A renewed interest in intrapreneurship coincides with the emergence of more competitive marketplace. Competition is, in turn, forcing organisations to examine the different ways of enhancing or retaining their competitive advantage.
My company, 3M, is acknowledged internationally for its history of innovation through intrapreneurship. Almost 100 years after developing cornerstone products like wet and dry abrasives and masking tapes, innovation at 3M is as prevalent as ever. For example, 3M Integrated Fleet Operations’ (INFO) System tracks the location and course of airplanes and ships; patented liquid crystal technology enables windows to switch easily between clear and frosty; Scotch pop-up tape makes gift wrapping easy with pre-cut tape strips; and Scotch-Brite cleaning sponges kill odour-causing bacteria in the sponge.
As industry evolves under global market forces, organisational ability to create innovation has become critical to success. Establishing and nurturing intrapreneurial behaviour and practice so they become part of an organisation’s culture and ethos can provide the opportunity to initiate corporate renewal and create innovation, in other words managing strategy for sustainable competitive advantage.
Intrapreneurship is about bringing entrepreneurial behaviour into an organisation and focusing on “extending the firm’s domain of competence and corresponding opportunity set through internally generated new resource combinations”. It can take place at any level within the organisation.
The process even has its own vocabulary of buzz words such as bootlegging and skunk works, created to describe individuals who pursue their projects on shoestring budgets and hide them from management for fear of having the project prematurely unplugged. Individuals, on the other hand, are seen as innovation champions within their organisations. Intrapreneurs are frequently found in companies like 3M, IBM and Hewlett-Packard.
To be successful, intrapreneurship needs motivated individuals to take action and an ‘entrepreneurial’ philosophy to be an integral part of the wider organisation’s culture and operating principles.
The benefits
Intrapreneurship can improve an organisation’s financial and market performance by creating additional shareholder value. Measures can be used to audit the outcome of the process including measurement of the return on investment, return on labour, sales growth, operating and contribution income and productivity.
Intrapreneurship can produce either radical or incremental change within an organisation that can enable it to maintain or enhance its competitive advantage. It can develop profitable new businesses, identify process innovations or uncover innovative new products. The most celebrated of this last outcome within 3M is the story of Art Fry, creator of the Post-it Note.
The discovery of an exciting new product is perhaps the most obvious outcome of the intrapreneurial process and not least because of the impact on an organisation’s sales and market share, both highly visible performance measures. For example, worldwide sales of Post-it Notes in 1999 generated more than US$1.3 billion for 3M.
Organisations such as 3M manage innovation through both formal and informal processes, resulting in incremental and radical change to products, services and processes providing sustainable competitive advantage. At 3M this takes place over 40 product divisions.
For an organisation to gain competitive advantage through innovation, individuals or groups must think outside the square and be somewhat maverick in their actions. Intrapreneurship invariably assists the innovation process by challenging the status quo and eliminating organisational structures that “obscure personal responsibility and homogenise individual actions”.
This perspective on innovation and risk-taking underpins the intrapreneur’s 10 commandments, which includes the observation that; “it’s easier to ask for forgiveness than permission”. (See box story.)
Intrapreneurship drives knowledge creation and, therefore, the development of new organisational competencies or modifications to existing ones. This new knowledge becomes the foundation on which an organisation’s competitive advantage can be sustained or improved.
Intrapreneurs influence organisational learning particularly as it relates to opportunity assessment or the creation and commercialisation of new knowledge-intensive products, processes or services. For instance, 3M takes products or process innovations and applies them across range of markets or applications. Breakthroughs in adhesive technology are just as likely to be found in healthcare markets as they are in industrial applications.
Intrapreneurs contribute to improving an organisation’s performance by increasing proactiveness and willingness to take risks through innovation of products, pro-cesses and services. Intrapreneurship adds further dimension by creating knowledge and developing new competencies that help create sustainable competitive advantage.
The variables
The level of intrapreneurship in an organisation is affected by three key variables:
• the individual
• the organisation, and
• the external environment.
The individual most directly impacts the level of intrapreneurship in an organisation, because it relies on the autonomous actions of individuals to initiate new ideas. Without the intrapreneur, innovation remains unrealised potential still to be converted into new product pro-cess or service.
To realise innovation the individual must become personally involved and committed to drive entrepreneurship within the organisation. To succeed the individual must simultaneously combine number of roles and become director, innovator, manager and entrepreneur.
An organisation’s culture, structure, strategy and resourcing are all variables that influence the number of creative ideas proposed and what happens to those ideas. The organisation must determine whether it will pursue innovation and intrapreneurship through formal or informal processes. Resources then need to be provides and linked to the strategic intent. Management’s willingness to support new ventures and the creation of structure and organisational culture that encourages and sustains intrapreneurial activities is key imperative.
Management’s commitment to intrapreneurialism is exemplified by the culture and value system at 3M which allows employees to spend 15 percent of their time on alternative projects and the corporate goal of generating 30 percent of sales from products less than four years old.
With this culture intrapreneurial activities become part of the organisation’s ethos and, given the favourable response to innovation within the organisation, provides motivation and direction for individuals to innovate.
The benefits of this innovative culture are sometimes far reaching. Charles Thiel, for instance, created the metered dose inhaler for 3M almost 50 years ago. The true impact of this innovation was for asthma sufferers, who could take easy and repeated doses of their inhaled medication and improve their quality of life. Today, over 70 million patients worldwide rely on metered dose inhalers for the treatment of asthma. At the same time development of this technology is still contributing to the 30 percent corporate goal with new CFC-free metered dose inhalers.
The external environment can provide conditions to encourage or inhibit intrapreneurship. If an organisation competes in stable environment there is less motivation to be entrepreneurial and support intrapreneurship. Heterogeneous and dynamic environments provide fertile ground for intrapreneurs and an informal intrapreneurship process.
Similarly, hostile environment provides motivation for an organisation to pursue innovation and intrapreneurship as more formal activity to achieve competitive advantage and corporate renewal.
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