Recently Max Unger, Head of Corporate Innovation at TheVentury, supported students of the Institute for Strategic Management at the Vienna University of Economics as an expert in their research on intrapreneurship. The project provided interesting insights on the state-of-the-art practices in intrapreneurship programs, some of which we summarized for you in this article.
Why should intrapreneurship be important for corporate organizations?
First let’s start with the basics. Intrapreneurship comes from the words intracorporate and entrepreneurship. Entrepreneurs are business founders, commonly seen as innovators. They are proactive, curious and passionate, take risks and have a lot of creative ideas.
Intrapreneurs are employees of a company, who work in the style of entrepreneurs. They are given the freedom and support to develop new business opportunities or products for the organization. Simply spoken: intrapreneurship is a marriage between startup culture and the resources of a larger corporation.
According to the economic theory, 88% of firms disappear as a result of the “creative destruction”. The term, invented by Joseph Schumpeter, describes the process of new innovations replacing existing ones, rendered obsolete over time.
To stay relevant in an ever-changing environment, companies need to develop capabilities for continuous innovation. Here is where intrapreneurs prove to be crucial, as they think across the boundaries of organizational units. Employees are the only resource of a company, that competitors don’t have access to. It’s a source of innovation, that shows how organizations can be truly generative. That’s why intrapreneurs are the one asset which can turn into a sustainable competitive advantage.
Process-related key considerations
To lead intrapreneurship programs to success, it’s essential to have all the required resources. The organization needs to provide intrapreneurs with slack-time, capital and education support. Regarding people resources, the number of team members varies between three to five and is likely to increase as the project advances. The teams can be selected through applications, nominations or a combination of both.
The duration of intrapreneurship programs highly depends on the project and the desired outcome. One cycle usually lasts between several months to one year and ideally happens annually. Different stages extent over certain months and have clearly set deadlines.
Organizational design aspects
Important aspect is to ensure the organizational structure is designed to support dynamic and fast intrapreneurship. This means that the hierarchy, decision authority and the power relationships need to give intrapreneurs the freedom as well as the necessary support. The innovation-supportive corporate culture is crucial for successful intrapreneurship programs.
During the development phase, the company’s innovation department (if existing) supports and facilitates the process. The responsibilities range from coordination, over quality assurance of submissions to methodological support. In addition, the department oversees the idea generation process and helps with triggering creativity.
Choosing the right approach
When designing intrapreneurship programs, organizations usually distinguish between two common streams: open and closed. The ultimate decision on the stream is based on available resources, desired outcome and company strategy.
Open-stream (“Idea box”)
Organizations, that choose the open-stream, usually implement an “Idea-box” (e.g. on a platform, during workshops). Employees can continuously submit ideas without any necessary connection to the existing business or strategy of the company. This approach leads to faster dissemination of innovation culture and improves diversity and versatility of information flows. It is also likelier to find a disruptive idea this way.
Closed-streams or also campaigns provide search fields connected to the corporate strategy. Employees can only submit ideas within or connected to this search field. All other ideas are excluded, which means it’s easier to organize and streamline the process. This method requires less resources and offers less risk for the company, however it often results in incremental innovation.
Introducing intrapreneurship to your company
Before starting with an actual program, the organization must provide employees with the opportunity to learn and educate themselves on the innovation topics. Trainings on intrapreneurship and innovation are a crucial puzzle piece in the process implementation. Of course, the training needs to be voluntary and all employees must have access to it. Most of the learning will happen “by doing”, however it’s important to focus on having the right conditions and supporting the cultural transition. This ensures the creation of an environment, which will foster creativity and entrepreneurial thinking.
Such education sessions must serve as a basis for intrapreneurs and provide them with first essential knowledge on innovation. Starting from explaining intrapreneurship as a concept and its importance for the company, through using creativity tools, innovative working approaches such as Design Thinking or A/B testing and agile methodologies like Lean Startup to developing business models or even rotating into the innovation department as part of the training. All these things will motivate employees and encourage their curiousity.
How to implement education
When it comes to implementing intrapreneurship education, organizations can use various online learning tools to cover the basics. This way all employees have access to the resources at any given moment. Workshops, led by internal experts or external consultants, are a great way to design a more interactive training and increase creativity. Another idea is to establish peer-to-peer learning by employees who already have some experience as intrapreneurs.
Encouraging and incentivizing intrapreneurship programs
One important aspect of corporate innovation are incentives. Primary research revealed that top and middle management support is the most important motivational factor, boosting the success of intrapreneurship. Having intrapreneurship-related targets as a part of a comprehensive incentive system, ensuring alignment of corporate and individual objectives, is also important according to experts.
A valuable and effective way to activate employees who seek reputational gain is providing social incentives to participate, such as the promise of public recognition. Intrinsic motivation, often regarded as the underlying basis for intrapreneurship, is not always a sufficiently strong motivator. What helps in increasing participation and engagement is offering creativity and ideation workshops.
„Innovation-friendly culture is both the prerequisite and the outcome of successful intrapreneurship.“
There are several underlying aspects to intrapreneurship programs that are important to consider. Program design, process structure, employee motivation and education as well as incentives are all key success factors for corporate innovation. Of course, intrapreneurship isn’t always the right solution for every company. Many industries can’t be revolutionized with an internal startup. However some of the best innovations were developed by established organizations. If you’re interested in finding out the opportunities intrapreneurship offers for your company, don’t hesitate to reach out to us!