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We've just gotten used to strange terms like entrepreneurship without knowing how to pronounce them correctly, when the next related term comes along: Intrapreneurship. What was that again?
We kept looking by the experts at Stanford University in the USA and the software company Viima in Finland and are now trying to unravel the mystery of intrapreneurship.
Western cultures are characterized by free-market thinking and therefore owe many of their greatest successes to creative entrepreneurs who have taken risks and introduced extraordinary innovations into the respective business landscape. Modern ideas and original thinking have gained popularity and are increasingly encouraged in our society. SMEs, or small and medium-sized enterprises, are often seen as the epicenter of this innovation, yet established larger companies also possess similar development potential. They just need to have the right leaders who look for the entrepreneurial spirit in their employees to harness their creativity and ingenuity specifically for their own business. This phenomenon is known as intrapreneurship. Whereby intrapreneurship is an artficial term composed of the words "intracorporate" and "entrepreneurship".
Intrapreneurship: A powerful driver of business growth
According to Stanford Online USA, intrapreneurs are not founders who must jump into a competitive market and succeed, but rather they are the internal entrepreneurs who drive progress within the structures of an established company. They are the scurrying employees of the company who are constantly looking for ways to improve existing work processes and their quality, sometimes they even liek to improve the entire company. Both entrepreneurship and intrapreneurship require similar skills, including leadership, an eagerness to innovate, and adaptability. However, while the entrepreneur is the captain steering his ship through any surf, intrapreneurs are more in the protected belly of the same. While the spirit may be the same, intrapreneurs are not forced to take the financial risk associated with traditional entrepreneurship. Intrapreneurs' ideas can improve work processes and working conditions under the condition that the company does not shy away from the risk of change and both promotes and implements these ideas. Intrapreneurs are sometimes passionate people who are driven by their ideas and enthusiastic about their projects. These people are the driving force behind the new and exciting ideas that have the potential to reshape and sometimes revolutionize industries.
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Why is intrapreneurship important for companies?
If you take a look at the current list of Fortune 500 companies, you will notice that 88% of companies from the 1950s are no longer present, active or relevant (INNOSIGHT, Richard N. Foster, Standard & Poor's 2012). Often this goes hand in hand with the size and inflexibility of the companies. If we use again a comparison from the shipping world, than large tankers are no speed boats. For immobile large companies that bet everything on their cash cow while neglecting or even ignoring their ability to innovate, this almost always means certain "doom". Young, small emerging companies, on the other hand, focus almost 100% on innovation. If you now merge the large established company with the young up-and-coming savages, you get intrapreneurship.
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As Diana Porumboiu already pointed out in the Viima Blog from 2021, it is vital for companies to find new ways to drive and sustain their own growth through innovation instead of focusing exclusively on optimizing the existing business and current areas of success. Intrapreneurship can be an important part of business innovation in this regard. But how do you find people in your own company, in your own organization, who are eager to act out their drive for innovation? Here it is worth paying attention to employees who are curious and frequently ask questions, perhaps even coming up with ideas now and then. Because the great intrapreneurs often take the initiative themselves, and if in a leadership position, they use the set screws to make a difference in the company.
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Typically, intrapreneurs are intimately familiar with company operations and may still recognize pitfalls and issues that management may have overlooked. As intrapreneurs take on more responsibility within the company, they use their understanding of employee needs and business operations to implement useful and strategic innovations. However, if intrapreneurship is suppressed within companies by creating a non-supportive, restrictive work environment where brilliant ideas don't get to shine, intrapreneurs may quit and possibly start their own businesses. Today's company needs these thought leaders - they are critical to growth and success. Encouraging new ideas and perspectives is essential to a company's development. Innovative plans facilitate change and promise a smoother and more efficient system within the company. Surviving and staying relevant in the rapidly changing and more innovative digital world is as simple as encouraging intrapreneurship.
Promoting a culture of innovation in a company
It should be in every company's best interest to promote a culture of creativity, innovation and the exchange of ideas, and to give employees the opportunity to live this creativity. The exchange of ideas with employees and the appreciation shown for one's own lived creativity is an incredibly powerful motivator that benefits the company again.
The cultural change in the company always starts at the top with the executives, who commit themselves to take all necessary measures to allow a culture of intrapreneurship and innovation to emerge. According to Christian Köhler (The Alternative Board 2022), there are three dimensions to the culture of innovation: 1) the ability, i.e., the capacity to innovate, 2) the willingness, i.e., the readiness to innovate, and 3) the permission, or the opportunity to innovate.
For the intrapreneur within a company, this means that he or she can develop his or her creative potential at any time and that this is also encouraged. To do this, he or she must be motivated and want to live the culture of innovation or intrapreneurship. And if the company management gives the internal innovation forge enough freedom for creativity and these intrapreneurs are allowed to continuously learn and implement their urge to experiment, a close bond with the company and a high degree of satisfaction will result.
Apple is an example that shows a culture of intrapreneurship in practice. The company's most popular products are the result of a culture that encourages creativity, experimentation, and entrepreneurial thinking (Deloitte White Paper on Intrapreneurship, 2015). Google's "20% Time" initiative is another great example of corporate encouragement. Google engineers focus 20% of their workday on their pet projects. The results are now well known: AdSense, Gmail, Google Maps and Google Earth. However, this initiative has since been abandoned in favor of a more focused innovation strategy, in part because the internal productivity analysis system was too critical of the 20% time initiative (hrzone, 2015).
Deloitte published a white paper in 2015 as a guide for companies by formulating 5 findings:
1: Intrapreneurship is all about people and describes a bottom-up approach where innovations are developed internally,
2: Intrapreneurship has a positive impact on company growth, corporate culture and employee development,
3: Intrapreneurs cannot be created, but must be discovered and nurtured,
4: Intrapreneurs know the rules and work around them effectively,
5: Intrapreneurship requires its own management structure.
Creating an intrapreneurship culture within a company should be the goal of every employer who strives for company-wide success. Workplaces thrive when they are a field of experimentation for intrapreneurs, when the work is exciting for employees, and when they can work passionately on their projects.
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Conclusions
Is intrapreneurship the ultimate solution for all innovation-driven companies? No. Of course it isn't. There are many other elements that make a company more innovative, and intrapreneurship is just one of them. As Diana Porumboiu points out in the Viima Blog (2021), intrapreneurship is first and foremost a mindset that enables employees to think and act in a way that encourages and supports innovation. What should not be forgotten is that systematically establishing innovation as part of the corporate culture takes time. Promoting intrapreneurship is one of the methods that can boost innovation efforts. However, it is important to remember that intrapreneurship should not exclusively be about the heroic employees who struggle to bring creative ideas to life. Intrapreneurs need to be supported on a company-wide level so that they can achieve lasting results. Only then can they become a success story.