What is Intrapreneurship: Definition, Strategies, and Examples
In modern business, intrapreneurship emerges as a key driver of comapny innovation. It's where entrepreneurial spirit thrives within the established structures of a company. This approach harnesses the creative potential of employees, blending their innovative ideas with the organization's resources to foster growth and transformation. Intrapreneurship is not just a concept; it's a strategic asset for companies aiming to evolve from within, unlocking new avenues of success and sustainability.
What is intrapreneurship?
Intrapreneurship refers to applying entrepreneurial principles and processes within a large organization to create, develop, and implement innovative ideas, products, or services. These innovative ventures can eventually become a new department or subsidiary spinoff. The term ‘intrapreneur’ was coined by Sustainable Business School founder Gifford Pinchot III in 1978, where he described it as “dreamers who do.” Gifford says intrapreneurs are employees who contribute to corporate innovation like entrepreneurs do for their startups.
Intrapreneurship involves empowering employees to take initiative, embrace risk-taking, and leverage the organization's resources, capabilities, and support to drive innovation from within. This approach fosters a culture of innovation and agility, enabling established companies to remain competitive and adapt to changing market conditions by continually evolving and introducing new offerings. Research by McKinsey & Company indicates that 60% of companies view their employees as the most significant source of innovation. This talent reservoir ought to be nurtured internally rather than overlooked.
Intrapreneurship vs Entrepreneurship
Intrapreneurship and entrepreneurship are distinct yet intertwined concepts in innovation and business development. While both involve pursuing new ideas and opportunities, they mainly differ in their execution within established organizations versus standalone ventures.
Here is a table that carefully compares the two concepts:
Examples of intrapreneurship
Google's innovative “20% time” policy, which allows employees to dedicate a fifth of their working hours to projects outside their primary responsibilities, has been a catalyst for some of the company's most groundbreaking products. Leveraging this policy, Paul Buchheit embarked on developing Gmail during his allocated 20% time. His vision was to engineer an email service that stood out by being faster, offering more storage, and integrating search functionality—features ahead of their time. Upon its launch in 2004, Gmail rapidly ascended to become a leading email service worldwide, boasting over 1.5 billion users as of 2019. This 80/20 rule generated a significant new revenue stream for Google and further solidified its status as a beacon of innovation in the tech industry. Google's intrapreneurship policy has also given birth to groundbreaking products like AdSense, Gmail, Google Maps, and Google Earth, proving intrapreneurs have the potential to reshape industries and drive a company's success.
Amazon Prime
Amazon's 'Prime' membership, a cornerstone of the company's identity, emerged from the innovative spirit of its workforce. Initially, Amazon offered 'Super-Saver Shipping' to its customers, but this failed to produce the anticipated impact, leaving Amazon behind its competitor, eBay.
Amazon’s 'Super-Saver Shipping' process was extremely complex on the back end and for customers. The shopper needed to reach a minimum of $25 spent and then wait 8-10 business days for the delivery to be fulfilled.
Recognizing the current loopholes and challenges with the service, a group of Amazon employees, under the leadership of then-VP Greg Greeley, conceived the idea of an 'exclusive' membership that guaranteed two-day delivery, which they hypothesized customers would be willing to pay for. The project that started as “Futurama” then evolved into 'Prime.' On The Ideas Show Podcast, Greg shared insights into Amazon's culture of valuing and cultivating new ideas from its employees.
Today, Prime generates over $35 billion annually from subscriptions alone, per data published by Backlinko, a testament to the power of a simple yet transformative idea.
3M’s Post-it Note
3M fosters innovation and forward-thinking within its organization through various centers and forums that help create actionable ideas that can be nurtured for greater success further with the right resources. The company also has a “15% rule,” enabling employees to allocate a portion of their working hours to explore and nurture innovations.
The creation of the Post-it Note began with Spencer Silver, a 3M scientist, who serendipitously invented a low-tack adhesive; at the time, the future applications were not immediately apparent.
Arthur Fry, a colleague of Silver's at 3M, identified the practical use of this adhesive. He saw its potential for creating non-permanent bookmarks for his hymnbook, leading to the development of the Post-it Note. It was suitable as a bookmark because it could be peeled and reused without leaving any residue.
3M’s corporate funding initiative helped advance the innovation through the ‘Genesis Grant.’
Since its introduction in 1980, the Post-it Note has emerged as one of 3M's flagship products, experiencing consistent growth in sales year over year. By 2013, 3M produced 50 billion Post-It Notes every year. Its widespread adoption in professional and personal settings underscores the significant impact that intrapreneurial efforts can have on a company's innovation trajectory and success.
PlayStation
The inception of the PlayStation can be traced back to Ken Kutaragi, a Sony engineer with a deep passion for video games. The engineer bought a Nintendo gaming console for his daughter, which he believed could be improved significantly. He envisioned a gaming console that would outperform any existing systems at the time.
Despite the initial skepticism from Sony—a company then primarily known for its audio-visual electronics—Kutaragi clandestinely developed his project. His determination was rewarded when he succeeded in creating a workable prototype.
Upon its release in 1994, the PlayStation transformed the gaming landscape, with sales exceeding 100 million units. This milestone cemented Sony's position in the gaming industry and paved the way for a series of successful consoles, including the PlayStation 2, which became the most-sold console in history.
How do you cultivate an intrapreneurial culture in your organization?
Here are some steps to build a healthy intrapreneurial environment:
1. Foster a culture of experimentation: A PwC survey revealed that 65% of workers stated that their managers did not accept small failures. In environments like these, experimentation and creativity are dampened. Organizations must create an environment where failure is seen as a step towards innovation. Implement a "fail fast, learn fast" approach by setting up rapid prototyping and feedback loops.
2. Provide resources: Resources for intrapreneurship include investing in learning and development, technology, and appropriating funds for intrapreneurial projects. These resources can include budgeting for innovation funds, providing access to technology and tools, and offering mentorship programs. Companies can also offer employees workshops on design thinking, lean startup methodologies, and digital transformation strategies.
3. Increase autonomy: Organizations must give employees autonomy by giving them the assurance and skills to believe that they can develop new solutions. A company must develop ways of working that encourage self-determination in specific areas of the business while the core elements of the company focus on strategy and resource allocation. Giving more responsibility to teams with high performance can be a good start.
4. Offer recognition and rewards: Employees need to be motivated for their entrepreneurial performance through recognition and rewards. Organizations can offer financial rewards and profit sharing from successful projects to encourage intrapreneurs, but these strategies need to be supported with intrinsic rewards. A company must establish a system of recognition for intrapreneurial efforts, even if they don’t always lead to successful outcomes. Other incentives could include innovation awards or public acknowledgment in company meetings.
5. Implement structured intrapreneurship programs: Develop a formal strategy with clear guidelines and processes for submitting ideas, obtaining funding, and accessing resources.
Here are some programs to encourage intrapreneurship:
The 20% Culture: Similar to Google’s "20% time" policy, a program where employees are encouraged to spend time on passion projects can spark innovations.
The 30% rule: A rule where divisions must generate 30% of their revenues from products introduced in the last four years, with bonuses tied to this metric.
Technology forums: Internal professional societies that facilitate employees' sharing of ideas and knowledge.
Grants: Inventors can seek seed capital from their business unit managers to fund their innovative concepts through specifically created grants for innovations.
6. Create innovation labs and incubators: Establish dedicated labs and incubators where cross-functional teams collaborate to nurture and develop disruptive ideas. These incubators can be designed to provide resources, mentorship, and a structured environment for employees to transform innovative concepts into successful ventures. Futurize, an innovation studio, helps organizations conceptualize new ideas and ways of thinking by creating innovation programs and incubators to solve complex problems and build cutting-edge ventures.
Conclusion
Intrapreneurship, the practice of applying entrepreneurial principles within established organizations, fosters innovation and growth. It plays a significant role in empowering employees to drive innovation from within. Intrapreneurship isn't just a concept; it's a catalyst for innovation, adaptability, and sustainable growth. Embracing intrapreneurship can unlock the potential for groundbreaking ideas, transforming your organization and ensuring its success in an ever-evolving business landscape.
Are you an Organisation Looking to Foster an Intrapreneurial Culture?
Futurize helps build and design innovation programs to encourage creative thinking among individuals. Get in touch with us to learn how!
