At a barbeque this weekend, a friend fretted, “How does a large company retain its entrepreneurial spirit?” Part of the leadership team of a fast-growing, $5 billion, public company – historically one of the most innovative in its sector – he painfully understands this dilemma. The agility and speed helped you grow. But your growth requires installing rigid policies and processes which kills your agility and speed. What keeps you big kills what got you there.
Another friend – who heads an innovation group at a leading consumer products company – shared the same frustration. Her company, once entrepreneurial, has grown stale. She is thinking of hiring one of a new crop of consulting firms that promise to attack your internal growth ideas with external entrepreneurs. We are seeing these “entrepreneurial transfusion” models popping up everywhere. Their premise – that to maintain your entrepreneurial spirit you need more entrepreneurs – is logical but flawed.
Over the past three years we have dug into all of the credible, fact-based research we could find on the topic of corporate entrepreneurship (or intrapreneurship), and we have interviewed more than 120 internal innovators. The conclusion of this is clear.
The idea that large companies cannot act entrepreneurially is unfounded. This myth persists because we hold on to three persistent, but false, beliefs:
- False belief 1: Entrepreneurs – not employees – drive innovation. We’ve already shown in prior blogs that employee innovators have overwhelmingly been at the source of the most important innovations in recent human history. Of the 30 most transformative innovations over the last 30 years – think email, internet, DNA sequencing, MRIs – entrepreneurs only conceived of and launched two. The research shows clearly that large companies can and do They start off entrepreneurial, they scale and lose some entrepreneurialism, but then as they scale larger and put in place “slack resources” and certain cultural and structural elements, their level of intrapreneurial behavior grows exponentially.
- False belief 2: To be more entrepreneurial, your company needs more entrepreneurs. Research clearly shows that while successful internal innovators resemble entrepreneurs in three specific ways, they also differ in three ways: internal innovators (a) have different motivations, (b) enjoy politics, and (c) pursue calculated risks.
- False belief 3: An intrapreneur’s journey is similar to that of an entrepreneur’s. While at the core, both traditional and internal entrepreneurs identify and select opportunities, decide to act on them, and rally resources to pursue them, the steps an intrapreneur takes to do so are remarkably different. For example, while entrepreneurs shop their one big idea with as many as 40 different investors, intrapreneurs have their one investor given and must instead shop as many as 40 ideas to find a match.
To help you increase your chances of success in driving innovation from within, to help you activate more innovative behavior from your team, we sought to lay out the unique path of the intrapreneur. In each of the 120+ interviews we conducted, with internal innovators across the US, Asia, Europe, Latin America, Africa, and the Pacific, we asked a similar set of questions: (a) what are the key barriers you have faced in pursuing entrepreneurial ideas from within an organization? and (b) what are the solutions you have found to get around those barriers?
We collated and tabulated their answers. We grouped their challenges and ranked the frequency with which the challenge was mentioned. The exercise revealed seven barriers that most often hinder intrapreneurial efforts. These are the key barriers you will likely face as you pursue new ideas.
- Mindset: How do you recognize and motivate yourself to move on unexpected opportunities?
- Seeking strategically: How do you know which kinds of ideas your business will support (and which they will reject)?
- Ideation: How do you conceive of a truly different, disruptive idea?
- Permission to experiment: How do you get approval to experiment with an idea you are not yet confident will work?
- Business model: How do you deal with the fact that truly innovative ideas often are disruptive to your core business and so your organization will want to reject them?
- Politics: How do you manage organizational politics to gather, and maintain, support?
- Scaling: How do you scale your idea as quickly as your agile, young competitors, when your organization is geared to act slowly?
These seven barriers represent the path that successful intrapreneurs pursue on their journey from desiring to do something different to realizing the success of an idea. They first adopt the right mindset, so they are looking for opportunities. They understand what kinds of ideas their organization is most likely to embrace (seeking strategically). They then generate many, truly different, disruptive ideas (ideation). They get permission to experiment on those ideas by embracing emerging approaches to minimize experimentation costs. They then cleverly design the business model around the idea so that it will disrupt their competition without disrupting their business. Having designed the business model, they carefully manage the politics to build a groundswell of support. With the support in place, they implement new scaling approaches that enable their team to move rapidly, even when their organization is not geared for speed.
For years companies have accepted these barriers as reasons large companies cannot innovate. We talk of “innovation antibodies,” and site hierarchy and procedure and rigidity as intractable realities. But new approaches are emerging. Forward-looking companies are finding clever ways around these barriers. You can too. And if you do, you will step into a future of a purpose-driven, agile, innovative organization that activates intrapreneurs to solve problems that matter.