An essay on how intrapreneurs generate sustainable growth, innovation, and bring about positive change in organizations. This essay looks into the role of intrapreneurs in organizations, how they help organizations in improving organizational performance, and how they bring about positive change and innovations within organizations with real life examples. This essay will analyze the benefits for organizations in employing intrapreneurs and creating a culture that nurtures intrapreneurial thinking within organizations.
Due to globalization businesses are faced with increased competition which requires product differentiation and innovation to stay ahead of competition. Intrapreneurial innovation helps organizations to stay competitive and to find new opportunities in the market to maintain growth and expand its operations (Ernst & Young, 2010). The first part of this essay will focus on the history of entrepreneurship, characteristics and skills of an entrepreneur, human capital, and look at ways of promoting entrepreneurship.
There is no universally accepted definition of an entrepreneur, but for the purpose of this topic we could define entrepreneurship as “Risk taking people, who react to profit opportunities, bear uncertainty to bring about a balance between supply and demand in specific markets” (Schaper & Volery, 2007). History of entrepreneurship dates back to the 6th millennium BC (Albright, 1985). Earliest evidence of entrepreneurship was found in the Middle and the Far East where trading had taken place for pottery making, silk and spices. (Moore & Lewis, 1999).
Present day entrepreneurship was given much interest after Birch (1979) said that small and medium scale businesses can create jobs opportunities. Today with globalization and intense competition taking place, inability to be entrepreneurial and innovate will result in job loss in the short run (Haltiwanger, 1999) and economic decline in the long run due to the inability to replace inefficient businesses (Drucker, 1986). A person should possess adequate human capital along with entrepreneurial traits to become a successful entrepreneur.
Many traits for a typical entrepreneur were identified by different authors but the following 5 are generally agreed upon as key traits, those are; high internal locus of control, independence and need for achievement, innovativeness, risk tolerant and willing to embrace change, and hard working and task oriented (Mueller & Goic, 2002). In addition to the above traits, an entrepreneur should enhance his/her human capital to broaden his/her scope to increase chances of becoming a successful entrepreneur.
Enhancement of human capital can be in the form of a higher tertiary education or practical work experience. Promoting entrepreneurship is important as it creates new job opportunities and enhances economic growth (Birch, 1979) (Drucker, 1986) (Steyaert & Katz, 2004). Entrepreneurships should to be encouraged by their friends and family (societal level) and by the government (national level) to pursue with their ventures. This will encourage potential entrepreneurs (individual level) to start up new business ventures.
Governments should communicate the opportunities and prospects of entrepreneurship with the help of media, city councils, business incubators and other private institutions and establishments. Sullivan Palatek (well renowned businessmen and entrepreneur) on a radio New Zealand interview with presenter Chris Laidlaw on 28th August 2011 replied when asked “how would you develop young entrepreneurs? ” He replied “entrepreneurs should be looked up to as heroes by young men just like the “All Blacks” New Zealand Rugby Team”.
It is important to understand social psychology and how it affects social behaviour. The drive for change should come from all levels as mentioned above namely, individual, societal and national level. Intrapreneurship is also known as corporate entrepreneurship, there is no universally accepted definition of an intrapreneur, but the most accepted definition is found in 1992 by the American Heritage Dictionary as “a person within a large corporation who takes direct responsibility for turning an idea into a profitable finished product through assertive risk-taking and innovation”.
The first intrapreneurship started in 1950 by aircraft manufacturer Lockhead when it created their “Skunks Works” operation (Haller, 2012, p. Para 4). Articles from The Economist in 1976 and 1982 by Norman Macrae said that businesses should challenge and innovate within themselves and that rewards should be given for the projects and not attendance (Macrae, 2012). The word “intrapreneur” was coined by Gifford and Elizabeth Pinchot, since then many books and articles were written about intrapreneurs.
An article on “TIME” magazine in February 4, 1985 titled “Here comes the Intrapreneurs” included a story about Stephen Wozniak an employee at Hewlett-Packard in 1975 came up with an idea of a microcomputer that could be used with a television which the firm was not interested, later he started a new company named Apple Computers in 1976 along with Steve Jobs (Haller, 2012, p. para 6). These intrapreneurial initiatives became popular in the last quarter of the 20th century through journals and articles and people started to study and learn more about intrapreneurship while stepping into the 21st century.
Intrapreneurs like entrepreneurs should try to enhance their human capital and possess some characteristics and skills to become successful intrapreneurs. Those characteristics and skills are; adequate knowledge of the internal and external environment, visionary thinking and willing to challenge the status quo, diplomatic and able to lead cross-functional teams, ability to build a professional-support network, and the ability to persevere even in the face of uncertainty (Quast, 2011).
These characteristics are also stated in “The Ten Commandments for Intrapreneurs” by Gifford Pinchot’s book of “Intrapreneuring, Why You Don’t Have to Leave the Corporation to Become an Entrepreneur”. Enhancing human capital is important for individuals who aspire to become intrapreneurs because employers would not need to invest on human capital if you have acquired higher education on your own. Thus, increases your chances of getting an opportunity in the corporate sector as a potential intrapreneur.
Let us look at the role of intrapreneurs in organizations with some practical examples. The role of intrapreneurs are to develop new ventures within organizations, diversify the businesses, exploit underutilized resources and create new opportunities, and help organizations to get rid of non-core activities to enhance economic growth and increase organizational performance through research, development, and innovation (Alipour, 2011, pp. 41-143). The following are examples of organizational success through successful intrapreneurial initiatives. The first example, Kodak struggled to transform itself into the digital age, Cheryl Pohlman who worked in the marketing department along with her team did research from 2003-2006 and as a result Kodak entered the printing market. Later Kodak sold 520,000 printers in 2007 exceeding its target of half a million (Flight, 2008).
Second example, Toyota launched its Scion brand in 2003 and Jeri Yoshizu – Scion Sales and Promotion Manager came up with an innovative style of marketing the Scion brand through opening a new internet based radio station called Scion 17 (Scion AV) In addition to this, she used social networking sites to market the Scion brand of vehicles along with the internet based radio channel. This innovative marketing approach started in 2007 and by 2008 there were 10,000 listening hours per month promoting and advertising Scion brand of vehicles (Flight, 2008).
This intrapreneur found a new and a very successful way to market Toyota Scion not relying on the traditional advertising like TV and newspapers, hence, saving advertising costs. The third example, Scott Gatz of Yahoo came up with the idea of RSS system which is a sponsored search model rather than a directory search model; he was a General Manager at the time in August 2001. Though he brought the idea he was not given the overall in charge of the project. Hundreds of people worked in the RSS project making millions of dollars for Yahoo.
He was later rewarded with the post of Senior Director of Advanced Products (Flight, 2008). This example shows us that by being an intrapreneur and bringing in innovative ideas does not mean that the intrapreneur will be put in charge of the project, sometimes it might be a learning experience. Out of many examples of successful intrapreneurships these three examples of successful intrapreneurship are unique and different from each other. It gives us an idea of how intrapreneurship works is different ways and forms.
These examples show that intrapreneurs can bring about reinvention, innovation, and positive change in mysterious ways, in other words, ideas which no one thought of, saw it coming, or predicted. The world is becoming smaller and smaller due to the development of transportation, communication and information technology. Today the businesses world is brought together through a common corporate language which is English. Hence, it is more convenient for business transactions and as a result more goods and services are produced and consumed in different corners of the world.
There are three different types of economic conditions businesses have to work with, namely, factor-driven stage, efficiency-driven stage and the innovation driven stage (Zoltan, Desai, & Hessels, 2008, pp. 219-220). The factor-driven stage is a basic model with small firms, usually sole proprietorships with low cost efficiencies and low value added products. The efficiency-driven stage is where economies of scale are achieved through higher production efficiency, and greater work forces are managed by better managers.
Finally, the innovation-driven stage is where firms differentiate and add value to its products and services through innovative ideas (Zoltan, Desai, & Hessels, 2008, pp. 221-222). Organizations will look for its intrapreneurs to come up with innovative business ideas mainly in the efficiency driven stage to transform the business to the innovation-driven stage and once it achieved the innovation-driven stage to help maintain and continuously stay competitive.
Creating an organizational culture which nurtures intrapreneurs is critical in determining its success (Ernst & Young, 2010). Ernst & Young after conducting a global survey in 2010 came up with six strategies on how to cultivate effective intrapreneurship within an organization. They are: setting up a formal structure for intrapreneurship, ask for ideas from your employees, assemble and unleash a diverse workforce, design a career path for your intrapreneurs, explore government programs and incentives, and prepare for pitfalls of intrapreneurship (Ernst & Young, 2010).
In addition to the six strategies, intrapreneurships should be supported by the senior management, institutionalize intrapreneurship as an integral part of the organization, and allow the freedom for intrapreneurs to fail without punishment as successful intrapreneurs help organizations to maintain their growth, competitive edge, and ensures its future. The real challenge for the organizations is to monitor intrapreneurship activities because it is difficult to give them specific job descriptions.
It is also difficult to determine a pay, whether it’s appropriate to pay intrapreneurs for attendance like ordinary employees or whether to pay them for projects completed. Other factors such as to whom would intrapreneurs report to and where would the position of an intrapreneur be in the organizational structure should be carefully determined. There is no evidence to say that “intrapreneurs” as intrapreneurs are employed by organizations rather, organizations will look for employees with intrapreneurial capabilities doing ordinary jobs in organizations such as marketing, finance or customer service.
Google for example has a system of allocating 20% of their employees official work time to work on their own intrapreneurship ideas and projects (Ernst & Young, 2010). In summary, intrapreneurs can bring about sustainable growth, create a competitive edge and ensure an organization’s future. Yet it is unclear whether organizations will have a separate department for intrapreneurs in future but leading organizations today are looking out for people with intrapreneurial thinking irrespective of which department they are assigned to work for.
An employee may work in finance, human resources, marketing, sales, research, development, or production departments but organizations will want those employees to come up with innovative ideas which can improve organizational performance. Nevertheless, organizations in future will create a learning culture that will encourage and nurture intrapreneurship ideas and innovation to stay competitive and improve performance. Word Count 1952 References Albright, W. (1985). Assyria. In Encyclopedia Americana (pp. 534-540). Danbury: Grolier.
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