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An intrapreneur, or internal entrepreneur, is an entrepreneur who works within an organization. Although they are company employees, they think and act like entrepreneurs. They are independent, proactive, and creative and generate new ideas and innovations for the companies they work for.
Just like entrepreneurs, intrapreneurs take direct responsibility and risk in generating business ideas and commercializing them. However, intrapreneurs don’t take all the risks like entrepreneurs.
The final risk lies with the company where the intrapreneur works. They may simply miss out on opportunities for promotion and lose careers if their initiatives fail. But, if successful, the company may appoint them as leaders in the newly formed business unit. And, for the company, a new business unit can add to its revenue stream.
Why intrapreneurship is important
There are several reasons why growing intrapreneurship is strategic for companies. Here are three reasons:
- Generate new revenue stream
- Encouraging motivation within the company
- Sustaining competitive advantage
New growth engine
Intrapreneurs introduce ideas—whether a new product or business—that can be a new revenue stream for their company. Thus, the company diversifies and grows revenue.
It is highly strategic in internal growth strategy. Companies depend on internal entrepreneurship to pursue new projects.
Motivation
Some employees may be excited about new ideas. They offer a new perspective on a problem and are trying to change the status quo.
And encouraging their entrepreneurship is one way to motivate them. They have the opportunity to experiment and innovate to put their thoughts into a potential new product or innovation.
On the other hand, without getting such opportunities, they are bored and fed up with their routine work. Eventually, they will leave the company to escape the stress and pursue careers elsewhere to realize their passion.
Competitive advantage
The business environment is constantly changing due to market demand, the economy, technology, and competition. Therefore, adapting to such a dynamic environment requires innovation and new ideas.
Thus, cultivating entrepreneurship is a solution to adapt to a changing business environment and always be ahead of competitors. If successful, the company can sustain its competitive advantage.
Characteristics of an intrapreneur
Entrepreneurs and intrapreneurs have several things in common. Both have a strong drive to innovate and are happy to challenge the status quo to provide better solutions to their problems.
- Risk-taker. Intrapreneurs are willing to take risks to bring about change to the status quo. They are and try to provide solutions to problems through their ideas. Losing a career is a major risk if their initiative fails.
- Innovative. The intrapreneurship spirit is usually creative in solving problems, likes to try new and better things, and sees problems as opportunities to be solved.
- Commitment. Internal entrepreneurs are responsible for finishing what they start and don’t give up. They are eager to put a lot of effort, time, and energy into making their ideas work.
- Leadership. Intrapreneurship requires strong and effective leadership skills. Emotional intelligence is another vital aspect needed to motivate the team to work towards the same goal.
- Good strategist. Intrapreneurs know what they need to realize a business idea, including selecting a team and organizing resources.
How Intrapreneurship works
Intrapreneurship thrives in companies that actively cultivate a culture of innovation. This environment encourages employees to think creatively, challenge the status quo, and develop new ideas. Here’s how companies can achieve this:
- Empowering employees: Granting employees some level of autonomy and decision-making power allows them to experiment and explore new possibilities. This could involve flexible work arrangements, dedicated innovation labs, or even internal hackathons where employees can brainstorm and prototype new ideas.
- Encouraging open communication: Fostering a culture where ideas are openly shared and discussed, regardless of hierarchy, can spark innovation. This can be achieved through regular brainstorming sessions, anonymous idea submission platforms, or mentorship programs that connect experienced employees with fresh perspectives.
- Providing resources: Allocate resources like funding, mentorship, and training programs to support employee initiatives. Funding allows intrapreneurs to validate their ideas through market research or prototyping, while mentorship programs connect them with experienced professionals who can guide them through the development process. Training programs can equip employees with the necessary skills in areas like design thinking, lean startup methodologies, or project management.
- Celebrating success stories: Recognizing and rewarding successful intrapreneurial ventures motivates employees and reinforces the value of innovation. This could involve public recognition programs, bonuses tied to the success of new ventures, or even promotions for intrapreneurs who demonstrate exceptional leadership and innovation skills.
Internal vs. External growth strategies
Many companies are increasingly turning to internal growth strategies, fueled by intrapreneurship, as an alternative to external growth strategies like mergers and acquisitions. Here’s why:
- Deeper understanding of the market: Intrapreneurs have a firsthand understanding of the company’s existing market, products, and customer base. This allows them to identify organic growth opportunities that leverage the company’s existing strengths and assets. In contrast, acquisitions can involve integrating unfamiliar markets, products, and cultures, which can be a complex and time-consuming process.
- Faster time to market: Internal resources and existing infrastructure can accelerate the development and launch of new products or services compared to external acquisitions. Intrapreneurs can leverage existing teams, technology platforms, and supply chains to bring their ideas to market quicker. Acquisitions often require extensive due diligence, integration planning, and potential restructuring, which can significantly delay the launch of new products or services.
- Improved employee morale: When employees see opportunities to contribute to the company’s growth through intrapreneurship, it boosts morale and fosters a sense of ownership. Employees feel valued for their ideas and have a stake in the success of the company. Acquisitions can sometimes lead to employee uncertainty or fear of job losses, which can negatively impact morale and productivity.
Anyone can be an intrapreneur
Intrapreneurship isn’t limited to specific departments or positions. Anyone within a company can become an intrapreneur. It requires a proactive mindset and a willingness to think outside the box. Here’s how:
- Identify problems and opportunities: Look for ways to improve existing processes, develop new products or services, or address unmet customer needs. This could involve analyzing customer feedback, identifying industry trends, or looking for inefficiencies within your own department.
- Develop a compelling business case: Clearly articulate the potential benefits of your idea, including increased revenue, cost savings, or a competitive advantage. Quantify the impact of your idea whenever possible to make a strong case for its implementation. This might involve market research data, financial projections, or potential cost savings estimates.
- Seek support and resources: Network with colleagues who share your passion or expertise, present your idea to management and leverage company resources to bring your vision to life. Building relationships with potential allies within the company can help you gain buy-in for your idea. Presenting a well-defined plan with a clear value proposition increases your chances of securing the resources you need to move forward.
Case studies: unleashing intrapreneurial potential
Sony PlayStation: Ken Kutaragi, an engineer at Sony, championed the idea of a video game console despite initial skepticism from management, who questioned the market potential. His persistence and belief in the PlayStation’s potential ultimately led to the creation of a multi-billion dollar gaming empire, proving the power of an intrapreneur’s vision and determination.
Facebook Messenger: Facebook Messenger was originally a side project developed by a small team of intrapreneurs within Facebook. Recognizing its potential to become a core communication platform, Facebook invested resources in Messenger, which has grown to connect billions of users worldwide. This case study highlights the importance of companies recognizing and nurturing promising intrapreneurial ventures.
Google Chrome: Google’s famous 20% time policy allows employees to dedicate a portion of their workweek to exploring personal projects. This policy has led to the creation of numerous successful products, including Google Chrome, which revolutionized web browsing.
Chrome’s development exemplifies how intrapreneurship can flourish when companies empower employees to explore their ideas and capitalize on unexpected opportunities. Google Chrome’s story is a testament to the potential of intrapreneurship to generate incremental improvements and lead to disruptive innovations that redefine entire industries.
These case studies demonstrate how companies like Sony, Facebook, and Google have fostered a culture of innovation and empowered their employees to act as intrapreneurs. By providing resources, encouraging experimentation, and recognizing the value of new ideas, these companies have not only unlocked employee creativity but also driven significant growth and competitive advantage.
Intrapreneur vs. Entrepreneur: Key differences
While both intrapreneurs and entrepreneurs share a passion for innovation, the environments they operate in and the rewards they seek create some key distinctions between the two.
Accountability: Intrapreneurs are accountable to their employers. They operate within the company structure, following established policies and procedures. Entrepreneurs, on the other hand, are independent. They answer only to themselves and are free to make their own decisions.
Goal orientation: Intrapreneurs are primarily focused on creating value for the company they work for. This may involve developing new products or services that increase revenue, improve efficiency, or gain a competitive edge in the market. Entrepreneurs, however, are driven by fulfilling customer needs and turning a profit for themselves. Their primary goal is to build a successful business that solves a problem or provides a desired product or service to consumers.
Risk and compensation: Intrapreneurs take on minimal financial risk. They receive a regular salary and benefits from their employer. However, their potential for financial gain is typically limited to salary increases and bonuses tied to the success of their initiatives. Entrepreneurs, in contrast, shoulder significant financial risk. They invest their own capital or secure funding from investors to launch their ventures. Their compensation is directly tied to the success of their business, and they may not see any profit until the business becomes established.
Freedom and resources: Intrapreneurs operate within the constraints of company policies and resource allocation decisions. They may have some autonomy to develop ideas but ultimately require approval and resources from management. Entrepreneurs enjoy greater freedom to make decisions and manage their businesses as they see fit. However, they are also responsible for securing their own resources, including funding, personnel, and technology.
Customer focus: Intrapreneurs may have a dual customer focus. They aim to develop solutions that benefit both the company (internal customer) and potentially external customers if the innovation leads to new products or services. Entrepreneurs are solely focused on external customers. Their success hinges on understanding customer needs and developing products or services that cater to those needs.
Similarities between intrapreneurs and entrepreneurs
Despite these differences, both intrapreneurs and entrepreneurs share a core set of characteristics:
- Risk-taking and initiative: Both are willing to take calculated risks to pursue their ideas. They are proactive in identifying opportunities and developing solutions, pushing the boundaries of the status quo.
- Problem-solving and a drive for profit: Both are skilled problem solvers with a strong desire to make a difference. While intrapreneurs aim to solve problems that benefit their companies, entrepreneurs seek solutions that address customer needs and ultimately lead to profit. Even though intrapreneurs may not directly profit from the company’s success, their innovative solutions can contribute to the company’s growth and potentially lead to promotions or other forms of recognition.
- Project control: Both intrapreneurs and entrepreneurs have some degree of control over their projects. However, the extent of control can vary. Intrapreneurs may face limitations due to company policies and resource allocation decisions. Entrepreneurs, on the other hand, have greater autonomy but must manage all aspects of their business, from funding and resource acquisition to product development and marketing.
