How to promote intrapreneurship in organizations
Corporate Entrepreneurship (CE) is entrepreneurship within established organizations. Primary goals for companies to engage CE is to build innovative capacity, expand the scope of the organization and/or generate increased financial returns. CE can be viewed as a way of taking advantage of the creativity of the personnel to achieve these benefits.
Definitions of Corporate Entrepreneurship and Intrapreneurship
The history of CE goes back to 1970’ and the concept of CE has evolved greatly during the years. To date it is a broad, multi-level and quite complex concept which brings along also challenges like rather diverse terminology around CE. Often terms like intrapreneurship and innovation management are used in parallel with CE. Thus, CE could be considered as an “umbrella” which contains several different dimensions and depending on the context the outcome can be different in companies and for the personnel.
The diversity of CE brings along complexity for the companies trying to implement CE successfully. The concept of CE should be clarified in each company to decide what CE means for the company and which dimensions are the most relevant for the company business. Implementation could then be planned accordingly. There is heterogeneity in implementation approaches that the firms pursue. As the field of CE and intrapreneurship has developed, the research around implementation also has grown. Researchers have drawn lists of the factors that enable successful implementation of CE trying to ease the difficulties in CE implementation that the companies are facing.
Intrapreneurship is a term which describes the innovation practice within the organization through which employees undertake new business activities and pursue different opportunities. Intrapreneur is a person within a large corporation who takes direct responsibility for turning an idea into profitable finished product through assertive risk-taking and innovation. There are some personal characteristics which are typically related to intrapreneurial behaviour. These are characteristics like risk-taking ability, proactivity, ownership and willingness to change. Models have been generated to measure these personal characteristics. It is also known that the best outcome for CE implementation is achieved when both top-down and bottom-up approaches are combined. This highlights the importance of intrapreneurs in bringing forth their share through bottom-up approach in the successful implementation of CE.
Importance of Intrapreneurship
The importance of organizational support to intrapreneurship is significant. CE is always an interplay between the person (the intrapreneur) and the organization. If the person is lacking some intrapreneurial characteristics, those can be strengthened with the help of organizational support. On the other hand, it is impossible for an intrapreneur to operate successfully if there are deficiencies in organizational support mechanisms or if they are lacking. There are models developed to obtain a view how organizational and individual factors contribute to CE. Furthermore, several organizational support mechanisms have been identified in the literature which are known to support and promote intrapreneurship in the organizations.
Prerequisites for intrapreneurship
Top management commitment is a prerequisite for a successful implementation of intrapreneurship in the organization and commitment needs to be visible to the entire organization. One option to achieve this is to include it into the strategy, or by other means making the commitment and the importance of intrapreneurship visible. In expert organizations personnel is typically committed to strategic targets and therefore it could be a convenient route for visualization. Personnel in the organization also needs to know what type of innovations top management are pursuing and it needs to be communicated to the personnel. This can also be considered as one type of operating controls belonging to intrapreneurship since it is important that all innovation activities are aligned with the strategy.
Middle-management is in important role in successful implementation of intrapreneurship. They should implement and facilitate innovation process in the organization and act as innovation champions, expressing enthusiasm and getting the right people involved. Furthermore, they need themselves also behave innovatively while supporting and nurturing others’ attempts to do the same. This highlights their importance in successful execution of intrapreneurship.
Organization structure should be such to allow free flow of information and communication without any silos. Intrapreneurs need access to all the necessary information they need in their work. Also, organizational culture is in important role, it should be flexible and not risk-avoidant. Furthermore, bureaucratic organizational culture does not favor intrapreneurship. Intrapreneurial organizational culture can also be an asset in recruitments since new generation of employees appreciate creativity and autonomy in their work.
Ad hoc time allocation policy is an important support mechanism since intrapreneurs need time for their experiments, learning, failing and retrying. There must be slack resources to support intrapreneurship. Unfortunately, such ’extra’ resources have been stripped to a minimum in modern organisations, and employees do not have enough time to develop, but all working time is spent coping with current tasks. Personnel must also have sufficient autonomy not just to be able to decide how to do their daily tasks but also to have sufficient autonomy for the decision making. Organizational hierarchy must be low to allow certain level of decision making within the teams. This low hierarchy is particularly important in knowledge-intensive organizations where the teams typically have the needed expertise to do the decisions independently.
There should be a proper reward system to support intrapreneurial activities and initiatives. These can be not just monetary, but also rewards like recognition or ability to choose one’s next move. Reward system should be diverse and contain different kind of rewards in each category. Typically, these external rewards are considered very important intrapreneurial support mechanism among the personnel.
Human Resources has an important role in supporting organizations in intrapreneurship. There are several beneficial HR policies which can be executed like different levels of training and training programs even. Also, HR should have a visible role in building up for example the reward system.
Concluding Remarks
Setting up a formal entrepreneurial project evaluation process is important. Intrapreneurs need to understand how their initiatives are taken forward and evaluated otherwise they become demotivated in making initiatives. In the end the power of the organizational support mechanisms can be measured by using different models available in the literature. Using these models in measuring brings structure around the concept of intrapreneurship and makes it easier to follow the progress and success of implementation in the organization. As a whole, CE/intrapreneurship can be considered as a valuable tool to promote company business performance and growth.