With a stifled economy, and an unfulfilled young workforce, companies are looking inward to solve these growing problems. The solution may be far simpler than you could possibly imagine, and surprisingly cost effective. To both generate new sources of revenue, and retain young talent, companies are turning to the concept of Intrapreneurship. A basic definition of Intrapreneurship is the practice of fostering innovation in your employees by allowing them to practice ideation and create new products, but it has so many far reaching effects that this definition does not do it justice.
Being an entrepreneur is a high risk high reward enterprise, but being an Intrapreneur is a low risk high reward enterprise. Instead of putting your own assets into jeopardy, by founding your own company, an Intrapreneur will take the resources of their parent company to accomplish their goal, whether it is an innovative new product or new methodology. Fostering Intrapreneurship does not generate wealth for your employees, but it will develop the skills necessary to eventually start their own companies, if they so desire, or become a leader in the company that fostered them. By allocating a small margin of your company’s resources, and time, you can create bonds that will retain workers for longer periods of time, increase efficiency, and ultimately profits, without sacrificing your reputation in the growing social network.
In an article by Simone Ahuja, Ahuja describes how Intuit experiments with Intrapreneurship and their process. Her article begins with the underwhelming statistics, from an Accenture study, that only 20% of employees feel their managers encourage entrepreneurial endeavors, and that 70% of entrepreneurs that developed their ideas in-house then took their idea outside of their parent company to commercialize. This is a correlation that cannot be ignored. If the companies had instead made small investments of time and money in their employees their employees would have commercialized their ideas in-house.
As explained in Ahuja’s article Intuit not only experiments with Intrapreneurship and ideation but they have a formula for it to succeed. Employees are encouraged to spend their own time to develop ideas that can be marketable, but still perform their regular position. Then, when they think they have a solid idea, they are told to create a single prototype for a specific customer and see how well it works. If successful Intuit will then scale up, but if not, there are no repercussions as long as the company and the employee have learned from it. Intuit founder Scott Cook encourages failure through learning and calls it “falling in love with the problem, not the solution.” To help guide, but not control, Intuit has set up several different positions that are meant to mentor these young Intrapreneurs. Some of these mentors allocate ten percent of their time to help develop the Intrapreneurs’ ideas, for others though it is a full time position. Though there are mentors, whether an idea continues or has the plug pulled is entirely up to the employee behind the project. This demonstrates trust in the employees and allows for them to grow as their ideas grow.
Now you may be wondering why waste time and resources to fund young Intrapreneurs’ ideas. Well, according to a Gallup article, by Jim Harter, a study of over 80,000 organizations showed that when employees are engaged, by methods such as Intrapreneurship, profitability and sales increase by twenty percent. There are other benefits to Intrapreneurship, that will be discussed on a later posting, but by putting less than ten percent of your company’s resources into new ideas you will be getting more than double on your return and that is a figure to investigate. Some companies, other than Intuit, that are pioneering Intrapreneurship are the folks over at Facebook, Lockheed Martin, and Google. All of these companies are leaders in their fields and examples of how successful fostering innovation can be. Next week the series will discuss the right conditions necessary for Intrapreneurship to succeed, and if this methodology is right for you.