Intrapreneurship: Driving Innovation Within Organizations

What is Intrapreneurship?

Intrapreneurship is the process of developing employees to think like entrepreneurs. it’s helping them develop an entrepreneurial mindset whereby they can recognize new opportunities, and come up with creative solutions to drive growth and revenue for the company. Like entrepreneurs, intrapreneurs are driven, proactive, and prepared to take measured risks.

Why Should Employers Embrace Entrepreneurship

For Competitive Edge

Organizations need a continuous stream of innovation to maintain their competitive edge and intrapreneurship encourages people to think outside the box, question conventional thinking, and generate fresh ideas. Innovation is not limited to launching new products, it also includes creating more uses for current products, finding new markets, or adapting a company’s products to different user segments. For example, did you know that Vaseline was originally a motor lubricant? Unilever identified an opportunity to reposition the product as a consumer product because of the need for skin moisturization, and since then the company has created different product lines from lip balms to body lotions based on petroleum jelly.
In the book “Humancracy,” the authors argue that Microsoft was slow to leverage the opportunities in the tablet device market, in part, due to the company’s more traditional culture where innovation flowed from the top.

Increased Employee Engagement

Intrapreneurship fosters a sense of fulfilment and purpose among employees by leveraging their intrinsic desire to make a difference. In other words, people are more engaged, happier at work, and more productive when allowed to meaningfully contribute to the expansion of the organization.

Incubator for Future Entrepreneurs

Intrapreneurial initiatives create an environment that attracts and retains high-performing employees who seek autonomy and personal growth. PayPal was known for fostering intrapreneurship and a number of the company’s former employees have gone on to establish lucrative businesses of their own. Jeremy  Stoppelman served as the Vice President of Engineering in the company’s early days. After PayPal, he co-founded Yelp, an online review platform for local businesses. Chad Hurley and Steve Chen, who were also both former PayPal employees, co-founded YouTube which was later acquired by Google in 2006.

Haier Group, a Chinese multinational consumer electronics and home appliances company, is another example of a company that fosters intrapreneurship.  More than 10% of Haier’s market capitalization comes from its 50 or so incubating microenterprises.

How to Foster Intrapreneurship in the Workplace

Provide Autonomy and Financial Rewards

Intrapreneurship thrives when organizations provide a supportive environment for intrapreneurs. This includes providing employees with more authority to drive their ideas and rewarding their efforts and successes. Talented individuals with an entrepreneurial mindset are often driven by their desire to make a significant impact and look for opportunities where their efforts will be rewarded.

The National Bureau of Economic Research published a study of 780 US companies that looked at the relationship between profit sharing, autonomy, and voluntary turnover rates. It turns out that neither gain sharing nor autonomy had a major impact on turnover. However, in organizations that provided both, voluntary turnover was less than half of what was observed when one or neither of those two requirements were present.

Haier provides financial benefits in the form of profit-sharing plans, bonuses, and performance-based compensation to employees for successfully deploying their innovative and value-adding ideas.

Cultivate an Innovative Culture

Create an environment that supports risk-taking, experimentation, and learning from failure. Make room for cross-functional collaboration and idea exchange. Recognize and encourage innovative ideas by offering resources and support to intrapreneurs.

When it comes to building a creative workplace, companies are concerned about the financial consequences of failure. However, while this concern is not trivial, there are several ways to mitigate such financial risks:

Encourage Intrapreneurs to Start Small

Rather than investing large sums of money upfront, encourage staff to create minimum viable products (MVPs) or prototypes that can be quickly tested in the market or a controlled setting. This method enables early feedback and validation, lowering the financial effect of future failures. Eric Ries popularized the concept of validated learning in his book, The Lean Startup (which is our current book club pick). It highlights the significance of learning through iterative experimentation and validated client feedback. Validated learning is all about designing experiments, testing hypotheses and collecting feedback from customers to validate or disprove those hypotheses.

Provide dedicated Resources

Provide resources for innovation projects including time, budget, and manpower. Companies can limit their financial exposure by ensuring that intrapreneurial projects do not disrupt their organization’s entire operations by budgeting their resources adequately.

Invest in Learning and Development

Dedicate resources to training programs and skill development projects that will improve employee capacity. Companies can enhance the likelihood of successful innovation and lower the possibility of costly failures by investing in their employees’ skills and knowledge. Encourage continuous Learning by offering opportunities for skill development, training programs, and access to industry events. Moreso, encourage intrapreneurs to stay current on trends, technology, and industry insights to drive creative solutions.

Diversify Innovation Portfolio

Encourage a diverse innovation portfolio that includes projects of varied risk levels. Organizations can reduce the financial impact of any individual failure by distributing resources across multiple initiatives. This method also raises the likelihood of finding successful inventions within the portfolio.

Provide Autonomy and Support

Intrapreneurs require autonomy and decision-making authority to explore their ideas. For example, the microenterprises at Haier are self-managing, and their freedoms are explicitly recognized in three rights:

Strategy

This means the authority to choose which opportunities to pursue, to determine priorities, and to form both internal and external alliances.

People

This refers to the authority to make hiring decisions, align persons and positions and define working relationships.

Distribution

This means the authority to determine pay rates and give bonuses.

It is also important for companies interested in developing their employees as intrapreneurs to offer mentorship, coaching, and access to subject matter experts to help them succeed.

Supporting intrapreneurship encourages employee engagement, attracts top talent, and positions organizations as industry leaders. In today’s ever-changing business climate, intrapreneurship is crucial for long-term company success.