You need to re-engineer organisation’s thinking

• Managers need to develop policies that will help innovative people reach their full potential.

Chapter 8

Julian Birkenshaw, ‘The Paradox of Corporate Entrepreneurship’, Strategy+Business, Spring 2003, Issue 30

Developing entrepreneurship within organisations

Objectives• To understand the entrepreneurial mind-set in organisations• To define the term ‘intrapreneurship’ in enterprises such as

companies and public institutions in the Asia–Pacific• To illustrate the need for intrapreneurship and how entrepreneurial

management differs from bureaucratic management• To describe the obstacles preventing innovation in enterprises• To highlight the considerations involved in re-engineering business

thinking• To identify the relevance of purpose and organisation concepts of

an intrapreneurial strategy• To highlight the role of social intrapreneurs in creating shared value

Who amongst you . . . • is [or has been] self-employed or has started your own

business or a social venture?• would like to be self-employed and independent business

owner?• is [or has been] an employee in a business owned by

someone else?• is [or has been] a manager in a business owned by

someone else?• is [or has been] helping your business owner start up a

new venture?• not included above? What are you?

?

Manager Entrepreneur IntrapreneurMotives Wants promotion and other

traditional business rewards; power motivated

Wants freedom; goal oriented, self-reliant and self-motivated

Wants freedom and access to company resources; goal oriented and self-motivated, but also responds to business rewards and recognition

Courage and

destiny

Works for others; Sees others being in charge of their destiny; can be forceful and ambitious but may be fearful of others’ ability to do them in

Self-confident, optimistic and courageous, self-employed

Self-confident and courageous; optimistic about their ability to outwit ‘the system’ within their organisation; wants company to succeed

Focus Primarily on events inside the company; obeying strategy of leaders

Primarily on customers and the marketplace; highly communicative

Both inside and outside; sells insiders on needs of venture and marketplace but also focuses on customers

Are you a manager, entrepreneur, or intrapreneur?

When will you be out

the door?

The eagerness to get out and do your own thing, the frustration of answering to a hierarchical boss, the hunger to strike it rich in business…

Is ‘corporate entrepreneurship’ an oxymoron??

Oxymoron is a ‘contradiction in terms’ or juxtaposed elements that appear to be contradictory

The misfits.The rebels.The troublemakers.The round pegs in the square holes.The ones who see things differently.They're not fond of rules.And they have no respect for the status quo.You can quote them, disagree with them,glorify or vilify them.About the only thing you can't do is ignore them.Because they change things.They push the human race forward.While some may see them as the crazy ones,we see genius.Because the people who are crazy enough to thinkthey can change the world, are the ones who do.

See also Here’s to the crazy ones & 1984 Superbowl Ad.

• Carrying on from previous discussion on ‘pathways’ in Chapter 5– Bootstrapping– Minipreneurship– A new business start-up– Acquiring an existing venture– Buying a franchise– Establishing a social venture

• Taking over the family business (covered in Chapter 7)• Corporate Entrepreneurship: Starting a business for

your employer (covered now)

Pathway: Corporate Entrepreneurship

Defining intrapreneurship

11

We define intrapreneurship as

1. Individual (or a group of individuals),

2. In association with an existing organisation,

3. Creates a new organisation or 4. Instigates renewal or innovation

within the organisation. Arthur Fry, co-inventor-scientist, created Post-it

notes

Dreamers who do

• Pinchot describes intrapreneurs as ‘dreamers who do’.

• Not necessarily the inventors of new products or services, but the people who turn ideas or prototypes into profitable realities

Re-engineering thinking

If you were in a large organisation, how would you encourage people to have a more ‘intrapreneurial mind-set’?

?

Answer: You need to re-engineer organisation’s thinking

• Need to provide the freedom and encouragement required for employees to develop their ideas.

• Managers need to develop policies that will help innovative people reach their full potential.

• Your organisation is intrapreneurial if . . . – People can get the company’s blessing for their ideas– Your company provide ways for innovators to stay with their ideas– People are permitted to do the job in their own way, not being constantly stopped

to explain their actions and ask for permission– The company has evolved quick and informal ways to access the resources to try

new ideas– The company has developed ways to manage many small, experimental

innovations– The system is set up to encourage risk taking and to tolerate mistakes– There are people more as concerned with new ideas as defending their turf– It’s easy to form functionally complete, autonomous teams

Is your company intrapreneurial?

?

Intrapreneurship examples• [Gillin video] Sony, 3M . . . Hawker

de Havilland• Entrepreneurial strategic decision

taken in 1989:– Become a manufacturer based on

design, quality and market fit. – Total system approach of research, new

product development and manufacturing– Corporate entrepreneurship training

from shop-floor to the top

Prof Murray Gillin, ‘Famous Cases of Intrapreneurship’

Obstacles to intrapreneurship

• Resistance to change in organisations• Corporate bureaucracy that slows down

project approval• Refusal to allocate resources to new ideas• Lack of training and support for employees• Low rewards for success coupled with

high costs of failure• Performance evaluation based solely on

job descriptions

Proven keys to success in intrapreneurial companies• Atmosphere and vision• Orientation to the market• Small, flat organisations• Multiple approaches• Interactive learning• ‘Gumboot factory’

or ‘skunkworks’Lockheed Martin’s Skunkworks is the company’s intrapreneurial ‘sandbox’. The name was taken from the moonshine factory in the comic Li’l Abner

3M’s innovation rules• Don’t kill a project: If an idea can’t find a home in one of 3M’s divisions, an

employee can devote 15 per cent of their time to prove it is workable. • Tolerate failure: Encouraging plenty of experimentation and risk-taking

allows more chances for a new product hit. • Keep divisions small: Division managers must know employee’s first name. • Motivate the champions: When a 3M employee has a product idea, they

recruit an action team to develop it. Stay close to the customer: Researchers, marketers and managers visit customers and routinely invite them to help brainstorm product ideas.

• Share the wealth: Technology belongs to everyone.

20

Not for businesses only -- public sector entrepreneurship

• Can the public sector be entrepreneurial?• Police, military, public transit, public roads, public

education, health care, government workers, elected officials. . . .

?

• Public institutions ‘need to be entrepreneurial and innovative fully as much as any business does’. Peter Drucker

• It’s not easy considering the entrenched bureaucracies that resist change.

• Entrepreneurship is as much a public sector imperative as a private sector one.

Public sector entrepreneurship: ‘an individual or group of individuals undertaking activities to initiate change by adapting, innovating and assuming risk, and recognizing that personal goals and objectives are less important than generating results for the organization’ -- Hisrich & Al-Dabbagh

Not for businesses only -- public sector entrepreneurship

Private, corporate, public sector entrepreneurs. What are the differences?

Differences between private, corporate and public sector entrepreneurs

Private (independent)

entrepreneur Corporate entrepreneur Public sector entrepreneur

ObjectivesFreedom to discover and

exploit profitable opportunities; independent

and goal orientated; high need for achievement

Requires freedom and flexibility to pursue projects without being bogged

down in bureaucracy; goal oriented; motivated but is influenced by the

corporate characteristics

An individual who is motivated by power and achievement; undertakes purposeful

activity to initiate, maintain or aggrandise, one or more public sector

organisations; not constrained by profit

FocusStrong focus on the external

environment; competitive environment and

technological advancement

Focus on innovative activities and orientations such as development of

new products, services, technologies, administrative techniques, strategies

and competitive postures; concentrates on the internal and

external environment

Aims to create value for citizens by bringing together unique combinations of public and/or private resources to exploit

social opportunities; learns to use external forces to achieve internal change

Differences between private, corporate and public sector entrepreneurs

Private (independent) entrepreneur Corporate entrepreneur Public sector entrepreneur

Innovation

Creates value through innovation and seizing the

opportunity without regard to resources (human and capital); produces resources or endows

existing resources with enhanced potential for creating

wealth

A system that enables and encourages individuals to use

creative processes that enable them to apply and invent

technologies that can be planned, deliberate, and purposeful in

terms of the level of innovative activity desired; instigation of

renewal and innovation with that organisation

Public managers are entrepreneurial in the way they take risks with an

opportunistic bias toward action and consciously overcome bureaucratic and

political obstacles their innovations face

OpportunityPursues an opportunity,

regardless of the resources they control; relatively

unconstrained by situational forces

Pursues opportunities independent of resources they

currently control; doing new things and departing from the

customary to pursue opportunities

Uses every opportunity to distinguish their public enterprise and leadership

style from what is the @@nform in the public sector; understand the business as

well as the opportunity for business growth and development

Risk taking

Risk taking is a prime factor in the entrepreneurial character

and function; assumes significant personal and

financial risks but attempts to minimise them

Moderate risk taker; recognises that risks are career related

Calculate risk taker; takes relatively big organisational risks without taking big

personal risks

Character and skills

Self-confident; strong knowledge of business

Self-confident; self-believe that they can manipulate the system;

strong technical or product knowledge; good managerial

skills

Self-confident; high tolerance of ambiguity; strong political skills

What is intrapreneurial strategy?

• Vision-directed, organisation-wide reliance on entrepreneurial behaviour that

• Purposefully and continuously rejuvenates the organisation and

• Shapes the scope of its operations through the • Recognition and exploitation of entrepreneurial

opportunity.

Integrative modelof intrapreneurial

strategy

Critical steps of intrapreneurship strategy

1. Developing the vision

2. Encouraging innovation

3. Structuring an intrapreneurial climate

4. Developing individual managers

5. Developing venture teams

Developing the vision

Thomas J. Watson, head of IBM: ‘I think there is a world market for about five computers’.

Encouraging innovation

• Radical innovation – launching major breakthroughs• Incremental innovation – systematic transformation of existing

products/services

Structuring the intrapreneurial environment

• Each employee is asking, Are the perceived costs and benefits of

becoming an intrapreneur worth taking personal risks?

• Key environmental factors– Management support– Autonomy/work discretion– Rewards/reinforcement– Time availability– Organisational boundaries

Developing individual managers

• Senior managers should determine if intrapreneurial behaviours are understood by the firms’ employees.

• Executives need to help all parties to understand the value of the entrepreneurial behaviour that the firm is requesting of them as the foundation for a successful innovation.

Richard Branson believes in constantly reinforcing the

message to his staff.

Developing venture teams

• A venture team or I-team creates and shares ownership

• Has a budget plus a leader who has the freedom to make decisions within broad guidelines.

• Sometimes the leader is called an innovation champion or an intrapreneur.

• I-team is a small business operating within a large business and its strength is its focus on design (that is, structure and process) issues for innovative activities.

• Similar to ‘collective entrepreneurship’

Greenchoice Forze, Forze I Team from Delft University

TigerGen Eco-Racing I-team from University of Missouri

What is collective entrepreneurship? • Referring back to our definitions about

entrepreneurship . . .• Reich defines as follows:

– “. . . individual skills are integrated into a group . . . they learn about each other’s abilities. . . . Each participant is constantly on the lookout for small adjustments that will speed and smooth the evolution of the whole. The net result of many such small-scale adaptations, effected throughout the organisation, is to propel the enterprise forward.”

Which of these Intrapreneur’s Commandments can get your fired?

1. Ask for advice before asking for resources.2. Be true to your goals, but be realistic about how to

achieve them.3. Build your team; intrapreneuring is not a solo activity.4. Circumvent any orders aimed at stopping your dream.5. Come to work each day willing to be fired.6. Do any job needed to make your project work,

regardless of your role’s description.7. Don’t ask to be fired; even as you bend the rules and

act without permission.8. Use all the political skill you and your sponsors can

muster to move the project forward without making waves.

9. Express gratitude.

10. Find people to help you.11. Follow your intuition about the people you choose,

and work only with the best.12. Honour and educate your sponsors.13. Keep the best interests of the company and its

customers in mind, especially when you have to bend the rules or circumvent the bureaucracy.

14. Never bet on a race unless you are running in it.15. Remember it is easier to ask for forgiveness than for

permission.16. Share credit widely.17. Underpromise and overdeliver – publicity triggers the

corporate immune system.18. Work underground as long as you can – publicity

triggers the corporate immune mechanism.

?

Stay true to yourself. Leverage the power of business for good. Remember the ‘power of AND’. Subversion is important. Fight mediocrity. Ideas and concepts rule. Tap into your feminine side. Unleash your passions. Be a part of the revolution. Adopt a new mind-set. Have passion, creativity and the desire to make a difference. Make meaning from your work. Be yourself. Be extraordinary. Act with integrity. Live your personal brand. Be curious about everything. Find and got behind your cause. Stand up for yourself. Get into the action. Be optimistic. Engage with like-minded people. Be a mover and shaker. Ask why. Think as big as you can and go for it. Know what fear smells like, take a deep breath and do it anyway. Be a dreamer, thinker, doer in one. Be kind to yourself. You always have a choice. Recognise, the power of working with others. Live through your heart and soul. Create buy-in with involvement. Convert enemies to allies. Engage through vision. Create your intraprise. Live your dream. Have big, hairy, audacious goals. Be open and accepting. Create suspense and mystery. Reward yourself and your team. Be open to all possibilities. Listen to your intuition. Don’t follow fashion. Be agile and adaptable. Create an ‘anti-process’ process. Embrace constraints. Leverage systems. Pick your battles. Accept the things you cannot change. Value and acknowledge yourself. Know what you want. Ask for what you want. Know what success means to you. Make your own luck. Stay true to who you are. Create a vision for your life. You are an intrapreneur. You can change the world. You are not alone.

Intrapreneur’s credo

Social intrapreneurs

• See business as part of the earth’s ecosystem

• Understand business priorities as well as environmental imperatives

• Often more interested in social change than personal wealth creation

• Share personality traits with social entrepreneurs

See also Chapter 3 on Social Venturing and Chapter 4 on Social Entrepreneurship

See the exercise ‘Spot thesocial intrapreneur’ at the end of the chapter.

Creating ‘shared value’: moving beyond CSR• “Shared value” -- policies and

operating practices that enhance the competitiveness of a company while simultaneously advancing the economic and social conditions in the communities in which it operates.

• The central premise is that the competitiveness of a company and the health of the communities around it are mutually dependent.

Shared value Policies and practices that enhance the competitiveness of a company while simultaneously advancing the economic and social conditions in the communities in which it operates.

Creating ‘shared value’: moving beyond CSR• CSV is a transition and expansion

from the concept of CSR. • CSV concept supersedes CSR for

it is a way for corporations to sustain in the competitive capitalistic market.

Gaps Realities from globalisation Commercial possibilities for social intrapreneursDemographic The world is heading to a population of 9 billion by 2050,

with 95% of growth expected in developing countries.To meet the needs of billions of people affected by market failures in both developing and developed countries.

Financial 40% of the world’s wealth is owned by 1% of the population. Poorest 50% can claim just 1% of the wealth.

Help the have-nots become bankable, insurable and entrepreneurial.

NutritionalThe world now produces enough food for everyone, but over 850 million people still face chronic hunger every day.

Address the needs of those with too little food – and too much.

Resources60% of ecosystem services, such as fresh water and climate regulation, are being degraded or used unsustainably.

Enable development that uses the earth’s resources in a sustainable way.

EnvironmentalThe loss of biodiversity, droughts and the destruction of coral reefs are just some of the challenges facing the globe.

Create markets that protect and enhance the environment.

Health Some 39.5 million people live with HIV/AIDS in the world, now the fourth-largest killer disease.

Create markets that encourage healthy lifestyles and enable equal access to healthcare.

Gender Two-thirds of the world’s 1 billion illiterate people are women.

Enable and empower women to participate equally and fairly in society and the economy.

Educational About 100 million children within emerging economies are not enrolled in primary education.

Provide the mechanisms to transfer and share knowledge and learning that empowers all levels of societies.

DigitalInternet users worldwide topped 1.1 billion in 2007, but only 4% of Africans and 11% of Asians have Internet access.

Develop inclusive technology that enables all levels of society to tackle each of these divides more effectively.

Security Intra-state conflict created 37 million refugees and displaced people.

Work to promote security and reduce conflict based on inequity and exclusion.

Key concepts

(close your books)1. What are intrapreneurs?2. What are social intrapreneurs?3. What is the difference between

CSR and ‘shared value’?

?

Key concepts

Intrapreneurs:• Not necessarily inventors• Turn ideas and prototypes into reality• Team builders with a strong commitment and

drive• Action- and goal-oriented• Optimistic in the face of failure or setback

Key concepts

Social intrapreneurs:• The corporate equivalents of social

entrepreneurs• Align business and social values• Working inside a large business or social

organisation