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The fundamental difference between intrapreneurs and entrepreneurs is who they are accountable to. Entrepreneurs work for themselves and are free because they are not bound by any company rules. They also generate profits for themselves—or, in the case of social entrepreneurs, to make a social impact.
In contrast, intrapreneurs work and become employees for companies. They are bound by policies and rules within the company. Moreover, they make a profit not for themselves but for the company they work for.
Then, unlike entrepreneurs, intrapreneurs receive compensation such as salary and benefits. In addition, if they successfully develop a new business unit, the company may promote or appoint them to lead it.
On the other hand, entrepreneurs are compensated only if the new business they start is profitable. Otherwise, they could even lose the money they invested into the business.
Although there are some differences, entrepreneurs and intrapreneurs also share some similarities. Both have an entrepreneurial spirit, are willing to take risks, initiate and develop ideas and innovations, and seek to generate benefits by providing solutions.
Furthermore, many entrepreneurs start out as intrapreneurs. They work in companies, take initiatives to develop new businesses, and gain promotions. They all provide a mature experience before deciding to leave the company and start their own business.
Responsibility
A fundamental difference between intrapreneurs and entrepreneurs lies in their accountability structures. Intrapreneurs, as company employees, are accountable to their superiors and, ultimately, to the organization’s leadership. Their initiatives are evaluated within the framework of the company’s goals and existing structures.
This accountability to the company translates to less autonomy for intrapreneurs. They are bound by company rules and policies, which can limit their flexibility in pursuing radical innovations that might require significant changes to established processes or products.
In stark contrast, entrepreneurs enjoy the freedom that comes with independence. Unburdened by organizational policies, they have the flexibility to make decisions quickly and adapt their approach as needed. This allows them to commercialize ideas rapidly and explore uncharted territory without seeking internal approval.
However, this independence comes with a broader scope of accountability. Entrepreneurs are responsible for managing all aspects of the business, from securing funding and allocating resources to marketing and ensuring compliance with external regulations. The success or failure of the venture rests entirely on their shoulders.
In essence, the difference between intrapreneurs and entrepreneurs boils down to who they answer to. Intrapreneurs navigate within a defined structure, accountable to the company for their actions and initiatives.
Entrepreneurs, on the other hand, forge their own path, answering only to themselves and the success of their venture. This distinction significantly impacts the level of autonomy they experience and the decision-making processes they employ.
Objectives and benefits
The objectives and benefits sought by intrapreneurs and entrepreneurs diverge significantly, highlighting a key difference between intrapreneurs and entrepreneurs.
Intrapreneurs: Intrapreneurs are primarily focused on driving growth and maintaining a competitive advantage for the companies they work for. They act as internal champions of innovation, working to ensure the company remains relevant and profitable in the face of ever-evolving market conditions. Their initiatives may involve diversifying revenue streams by launching new business units or increasing efficiency through improved processes, ultimately creating greater value for shareholders.
Entrepreneurs: Entrepreneurs, on the other hand, are driven by a desire to disrupt the market and bring something entirely new to the table. Their focus is on developing innovative products or services that address unmet consumer needs and wants. While some entrepreneurs prioritize maximizing profits, others, social entrepreneurs, seek a triple bottom line that balances financial success with positive social and environmental impact.
Motive
Motives are the next difference between intrapreneurs and entrepreneurs. Intrapreneurs are motivated to make changes for the better. It could be to create value for the company they work for or generate a new revenue stream.
If successful, it enhances or diversifies an existing one. It drives changes to business processes and the way the company operates towards a sustainable competitive advantage.
Meanwhile, entrepreneurs have several motives for setting up new businesses. Getting profit and more money is what is usually quoted. However, some entrepreneurs also run businesses because they want to monetize their hobbies or skills. So, they can finance their lives and lifestyles without having to work in a company. Others may want to be independent and be their own boss.
Furthermore, social entrepreneurs ‘ motive is to positively impact society and the environment. They may be profit-oriented, but their goal is not to maximize their wealth but social welfare. For example, they redistribute profits for social programs such as establishing education and health facilities.
Type of innovation
The difference between intrapreneurs and entrepreneurs is also evident in the focus of their innovations.
Intrapreneurs: While intrapreneurs are innovative, their primary focus is on developing process innovations to address internal company challenges. These innovations may streamline operations, improve efficiency, or reduce costs. They create value by optimizing existing processes, even if they don’t directly generate new revenue streams. For example, an intrapreneur might develop a new software program that automates tasks, saving the company time and money.
Entrepreneurs: Entrepreneurs, on the other hand, are driven to create new goods and services. Their innovations take raw materials or existing ideas and transform them into products or services that solve consumer problems or fulfill unmet needs. They create value by offering something new and desirable to the marketplace. This could involve developing a revolutionary new technology, launching a subscription service that caters to a specific niche, or introducing a sustainable alternative to a traditional product.
Risk
A key difference between intrapreneurs and entrepreneurs lies in how they manage risk. Intrapreneurs shoulder a lighter burden when it comes to risk. Since they operate within an established organization, the company typically bears the brunt of the financial risk if their initiative fails. This doesn’t eliminate all risk for intrapreneurs, however. Their careers could be impacted if their project underperforms. In some cases, promotions may be delayed, but they typically retain their salaries and benefits.
Entrepreneurs, on the other hand, face a much riskier proposition. The burden of financial responsibility falls squarely on their shoulders. If their business fails, they stand to lose the capital they invested in the venture. The potential consequences can be even steeper for sole proprietors, who may be held personally liable for business debts, risking their personal assets in the process.
Compensation
Compensation is another differentiating aspect between entrepreneurs and intrapreneurs. As an employee, intrapreneur salary and benefits. They may lose their career when their initiative fails. On the other hand, if their business idea is successful, they can get a promotion or a chance to lead a new business.
On the other hand, unlike intrapreneurs who receive a regular salary and benefits, entrepreneurs won’t receive compensation until their business is successful and starts generating profits. However, if the business thrives under a sole proprietorship structure, all the business profits belong to the entrepreneur.
Rules
The operational environment for intrapreneurs and entrepreneurs differs significantly when it comes to following established rules.
Intrapreneurs: Intrapreneurs operate within the framework of a company’s existing rules and policies. These guidelines provide structure and ensure consistency across the organization. While intrapreneurs may have some autonomy to develop and test their ideas, they are ultimately beholden to company leadership for approval and resource allocation. This can limit their flexibility in pursuing radical innovations that may require significant changes to existing processes or products.
Entrepreneurs: Entrepreneurs, on the other hand, enjoy the freedom of independence. They are not bound by the constraints of organizational policies and have the flexibility to make decisions quickly and adapt their approach as needed. This allows them to commercialize ideas rapidly and explore uncharted territory without seeking internal approval. However, this freedom comes with the responsibility of managing all aspects of the business, from funding and resource allocation to marketing and compliance with external regulations.
Capital
One of the most significant differences between intrapreneurs and entrepreneurs lies in how they finance their ventures.
Entrepreneurs: Entrepreneurs typically fund their businesses through various methods. Many bootstrap their ventures, relying on their own savings or borrowing from friends and family. This approach allows them to maintain ownership and control but comes with the significant risk of losing their personal investment if the business fails.
Other entrepreneurs raise capital from external sources. This can involve crowdfunding, where they pitch their idea to a large pool of potential investors online. They may also seek funding from angel investors, wealthy individuals who provide financial backing to startups in exchange for equity. Venture capital firms, which invest in high-growth companies, are another potential source of funding.
However, securing funding from external parties requires a strong business plan and the ability to convince investors of the venture’s potential for success. This process can be challenging, especially for new entrepreneurs.
Intrapreneurs: In contrast, intrapreneurs do not shoulder the financial burden of funding their initiatives. The companies they work for provide the capital necessary to develop and launch new ideas. This allows intrapreneurs to experiment and innovate with less personal risk. However, they may face limitations in terms of the resources available to them and may need to secure approval from company leadership before proceeding with their ideas.
Resources
This is a key difference between intrapreneurs and entrepreneurs. The company’s support for intrapreneurs is not only on capital. They also receive other supporting resources. The company fulfills and facilitates their needs, including teams, support materials, and equipment, all at no cost to the intrapreneur.
Instead, the entrepreneur must gather related resources and organize them. Then, they use the capital they raise to pay suppliers for these resources, such as employee salaries, equipment rental, and raw material costs. They also have to be careful with their money. Thus, their capital is sufficient until the business actually generates income and profits.
Customer
Another key difference between intrapreneurs and entrepreneurs lies in their customer base.
Entrepreneurs: Entrepreneurs are laser-focused on external customers. Their primary objective is to develop and sell products or services that meet the needs and wants of consumers in the marketplace. Their success is measured by their ability to generate revenue through customer sales. This customer focus necessitates a deep understanding of market trends, competitor analysis, and effective marketing strategies.
Intrapreneurs: Intrapreneurs, on the other hand, may have a broader definition of customers. Their focus can be internal, external, or both, depending on the nature of their initiative. For example, if an intrapreneur develops a new product, the customer may be an external consumer who purchases the product. Alternatively, an intrapreneur may develop a new process innovation that improves efficiency within the company. In this case, the customer is internal, referring to the company’s employees who benefit from the streamlined process.
Similarities between intrapreneurs and entrepreneurs
While intrapreneurs and entrepreneurs navigate different professional landscapes, they share a core set of characteristics that fuel their success. This shared DNA, often referred to as the entrepreneurial spirit, manifests in several ways.
Relentless curiosity and a drive to innovate: Both intrapreneurs and entrepreneurs are inherently curious. They possess an insatiable desire to understand the world around them, identify unmet needs, and develop creative solutions. This curiosity translates into a relentless pursuit of innovation. They are never satisfied with the status quo and constantly seek ways to improve existing products, services, or processes.
Calculated risk takers: Success, whether within a company or through a new venture, often lies on the other side of calculated risks. Both intrapreneurs and entrepreneurs understand this. They are willing to step outside their comfort zones and take calculated risks to pursue their ideas. However, they don’t gamble blindly. They meticulously assess potential risks, develop mitigation strategies, and only proceed when the potential rewards outweigh the downsides.
Initiative and the drive to develop ideas: Intrapreneurs and entrepreneurs are not passive observers. They are driven to take initiative and translate ideas into action. They possess a strong internal motivation to develop new concepts and a relentless drive to see their ideas come to fruition. This initiative is essential for creating new business opportunities, identifying process improvements, and ultimately driving growth.
Problem solvers with a focus on benefits: At their core, both intrapreneurs and entrepreneurs are problem solvers. They identify challenges, whether within a company or in the marketplace and then set about developing solutions. Their focus, however, extends beyond simply solving problems. They are goal-oriented and strive to create solutions that generate benefits. For intrapreneurs, this may translate to increased efficiency or profitability for their company. For entrepreneurs, it may involve developing products or services that improve customers’ lives or address social and environmental issues.
A learning journey: The path to entrepreneurial success is rarely linear. Many entrepreneurs begin their careers as intrapreneurs. Working within a company allows them to develop their skills, gain valuable experience, and test their ideas on a smaller scale. This experience serves as a stepping stone, providing them with the knowledge and confidence to launch their own ventures eventually.
In conclusion, while intrapreneurs and entrepreneurs operate within different environments, they share a fundamental set of characteristics that propel them toward success. Their entrepreneurial spirit, characterized by curiosity, calculated risk-taking, initiative, and a problem-solving mindset, allows them to identify opportunities, develop innovative solutions, and generate benefits for themselves, their companies, or society at large.
