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How is intrapreneurship different from entrepreneurship?
Organising Business Creativity: Blog 4 of 6
Most everyone has heard of entrepreneurship. Either they think of bold people who try to change the world with their big ideas through founding a company or they think of someone simply trying to make some more money on their own via a side hustle or a full-time commitment.
But what, then, is intrapreneurship?
If you plot the public interest in the topic entrepreneurship compared to intrapreneurship according to Google Trends, you will see a ginormous difference in their average (“Durchschnitt”) (see Figure 1).
Clearly, intrapreneurship is a less well-known phenomenon. And that makes sense because intrapreneurship is a relatively new concept which is also less exposed to the general public because it is a topic that resides inside the walls of a corporate enterprise, derived from — you guessed it — entrepreneurship.
The term “intrapreneur” originates from the 1980s when a man named Gifford Pinchot, a management consultant, used it to refer to employees innovating inside a large enterprise and using the enterprise resources to monetize their innovation (Chandrasekhar, 2014). Consequently, unlike entrepreneurs who found their own startups carrying the risk and raising resources on their own, intrapreneurs are only developing ideas that might turn into new ventures or practices for their organization (Chandrasekhar, 2014).
What is to be avoided is to use the term “corporate entrepreneur”. At least Scott Kirsner in his Harvard Business Review (HBR) article is vehemently against the term because he believes that it “devalues what real entrepreneurs do, and it creates a haze of hokum around people trying to innovate in large companies that sets them up to fail” (Kirsner, 2018).
Mainly, Kirsner outlines 5 characteristics that differentiates entrepreneurs intrapreneurs. First, bureaucracy and politics. One can guess intuitively that the bigger the organization the longer processes will take. Thus, the many meetings to communicate and coordinate, and the efforts needed to resolve competing interests will inevitably slow down the process of innovation, going against the mindset of an entrepreneur to “move fast and break things”. (Kirsner, 2018)
Second point to make is that the economic upside of being a successful intrapreneur is probably miniscule compared to a successful entrepreneur or founder. One might look at Bill Gates, the founder of Microsoft, starting a foundation that has an endowment of $40 billion, or Oracle founder Larry Ellison who owns the Hawaiian island of Lanai, and, of course, a few planes to get there. Most employees below the CEO level simply cannot match even when they are successful inside the company (Kirsner, 2018).
The remaining characteristics are fear of failure, persistence, and the difference between private and public environments. In a few words, unlike entrepreneurs intrapreneurs do not have to fear their company going bust when their ideas and efforts do not turn fruitful. Additionally, Kirsner is of the opinion that intrapreneurs would no go to such lengths like “real entrepreneurs” who do everything in their power to succeed, even sacrificing comfort like not paying for an apartment but sleep hidden in some office building. Besides, public companies care about quarterly metrics more than venture capitalists or business angels who are in it for the long game (Kirsner, 2018).
Andrew Corbett, a professor at Babson College who researched innovation in large companies for more than 20 years, talks about the “myth of the intrapreneur”. While it is enticing to think of the one intrapreneurial genius who invents something groundbreaking like Spencer Silver who developed the Post-It note at 3M, it is more likely that the typical intrapreneur ends up like Steven Sasson. Sasson invented the portable digital camera at Kodak, which, as we now know, did not push Kodak into a glorious future but rather became a regrettable missed opportunity. (Corbett, 2018)
The moral of the story is that rather than relying on individuals alone, a company-wide innovation management system is necessary if the company wants transformative scalable innovation (Corbett, 2018).
Intuit is an exemplary company that lets intrapreneurs thrive by supporting them through project sponsors, trained volunteers that spend 10% of their time guiding employees with design principles, and finally, managers who are incentivized to recognize and support entrepreneurial behavior and endeavors. For more on Intuit’s intrapreneurial support system, read Simone Ahuja’s HBR article. (Ahuja, 2016)
Regarding intrapreneurship, there is also the term “champions” who help organizations overcome its inherent obstacles to innovations and help them acquire ultimate market success. What distinguishes effective champions from ineffective ones are in summary three behaviors according to Jane M. Howell’s research (Howell, 2005): “Conveying confidence and enthusiasm about the innovation; enlisting the support and involvement of key stakeholders; and persisting in the face of adversity.” Furthermore, they rely on their networks inside and outside their organization, always scouting for new ideas and opportunities. (Howell, 2005)
In the end, the apple does not fall that far from the tree, does it? What do you think?
This is part of a blog series on “Organising Business Creativity”. It is a course I am currently attending as an exchange student at the triple-accredited Hanken School of Economics in Helsinki, Finland. As I go through the various topics of the course, I will write short blogs on them while referencing at least three of the assigned readings. Enjoy!
Ahuja, S. B. (2016). How Intuit Built a Better Support System for Intrapreneurs. Retrieved from https://hbr.org/2016/04/how-intuit-built-a-better-support-system-for-intrapreneurs
Chandrasekhar, R. (2014). Intrapreneurship at Alcatel-Lucent.
Corbett, A. (2018). The Myth of the Intrapreneur. Retrieved from https://hbr.org/2018/06/the-myth-of-the-intrapreneur
Google Trends (2022). Google Trends — Entrepreneruship vs. Intrapreneurship. Retrieved from https://trends.google.com/trends/explore?date=all&q=%2Fm%2F02nwq,%2Fm%2F0b6xr3
Howell, J. M. (2005). The Right Stuff: Identifying and Developing Effective Champions of Innovation.
Kirsner, S. (2018). Why There’s No Such Thing as a Corporate Entrepreneur. Retrieved from https://hbr.org/2018/02/why-innovators-in-big-companies-dont-count-as-entrepreneurs