I’m invited on a regular basis to participate as one of several panel ‘judges’ at the Stanford Graduate School. At the end of their term, the Stanford MBA students have to pitch their ideas as ‘intrapreneurs’, and the panel acts as the board members within a bigger organization deciding about the funding or rejection of the demonstrated ideas.

Intrapreneurship means driving change from within organizations.

An ‘intrapreneur’ acts in an entrepreneurial fashion within an organization to innovate rapidly for the benefit of the organization and its customers. They need to be ‘dreamers’ and ‘doers’. Or, in other words, doers that still dream, imagine and act. They should not be confused with inventors, who often start out with a longer-term, often incomplete vision. ‘Intrapreneurs’,on the other hand, are under constant pressure to convert a vision into prototype and into market success in a very short time frame.

Two weeks ago my colleagues from takepart.com invited me to a private meeting with Al Gore in Beverly Hills.  Al Gore mentioned an executive survey that asked CEO’s whether they would make an investment that would meet their internal ROI targets and make their business stronger, more profitable and sustainable. One hitch: It would also make the company slightly miss its next quarterly earnings estimate.

Result: 80% of CEO’s said ‘no’.

Why do I mention this?

The ‘enemy’ of ‘intrapreneurs’ is short-termism and organizational structure.’Intrapreneurs’ get frustrated if they constantly have to seek permissions at different levels of the organization. It stifles mobility, creativity and innovation.

As a result, ‘…..the venture capital industry is producing 35% ROI by taking frustrated R&D people and their rejected ideas out of large companies, and financing the commercialization of those ideas. The fact that the venture capital community can make 35% ROI on rejected ideas and people should be a constant rebuke to everyone in the R&D community’ [Source: Innovation Through Intrapreneuring, Gifford Pinchot]

Intrapreneurship can be very frustrating, and my ex-colleague Mario Herger laid out a few examples recently as a response to Bill McDermotts blog entry ‘A Time for Founders’.

Intrapreneurship cannot be mandated by top management. Its based on grassroots innovation and requires stamina, courage, opportunism as well as political and networking skills. But top management has the responsibility to create an environment that fosters a global culture of collaboration to keep ‘intrapreneurs’ engaged. These people need to feel that they can ask the demanding questions, be creative and pursue their ideas.

Intrapreneurship leads not only to new ventures, it leads to other innovative activities and orientations such as development of new products, technologies, services, strategies and competitive postures. So it certainly pays to create a suitable environment for ‘intrapreneurs’ where its possible to learn from failure, rather than punish it.

Emma Stewart, head of sustainability solutions from Autodesk, is leading the mentioned MBA program. This is one of her slides:

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Conclusion: ‘….Managers need to be open to new thinking but colleagues need the courage to push when they really believe. Let’s be clear: this will be messy. Change usually is.’ [Bill McDermott’s response to Mario Hergers comments]

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6 Comments

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  1. Andy Silvey

    Hi Thomas,

    totally agree with the message of the article and have had similar thoughts.

    For sure, the short-termism of quarterly reporting stifles innovation at all levels, from the floor, right up to the CEO and Board.

    And innovation doesn’t only have be new products, innovation can be strategic investment in reducing costs.

    The statistic you have quoted above comes as no surprise, it will take the strongest leaders (CEO’s) to stand up to the analysts and investors and say, we’re going to miss (the estimate) this quarter because we are investing for the future.

    The problem is then magnified exponentially, because the same approach, this culture,  is followed throughout the company, from the floor, right to top.

    It would be interesting to see how a strong leader at the top, would change the culture all the way through to the floor.

    From the CEO downards, how many decisions are throttled because people are frightened that failure would slow their career or in the harshest case lead them to losing their job ? Imagine the innovation which could be released and unleashed if decisions were not throttled by the fear of failure.

    Fear of failure and the resulting effects on the corporation have been discussed, here, here, here, and here.

    Best regards,

    Andy.

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    1. Thomas Odenwald Post author

      Hi Andy,

      thanks for your valid comments. I guess we both agree on the danger of short-termism. In regards to FAILURE – my own experience is that failure as such is treated very differently in the Silicon Valley than for example Germany.

      Thomas

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  2. Sylvia Delcheva

    I am the oppinion that if intrapreneurs act on behalf of SAP their actions need to be perfect compliant  with all legal and standard norms of SAP. In the outside world if an idea does not make it, just the intrapreneur (and perhaps a sponsors) looses. 99% of the intrapreneurs fail!

    If SAP starts supporting wild intrapreneurship by managers giving allowance for everything, we will fail the complete company very soon.

    So, please intrapreneurs – be creative, but also responsible and smart! Good luck!

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    1. Krae Stumpf

      Agree wholeheartedly. A previous company I worked for had an executive that was an intrapreneur extraordinaire. Operations and IT were kept busy, but to no real positive effect to the organization. It wasn’t until the BoD brought in a COO that was a realist and had the power and disposition to temper the chaos of uncontrolled dreaming that the company stabilized,  but still had the intrapreneur spirit, although well anchored by managerial realism.

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  3. Naveen Vishal

    Very well defined and precise definition of ‘Intrapreneur’. Intrapreneur is the call of time and every organization have to follow or perish.

    Good diagrammatically presentation of the key points / key techniques for being a successful Intrapreneur.

    Regards,

    Naveen

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