Intrapreneurship

1
Intrapreneurship

• Corporate Entrepreneurship
• Making big companies more entrepreneurial

2
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
• Firm are changing the way in which they
  structure their processes in order to be more
  responsive to market needs, competitors
  strategies and the initiatives of small
  businesses

3
Requirements for Corporate Entrepreneurship

• Instilling the appropriate culture
• Flexibility
• Independence
• Risk-taking
• Developing a reward system
• Implementing entrepreneurial strategies
• Corporate Venturing
• Venture capital support
• Investing in projects, funding product
  development, sponsoring independent entrepreneurs
• Management as champions of Innovation

4
Creating the Intrapreneurial Culture

• Large bureaucratic organizations - layers of
  hierarchy, inflexible structures, low level of
  employee participation, high level of political
  activity
• 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 implies an environment that supports
  flexibility, independence, and risk-taking
• Intrapreneurship -- is developed through the
  organization 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

5
Organizational Structure

• 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 customer, eliminates needless roles that
  slow down the process (I.e. 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)
• Improves strategic decision making (close market
  relationship)
• Facilitates product innovation (speed)

6
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 a industry 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

7
Career Development and Reward System

• The development of Intrapreneurship must include
  a career development program and reward system
• The goal is to reward employees for their efforts
  and to make them feel as an integral part of the
  organization
• Equity, stock options, cash gifts, bonuses
• Promotions, free time, recognition, access to
  funds and resources

8
Corporate Venturing

• The development of a skunk works (sink or swim
  environment -- Saturn)
• The recreation of the businesses earlier days of
  being an out of the basement project -- 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

9
Venture Capital Support

• Funds set aside for the development of
  entrepreneurial/Intrapreneurial initiatives
• Budgets must be established for the purpose of
  funding internal and external entrepreneurial
  activities
• 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)

10
Management as Champions of Innovation

• New ideas can only be brought to fruition if
  given the required support
• 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
  power, prestige and vision
• Power level in the formal hierarchy, ability to
  supply need resources (funding, time, workforce)
• Prestige 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