Big organisations attempting to be “entrepreneurial” may sound like a contradiction in terms but “intrapreneurship”, as the practice is called, was coined as long ago as the late 1970s. Now the idea, credited to US entrepreneur and author Gifford Pinchot III and his wife Elizabeth, is back in fashion.
“It’s roughly on a 10-12-year cycle, a bit like a comet,” says David Molian, senior lecturer in entrepreneurship education at Cranfield School of Management. “Interest in entrepreneurship in big businesses seems to flare up at regular intervals as a means of rejuvenating them. Organisations say: ‘We need to find creative ways to grow – we can’t cut to the bone any longer. Maybe we ought to try being entrepreneurial?’”
Claire McCartney, adviser for resourcing and talent planning at the CIPD, a professional body for human resources and people development, has spent the past year studying the concept, and says: “Given the difficult economic period we’ve been through, more and more organisations are realising that the innovation of their people can make them stand out from competitors.
“Quite a lot of large organisations were once entrepreneurial and put in place so many layers of bureaucracy that they lost that entrepreneurial emphasis. Now, they are looking to refind it.”
Many of the trailblazers come from the technology sector, with Google’s famous policy of allowing employees 20 per cent of work time on pet projects, while Microsoft has a physical space known as “The Garage” for employees to work on innovative projects.
Mr Molian, who is also joint director of the Coutts Private Banking Entrepreneurs Programme, says: “If the organisation is running like a factory at 95 per cent productivity, there isn’t any slack for dealing serendipitously with opportunity. Everyone is fully employed on ‘the five-year plan’.
“If you’re going to be intrapreneurial, to spot opportunities and take them, there’s got to be some capacity to respond to it.”
Dell, the US IT company, has a UK Centre for Entrepreneurs and an entrepreneur in residence. Its UK managing director, Tim Griffin, says the company has a liberal approach to time: “You deliver your job and we overlay that with special projects and special assignments for people to execute innovation.”
It is more about an overarching culture than taking “20 per cent time”, says Mr Griffin: “A culture of continuous improvement is about constant on-the-job tinkering with systems and processes, as opposed to carving out a specific amount of time.”
SAP, the global software company, is also known for intrapreneurial activity, with Vishal Sikka, global board director, in charge of all product innovation. He says: “Having lived in Silicon Valley my entire adult life, I am of the firm opinion that we’re either innovating or dying. We must always have an entrepreneurial mindset.”
SAP’s business software platform Hana, one of its biggest sellers, was the result of a small internal team working on an idea rather than a specific R&D investment.
Beyond IT, EY, a professional services firm, also has an internal entrepreneurial venture. Michel Driessen was brought in seven years ago to head a team of 21. Now with 135 people and six partners, the operational transactions services unit is given autonomy to act as a start-up within the global organisation.
“I am very much left to my own devices”, explains Mr Driessen. “We are non-hierarchical, reward success, and are also strongly connected with the academic world … It’s not only about running projects, it’s about giving people the space.”
All of which is easier said than done. Ms McCartney at the CIPD says: “You have to have the desire to be that way, the senior level backing, and the systems to support it.” She also warns that “you could do a massive amount of harm by calling for employees to behave as ‘intrapreneurs’ if you don’t help them develop”.
Some organisations have tried the concept and been defeated. Mr Molian recalls a high street bank in the 1980s “that tried to have its bank managers run branches as local businesses. It went so far against the culture and the people it had recruited. They weren’t entrepreneurs, so turning to them and saying ‘forget all the cultural norms of the last 20-30 years, boys, we want you to behave like an entrepreneur’, is simply unrealistic.”
For Mr Driessen the critical component is trust and the freedom to deliver: “I’ve seen other companies that have had ‘innovation teams’, but when they didn’t produce outcomes or financial returns quickly enough, they were folded. That sends the wrong signal.”
Equally, problems can occur from overinvestment, says Mr Molian, when “organisations throw too much money at the project and corporate managers typically react by spending the whole budget … Whereas the entrepreneur would say: ‘How can I spend as little of that budget as possible and do it on the cheap?’”
Accepting that some ideas will fail is also important. Dell’s Mr Griffin describes having people who try 10 things and get seven right, as opposed to people who try three things and get all of them right. Most managers and employees in large organisations match the latter.
“If they are raising their head above the parapet by saying: ‘There is an opportunity to do something differently,’ then they need clear support from the top,” says Mr Molian. “Otherwise, there is a danger that if they fail they will be hung out to dry.”
Failure is not seen as a bad thing at SAP, says Dr Sikka: “We actually celebrate failure – you learn from it. At the end of every cycle, we do an ‘I wish/I like’ session. ‘I like’ is the things that went right; and ‘I wish’ are the things we wish we’d done differently.”
He believes the recipe for success boils down to “continuous, rapid innovation, learning from failures, with the failure of a project not being equated with the failure of a person”.
Intrapreneurs also want a share of the spoils if their innovation is successful. Mr Molian believes businesses should be prepared to tolerate a few “Ferraris in the car park”.
Yet, while SAP offers a reward structure for patents, Dr Sikka believes money is not the main motivator: “It’s the association with something great that all entrepreneurs aspire to. We have to ensure that people get the credit for what they have done, that they put their name to it.
“But [when you] look at the risks and the likelihood of success in a start-up company versus an entrepreneurial programme within a big company, the personal and financial risks for the entrepreneur are much higher in the start-up … From a financial perspective, taking risks within a big company turns out to be not such a bad idea.”
Organisations trying to boost their entrepreneurial credentials would be wrong to try to form entire departments of entrepreneurs.
“It would be like having 11 Lionel Messi’s in the team,” says Mr Driessen. “It would spark a lot of inspiration and ideas, but you also need people to follow it through and execute it. You need a mix of leaders and innovative people.”
But there is a way that organisations can discover their hidden entrepreneurial talent, too: “Every once in a while, come up with some crazy challenge and see who responds,” laughs Dr Sikka. “Unleashing the imagination and creativity that is inside people is usually the best idea.”