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Prof. Poorva Ranjan: Entrepreneurship Development
It is the practice of using entrepreneurial skills without taking on the risks or accountability associated with entrepreneurial activities. It is practiced by employees and self-employed people using a systemised business model within an established organization. Employees, perhaps engaged in a special project within a larger firm are supposed to behave as entrepreneurs, even though they have the resources and capabilities of the larger firm to draw upon. Capturing the dynamic nature of entrepreneurial management (trying things until successful, learning from failures, attempting to conserve resources, etc.) adds to the potential of an otherwise static organizations without exposing those employees or self employed people to the risks or accountability normally associated with entrepreneurial failure. At some point an entrepreneurial venture reaches the point of being an established business. What that point is is arguable. Some definitions specify a certain dollar sales for a certain length of time, others say that once the growth rate has leveled off, a business is no longer in its entrepreneurial stage. While reaching a point of "being there" is an achievement, a real concern for most businesses is that somehow becoming an established business means that the entrepreneurial spirit has been lost. Hence, the growth of intrapreneurship - fostering entrepreneurism within established organizations. In the mid-80s, Gifford Pinchot coined the term "intrapreneur" to describe employees of large corporations hired to think and act as entrepreneurs. New grads may find that an intrapreneurship is just what they need to discover first hand all the ups and down of being an entrepreneur. Pinchot defines intrapreneurship as "behaving like an entrepreneur when you're employed at a large corporation for the benefit of the corporation as a whole" and believes employment as an intrapreneur prior to trying a hand at entrepreneurship is a great way to get your foot into the entrepreneurial door
The Intrapreneurial Organization
Intrapreneurs have been credited with increasing the speed and cost-effectiveness of technology transfer from research and development to the marketplace. While intrapreneurs are sometimes considered inventors, inventors come up with new products. Intrapreneurs come up with new processes that get that product to market. Part of the reason they are considered similar to inventors is that they are creative and are risk-takers in the sense that they are stepping out of their traditional role within the business. However, their risk-taking behavior is personal. In terms of the business, they actually work towards minimizing the risk through the innovative approaches they use to more efficient and effective product production and sales. Some methods that have been used by businesses to foster intrapreneurship are:
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Users of internal services are allowed to make their own choice of which internal vendor they wish to use. Intrapreneurial employees are granted something akin to ownership rights in the internal intraprises they create. Companywide involvement is encouraged by insisting on truth and honesty in marketing and marketplace feedback. 1
Intrapreneurism in business has evolved to encompass a variety of concepts: identifying and fostering employees who have what a considered to be intrapreneurial traits. combining the findings from their research and practical applications . a revised edition. but should be paying competing groups for modules of work done. Based on the success of some of the early trials of their methods in Sweden they began a school for intrapreneurs and in 1985 they published their first book. In 1982. noting that the this trend had resulted in confederations of intrapreneurs. One suggestion was to set up a number of typing pools contracted for a certain amount of work over a certain time period for a lump sum. setting pay. they will not accept high levels of risk that entrepreneurs will. and developing innovation through rewarding intrapreneurial behavior. The members of the pool would be responsible for apportioning work.) 2 . Team members are allowed a variety of options in jobs. and exchanges.a portion of their salary. Poorva Ranjan: Entrepreneurship Development Intrapreneurial teams are treated as a profit center rather than a cost center(i. developing an intrapreneurial process for part or all of a business. Under their model a person wishing to develop an intrapreneurial project would initially have to risk something of value to themself . Internal enterprises have official standing in the organization. Norman Macrae predicted a number of trends in business one of them being "that dynamic corporations of the future should simultaneously be trying alternative ways of doing things in competition within themselves". Applied across the business spectrum such groups would provide the intrapreneurial competition he envisioned. A system of contractual agreements between internal enterprises is defined and supported by the organization. Employees are encouraged to develop through training programs. The concept apparently dates back to 1976. (Note: A revised edition of that book. In an article in The Economist in 1976. they are responsible for their own bottom line). for instance. alliances.Intrapreneuring. During the same time frame. Intrapreneuring in Action is now available. he revisited those thoughts in another Economist article. The intrapreneur could then sell the completed project for both cash bonuses and intra-capital which could be used to develop future projects. One way some companies handle this is for the team to have their own internal bank account. in innovation efforts. They coined the word intrapreneur giving credit for their thinking to the 1976 article by Macrae. History The term itself dates to the 1983 PhD dissertation by Burgelman and later defined in a 1985 book by Gifford Pinchot III. Gifford and Elizabeth Pinchot were developing their concept of intracorporate entrepreneur.e. The term was later applied to the self-employed worker by Ed Ludbrook in his 2008 book '100% Confidence' to describe the self-employed people who operated a systemised business opportunity. A system for settling disputes between internal enterprises and between employees and enterprises is part of the intrapreneurship plan. setting work hours or even whether to subcontract out part of the work.Page 2 • • • • • • Prof. "Intrapreneuring". He suggested that firms should not be paying people for attendance. The use of this term helps name the differences in entrepreneurial activity and the theory that most business opportunity seekers are not just risk-adverse. such as franchising or a Network Marketing/MLM business. entitled "Intrapreneuring in Action" is currently published.
techniques. showcasing teams who are inventing the future and reinventing business.com discusses a variety of specific 3 . And. Thus. Why You Don't Have to Leave the Corporation to Become an Entrepreneur" provides 10 commandments for intrapreneurs: 1. attempting to conserve resources. Fast Company has the goal of chronicling the changes under way in how companies create and compete. " Re-Inventing the Corporation" and Steve Jobs was describing the development of the Macintosh computer as an intrapreneurial venture within Apple. defining it as "a person within a large corporation who takes direct responsibility for turning an idea into a profitable finished product through assertive risktaking and innovation". Gifford Pinchot's out-of print book " Intrapreneuring. 7. early publicity triggers the corporate immune system. Never bet on a race unless you are running in it. Capturing a little of the dynamic nature of entrepreneurial management (trying things until successful. and ask for advice before asking for resources. and creative about their pathway. They are advised to be courageous. The Intrapreneuring Cafe. 2. it is easier to ask for forgiveness than permission. Intrapreneurship was a concept here to stay. Be true to your goals. 9. build a team of the best. Online forums that encourage new thinking have evolved with Fast Company and The Intrapreneuring Cafe being among the favorites. The concept was established enough that in 1990 Rosabeth Moss Kanter of Harvard Business School discussed in her book. and equipping the people exploring this uncharted territory with the tools. For the intrapreneurial employee. The American Heritage Dictionary brought intrapreneurism into the main stream by adding intrapreneur to its dictionary. Intrapreneurs are Inside entrepreneurs who follow the goal of the organization. 6.) adds to the potential of an otherwise static organizations without exposing those employees to the risks or accountability normally associated with entrepreneurial failure. Come to work each day willing to be fired. Share credit wisely. etc. Remember.Page 3 Prof. and mindsets they need. but realistic about ways to achieve them. 10. in 1992. Employees. Follow your intuition about people. Their task is to put together a team of enthusiastic volunteers. Do any job needed to make your project work regardless of your job description. 8. models. learning from failures. Honor your sponsors. 3. build a network of sponsors. even though they have the resources. Ask for advice before asking for resources. Poorva Ranjan: Entrepreneurship Development By 1986 John Naisbett was citing intrapreneurship as a way for established businesses to find new markets and new products in his our-of-print book. run by intrapreneur. by operating within the organizational environment. advice abounds. capabilities and security of the larger firm to draw upon. flexible. perhaps engaged in a special project within a larger firm are supposed to behave as entrepreneurs. highlighting the new practices shaping how work gets done. Employee Intrapreneur An employee Intrapreneur is the person who focuses on innovation and creativity and who transforms a dream or an idea into a profitable venture. the need for intrapreneurial development as a key factor in ensuring the survival of the company. " When Giants Learn to Dance". 5. 4. Build a quiet coalition for your idea. frugal. moderate risk takers.
These teams can be focused on a product such as a new car. There are an infinite number of stories that could be told about the future. 3M has a standard policy that allows all employees to work on developing their own business ideas at least 15 percent of the time they are at work. From the initial group eight new projects were proposed and a number of them funded. Intrapreneurship has not just become a method for revitalizing business processes. Pathfinders. Scenarios are stories about possible futures which enable organizations to learn. What evolves is a free market system with work coordinated more effectively and responsibility distributed more widely 4 . The organization can be organized around teams that function as small businesses nested and networked together. of course. such as public relation or a service. Kelly Johnson. Poorva Ranjan: Entrepreneurship Development intrapreneurship issues such as what the best businesses are for intrapreneurship and government agency intrapreneuring. that lead to better decisions. The group was originally named after a reference in a cartoon. This program was actually developed by a former GTE employee. Spadafore spent extensive counselling the volunteer employees in this new way of thinking and working. but of also revitalizing jobs. in human resources. One of the most exciting concepts in intrapreneurism is developing intrapreneurial competing teams within a company. it is very applicable to the business environment today. adapt and develop better strategies. the project was internally protected and secretive. a process. Scenario planning begins by identifying the focal issue or decision. They also run want ads for intrapreneurs. the purpose is to tell those that matter.Page 4 Prof. Employee Examples Many companies are famous for trying to setup internal organizations that promote innovation within their ranks. and was first brought together in 1943 to build the P-80 fighter jet. One of the most well known is the "Skunk Works" group at Lockheed Martin. Anthony Spadafore. In GTE's Information Systems Division that has paid off for the company and its employees too. Because the project was to eventually become a part of the war effort. What has intrapreneurship meant in the reality of the business environment? The area of greatest impact has been. Another direction intrapreneurship is growing is in developing scenarios to anticipate future trends and responses. A number of employees have defined totally new career paths for themselves. One of the big breakthroughs that came from this program was the concept of Post-It-Notes which was pioneered by an employees that wanted something that wouldn't fall out to mark pages in his hymn book at church. later famous for Kelly's 14 rules of intrapreneurship. such as the secretarial services of the organization. While scenarios to-date have primarily been used for large scale planning efforts for such projects as education in the United States. This program has totally redefined how GTE does business. was the director of this group. 3M is another company that has reaped the rewards of intrapreneurism. which works towards developing self-directed employees. who left GTE to form his own consultancy program.
5 . This business offers a low risk alternative to creating your own business. More information about workable models is surfacing daily. Direct Sales Over 95% of companies in the $100bn Direct Sales industry now offer a leadership business opportunity. This has ensured that McDonalds franchisees effectively never fail. but has the potential for providing substantial synergy for both efforts. This industry was pioneered appealing to entrepreneurs and its failure rate produced widespread condemnation by 1970s and was called Pyramid Selling. The opportunity is to earn commissions on the sales network you built.Page 5 Prof. Direct Sales industry also seeks to attract Intrapreneurs yet has pioneered its industry like the Franchise industry with entrepreneurs and thus has produced unacceptably low success rates Conclusion Intrapreneurism as a field is just reaching a more stable point in growth itself. A variety of models are in practice industrywide. The industry then evolved their franchisee systems to a competence basis which ensure minimum skill levels and performance. Poorva Ranjan: Entrepreneurship Development Self-employed Intrapreneur A self-employed Intrapreneur is the person who builds a business based on a business format or system sold by another company. This is why it is known as a Network Marketing or MLM opportunity. The business opportunity is claimed to be a systemised business like a franchise system. The dialog between entrepreneurs and intrapreneurs on common challenges has been limited to-date. Self-employed Intrapreneurs are estimated to be the majority of people investigating business opportunities as few people have the acceptance of risk necessary to be an entrepreneur [link entrepreneur]. The most famous franchise is McDonalds that requires new franchisees to attend their Hamburger University and study for a minimum of 9 months full-time to prove their competence in their business system. They operate within set policies and procedures. Self-employed Examples Franchising The $2trillion global franchise industry has been built on appealing to Intrapreneurs. It reduced the failure rate to such a low level that failure in franchising is considered unusual.
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