THE ENTREPRENEURIAL AND INTRAPRENEURIAL MIND

I. THE ENTREPRENEURIAL PROCESS
A. Intrapreneurship is entrepreneurship within an existing organization. B. The entrepreneurial process involves finding, evaluating, and developing an opportunity by overcoming the strong forces that resist the creation of something new. C. Phase 1: Identify and Evaluate the Opportunity. 1. Opportunity identification: Most good business opportunities result from an entrepreneur being alert to possibilities. a. Fruitful sources include consumers and business associates. b. Channel members in the distribution system—retailers, wholesalers, or manufacturer’s reps—are also helpful. c. Technically-oriented individuals often identify business opportunities when working on other projects. 2. Each opportunity must be carefully screened and evaluated—this is the most critical element of the entrepreneurial process. 3. The evaluation process involves looking at: a. The length of the opportunity. b. Its real and perceived value. c. Its risks and returns. d. Its fit with the skills and goals of the entrepreneur. e. Its uniqueness or differential advantage in its competitive environment. 4. The market size and the length of the window of opportunity are the primarily bases for determining risks and rewards. a. The risks reflect the market, competition, technology, and amount of capital involved. b. The amount of capital forms the basis for the return and rewards. c. The return and reward of the present opportunity needs to be viewed in light of any possible subsequent opportunities as well. 5. The opportunity must fit the personal skills and goals of the entrepreneur. a. The entrepreneur must be able to put forth the necessary time and effort required for the venture to succeed. b. He or she must believe in the opportunity enough to make the necessary sacrifices. 6. Opportunity assessment should focus on the opportunity and provide the basis to make the decision, including: a. A description of the product or service. b. An assessment of the opportunity. c. Assessment of the entrepreneur and the team. d. Specifications of all the activities and resources needed. e. The source of capital to finance the initial venture. D. Phase 2: Develop a Business Plan.
THE ENTREPRENEURIAL AND INTRAPRENEURIAL MIND

in order to structure a deal with the lowest cost and loss of control. 1. while giving up as little control as possible. F. Administrative-oriented individuals receive personal rewards by effectively administering the resources under their control. The administrative domain is not only slow to act on an opportunity. The entrepreneurial domain is pressured by the need for action and has a short time span in terms of opportunity commitment. the administrative domain is operant. When the use of planning systems is the strategic orientation. 2. but the commitment is usually for a longer time span. 3. 4. The entrepreneur should try to maintain as large an ownership position as possible. often based on certain tasks or objectives being reached. Strategic Orientation. In the administrative domain. A good business plan must be developed in order to exploit the opportunity defined. MANAGERIAL VERSUS ENTREPRENEURIAL DECISION MAKING A. 1. 1. E. Phase 3: Determine the Resources Required. 3. In acquiring these resources the entrepreneur is forced to maximize resource use. 2. 1.1. 1. Alternative resource suppliers should be identified. Phase 4: Manage the Enterprise. The entrepreneur must use them to implement the business plan. c. particularly in the start-up stage. The entrepreneur’s strategic orientation depends on his or her perception of the opportunity. along with their needs and desires. II. 2. 4. Commitment of Resources. Acquiring needed resources. a. requiring more ownership be relinquished. is difficult. Assessing the resources needed starts with an appraisal of the entrepreneur’s present resources. the commitment of resources is for the total amount needed. Any resources that are critical need to be differentiated from those that are just helpful. As the business develops. 2. as well as identifying a control system. more funds will probably be needed. 2. This involves implementing a management structure. THE ENTREPRENEURIAL AND INTRAPRENEURIAL MIND . Care must be taken not to underestimate the amount and variety of resources needed. B. b. Control of Resources. An entrepreneur is used to having resources committed at periodic intervals. 2. obtaining those resources. E. This plan is essential to developing the opportunity and in determining the resources required. Commitment to Opportunity. and successfully managing the venture. C. D. The difference between the entrepreneurial style and the managerial style (administrative domain) involves five business dimensions.

c. Intrapreneurship is one method for stimulating and capitalizing on those who think that something can be done differently and better. When meaning is not provided within the organization. They want responsibility and want more freedom in their work environment. THE ENTREPRENEURIAL AND INTRAPRENEURIAL MIND . E. cultural.” a. Frustration can develop and result in the employee becoming less productive or leaving the organization. and business pressures for intrapreneurship. under pressure of limited resources. the organizational structure is formalized and hierarchical in nature. Self-renewal reflects the transformation of organizations through the renewal of the key ideas on which they are built. This has recently caused more discontent in structured organizations. Proactiveness includes initiative and risk taking. strives to rent resources on an asneeded basis. 1. and diversification can be overcomed by developing a spirit of entrepreneurship. cultural. 2. such as Xerox Corporation’s commitment to Xerox Technology Ventures. Entrepreneurial endeavors consist of four key elements. Organizational innovativeness refers to product and service innovation with an emphasis on development and innovation in technology. The entrepreneur employs a flat organizational structure with informal networks. Individuals frequently desire to create something of their own. New business venturing refers to the creation of new business within an existing organization. The resistance against flexibility. Interest in intrapreneurship has resulted from events occurring on social. 3. 2. B. The administrator is rewarded by effective resource administration and has a drive to own or accumulate as many resources as possible. There is an increasing interest in “doing your own thing. It is important to instill the entrepreneurial spirit in an organization in order to innovate and grow. called intrapreneurship. There are social. The entrepreneur. growth. d. Hyper-competition has forced companies to focus on new product development. individuals often search for an institution. within the existing organization. such as intrapreneurship. and decreasing costs. 1. b. In the administrative domain. Managerial Structure. 1. and business levels. as well as competitive aggressiveness and boldness. that will provide it. increased productivity. III. In a large organization problems occur that thwart creativity and innovation. 2. CAUSES FOR RECENT INTEREST IN INTRAPRENEURSHIP A. since large corporations are more efficient in a competitive market than are smaller firms. 4. D. 2. This growth and diversity that can result are critical. F. 1. e. 1. 2.1. C.

Many companies are attempting to create the same spirit. and mentors. (iv) Do not take initiative. a. The guiding principles in a traditional corporate culture are: (i) Follow instructions given. and experiment. Emphasis is on gathering large amounts of data as the basis for a rational decision. e. flexibility. try. Risky decisions are often postponed until hard facts are gathered or a consultant is hired. e. CORPORATE VERSUS INTRAPRENEURIAL CULTURE A. Motivation. b. (v) Stay within your turf and protect your backside. or risk taking—the guiding principles of intrapreneurs. b. (ii) Do not make mistakes. Smaller. aggressive entrepreneurial firms are developing more new products and becoming dominant in selected markets. These support the present corporate culture. goals. 1. (iii) Do not fail.IV. 4. Take responsibility and ownership. This restrictive environment is not conducive to creativity. culture. d. 3. c. lines of authority. 2. THE ENTREPRENEURIAL AND INTRAPRENEURIAL MIND . a. and rewards of entrepreneurship in their organizations. Develop visions. Create and develop. independence. b. teamwork. The goals of an intrapreneurial culture are quite different: a. Close working relationships help establish an atmosphere or trust that facilitates accomplishment of visions. d. e. sponsors. Suggest. a. and control mechanisms. The two cultures produce different types of individuals and management styles. with established procedures. The typical corporate culture has a climate and reward system that favors conservative decision making. 1. Individuals make suggestions across functional areas. There are differences in the norms of the two cultures. Traditional managers are motivated primarily by promotion and typical corporate rewards. resulting in cross-fertilization of ideas. c. d. c. and action plans. The traditional culture is hierarchical in nature. ownership. Be rewarded for actions taken. Often there are so many approvals required that no individual feels personally responsible for the project. B. but inhibit new venture creation. An intrapreneurial firm has a flat organizational structure with networking.

A multidisciplinary team approach needs to be encouraged. and intrapreneurs add sponsors. entrepreneurs serve self and customers. instead they evolve. such as Xerox. c. Without the opportunity to fail. insufficient funds are allocated to creating something new. not in the new venture. An organization should make sure that there are no initial opportunity parameters. Intrapreneurs and entrepreneurs are moderate risk takers. certain factors and leadership characteristics need to be present. entrepreneurs the long run. or trial and error. and intrapreneurs learn to conceal risky projects from management until the last possible moment.b. Experimentation. 2. One key to intrapreneurial success is the existence of “skunkworks” involving key people. There are also time orientation differences. 3. G. THE ENTREPRENEURIAL AND INTRAPRENEURIAL MIND . and AT&T have established separate venture capital areas for funding new internal and external ventures. 1. C. inhibiting creativity in new product development. it must be voluntary. Entrepreneurs and intrapreneurs thrive on independence and the ability to create. 3. Most managers in a corporation are not capable of being successful intrapreneurs. A company has to establish an environment that allows mistakes and failures. 1. the reporting requirements can become obstacles to obtaining resources. managers are much more cautious. Intrapreneurs expect their performance to be suitably rewarded. Traditional managers tend to be most concerned about those at higher levels. c. 4. few corporate intrapreneurial ventures will be developed. 3. a. Research and development are key sources for new product ideas. Available resources are committed instead to problems that have an immediate effect on the bottom line. 1. When available. 3. The corporate environment must establish a long time horizon for evaluating the success of the overall program. Often. 3M. CLIMATE FOR INTRAPRENEURSHIP A. 1. The firm must operate on the cutting edge of technology and encourage and support new ideas instead of discouraging them. Managers emphasize the short run. b. Another complication is the fact that a team member’s promotion within the corporation is based on performance in the current position. Some companies. Successful new products usually do not appear fully developed. is encouraged. V. 2. E. F. 2. 2. 2. The organization operates on the frontiers of technology. and intrapreneurs somewhere in between. Most entrepreneurs fail at least once. 1. B. In establishing an intrapreneurial environment. The resources of the firm need to be available and easily accessible. D. The spirit of intrapreneurship cannot be forced on individuals. such as turf protection.

Understanding the environment. F. an intrapreneur can create something new in the organization structure. Recruiting those in the organization requires crossing established departmental structure. 1. 3. Creating management options. Encouraging teamwork. open discussion is part of the learning process. The intrapreneur must be a good diplomat to minimize disruption. The individual must be creative and have a broad understanding of the internal and external environments of the corporation. 3. The intrapreneur needs to be appropriately rewarded for the energy and effort expended on the new venture. An intrapreneur needs to understand all aspects of the environment. The intrapreneur must be a visionary leader—a person who dreams great dreams. H. Leadership is the ability to dream great things and communicate them in a way that people say “yes” to being part of the dream. 2. An intrapreneur is open to and encourages change. E. There are certain individual characteristics needed for a person to be a successful intrapreneur. Being visionary and flexible. J. Creativity tends to decrease with age and education. Open discussion must be encouraged to develop a good team for creating something new. The seventh characteristic is a reward system. 1. 4. The intrapreneurial activity must be whole-heartedly supported by top management. A corporate environment favorable for intrapreneurship has sponsors and champions throughout the organization who support the creative activity and resulting failures. Those that emerge must be allowed to carry a project through to completion. To establish a successful new venture. C. VI. THE ENTREPRENEURIAL AND INTRAPRENEURIAL MIND . 2. Many corporate managers have forgotten that frank. including: 1. Building a coalition of supporters. B. and persisting. Encouraging open discussion. INTRAPRENEURIAL LEADERSHIP CHARACTERISTICS A. 1. D. 5. Every new company formation requires a broad range of business skills. 2. the intrapreneurial leader must have a dream and overcome all obstacles to achieve it. By challenging the beliefs and assumptions of the corporation. 6. 1. An equity position in the new venture is one of the best motivational rewards. He or she needs the ability to encourage teamwork and use a multi disciplined approach. 3. 1. The intrapreneur must be flexible and create management options. An intrapreneur falls in love with the new venture and will do almost anything to ensure its success. 1. I.2. 2. 2. 2.

1. The intrapreneur must encourage each team member. and helping the retailer.2. Information about intrapreneurship and about the company’s specific activities should be well publicized. G. a. Step 3: A company needs to use technology to make itself more flexible. 1. To establish an intrapreneurial environment. 1. A good intrapreneur makes everyone a hero. 1. Next. THE ENTREPRENEURIAL AND INTRAPRENEURIAL MIND . Technology has allowed small companies to act like they are big ones. Without top management commitment. upper. General guidelines need to be established for intrapreneurial venture development. 2. selected. E. Step 6: An organization must learn to be more productive with fewer resources. This is effectively accomplished through seminars. and trained. particularly during hard times. The overall expectations and target results should be established. Step 1: The first step is to secure a commitment to intrapreneurship in the organization by top. 2. The degree of openness among the team depends on the degree of openness of the intrapreneur. intrapreneurial leaders need to be identified. 2. With middle management cutbacks. Only through persistence will a new venture be created and successful commercialization result. 2. VII. Large companies can use technology to make themselves responsive and flexible. C. This is particularly true when the environment is very traditional. hiring from smaller rivals. and middle management. Once top management has committed to intrapreneurship for a sufficient length of time. 1. G. 2. Openness leads to a strong coalition of supporters and encouragers. Step 2: Ideas and general interest areas should be identified. but it is easier to use an outsider to facilitate the process. the organization must implement a procedure. and impact of the organization. 1. Step 4: The organization can use a group of managers to train and share their experiences with other members. 3. the organization will never be able to make the necessary changes. the concept is introduced throughout the organization. F. This can be done internally. Step 5: The organization needs to develop ways to get closer to its customers by tapping the data base. profitability requirements. D. A mentor/sponsor system needs to be established. b. 3. These sessions should be conducted one day per month for a specified period of time. 2. ESTABLISHING INTRAPRENEURSHIP IN THE ORGANIZATION A. H. along with the amount of risk money that is available. B. A successful venture can be formed only when the team feels the freedom to disagree and to critique an idea. more control has been given to lower levels of the organization. 1. specifying time frame.

2. THE ENTREPRENEURIAL AND INTRAPRENEURIAL MIND . 1. J. 3M allows employees to devote a percent of their time to independent projects. with the intrapreneurs having total authority over expenditures and access to funds. Independent start-ups tend to outperform corporate start-ups. 2. Even IBM has developed the independent business unit concept. The span of control should be increased. The problems of intrapreneurship are not insurmountable. 1. HewlettPackard has taken steps to take advantage of future opportunities. PROBLEMS AND SUCCESSFUL EFFORTS A. Intrapreneurship. There are many examples of companies that have successfully implemented intrapreneurship. Step 8: The support must involve tying the rewards to the performance of the intrapreneurial unit.2. is not without problems. After failing to recognize the potential of Wozniak’s personal computer. One study found that new ventures started within a corporation performed worse than those started independently. Because they do not immediately affect the bottom line. 2. VIII. Step 7: The organization needs to establish a strong support structure. This encourages team members to work harder and compete more effectively. and implementing intrapreneurship can lead to new products. Step 9: The organization needs to implement an evaluation system that allows successful units to expand and unsuccessful ones eliminated. 3. 1. The equity portion of the compensation is particularly difficult to handle. B. intrapreneurial activities can be overlooked and receive little funding. 1. and the development of an entirely new corporate environment and culture. H. growth. also called corporate venturing. C. I. 2. These ventures require flexible. innovative behavior.