funding, time, workforce)
Prestige: has respect of colleagues, ability to
champion the acceptance of the idea (politics)
Vision: ability to perceive the long-term benefits of
the idea over the short-term budgetary effects
5. Sponsoring Independent
Entrepreneurs
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Encouraging entrepreneurs with ideas (within
the company or outside)
Ex. Entire 3M structure designed to
encourage successful entrepreneurs to run
own business under corporate umbrella
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Lehr sponsored surgeons at Cleveland Clinic who
developed adhesive surgical tape – now have an
entire healthcare division
Ex. Dupont also sponsors independent
entrepreneurs
Summary
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Entrepreneurship is critical in today’s
economy
Success of corporate intrapreneurship
depends on creating appropriate culture
Success stories:
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Texas Instruments’ Speak & Spell
Sony’s Playstation
Microsoft X-Box
Etc.