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Suits vs Sneakers (Or: What’s the Difference Between Intrapreneurs and Entrepreneurs?)

intrapreneur-vs-entrepreneur

When you type “entrepreneur vs intrapreneur” into Google, you get 1 million + results. Is there a real difference between the two, or are both playing pretty much the same role, one wearing suits and the other sneakers?

We wanted to find out if there were major differences between intrapreneurs and entrepreneurs, or if they both pretty much preach the same gospel.

While there is no black and white answer to this question, we managed to color some grey areas with the help of four experts, all of whom have experience from both worlds (you’ll find their bios at the bottom).

 


Intrapreneurs and Entrepreneurs Defined

We’re not going to make the same joke of the auto-correct suggesting there’s a spelling mistake after typing intrapreneur. After all, we have been promoting intrapreneurship since 2011. But let’s set the scene before we start the fight, and define who’s how.

Jan Kennedy, who serves as Director for the Founder Institute (Munich chapter) and as CEO for the Academy for Corporate Entrepreneurship, gives the following definition:

An entrepreneur is someone who tries to solve a genuine problem by offering a feasible solution in an affordable way. An intrapreneur is doing the same, but within an existing organisation.

Dario Okrent is the General Manager of Wibe, the first online car insurance company in Mexico, which is part of the biggest Spanish Bank, BBVA. He explains that the key difference between intrapreneurs and entrepreneurs is about risk (and reward):

When you are an entrepreneur you have no network. If you fail, you might lose everything. When you are an intrapreneur, you have a network supporting you. On the other hand, as an intrapreneur you are not the owner of the company, if you fail you won’t lose everything, but if you are successful the [financial] payback is lower.

You won’t lose everything as intrapreneur, but you’re probably limited in funding sources too, thinks Anna Mazzone, who is the Managing Director for Europe and the Global Head of Customer Development in a Silicon Valley startup:

Entrepreneurs are visionaries who can identify market problems and take the risk to build commercial solutions and get external investors to fund the build and growth of the company. Intrapreneurs are very similar. Typically, they’re running a company/startup in the domain or the core competencies of the mothership. They have one funding source, so sometimes that can limit their potential to be successful.

Thomas Blekman, who is the founder of the Effectuation Academy and is also a clinical professor at the Erasmus Centre for Entrepreneurship, believes that everyone is an entrepreneur. Thomas too thinks that the difference between intrapreneurs and entrepreneurs lies in the investment opportunity, but:

As an intrapreneur, you have way more means available. As an entrepreneur, you’re always lacking means.

While it is true that in most cases intrapreneurs have only one source of funding, investment may come a lot easier for an intrapreneur who often doesn’t have to go through the strenuous fundraising periods that an entrepreneur has to go through.

Thomas goes on explaining why he believes that everyone is an entrepreneur (or should be):

“There are a lot of people that think that having a job gives security. I think that’s ridiculous. If you look at companies in The Netherlands like Rabobank, PostNL, thousands of employees are being laid off every year. We just have different business models. Having an income is a business model. 

In other words, everyone needs to think about his or her personal business model. The entrepreneurial mindset is not just about managing the current business model, but also about building new ones.”

Personality and skills

Now, let’s find out more about the personality traits and skills for entrepreneurs and intrapreneurs. Where better to start, than with their preference for taking risks?

# Taking Risks

Anna thinks that although both are risk-takers, entrepreneurs are bigger risk takers. Entrepreneurs tend to be independent thinkers that are very comfortable building their own cultures. They are usually highly selective of the leadership team because they know their success depends on the talent they can recruit and maintain to grow their business.

Intrapreneurs, while they want to shift the culture of the organization, can only do so to a certain extent because ultimately they have to adapt to the existing culture and structure of the company.

As an intrapreneur you are not independent with decision-making; you cannot, for example, build your dream team or choose the type of leadership that you want.  Intrapreneurs don’t have the same freedom that entrepreneurs do, but they also don’t face the same level of high risk that entrepreneurs do.

Thomas has a different opinion about risk-taking. He believes that the corporates, or the intrapreneurs, are the ones who are taking the bigger risk:

The effectuation research introduced by Sarasvathy shows something really important. Effectuation is a way of making decisions when the future is unpredictable, as opposed to making decisions based on causal reasoning. What effectuation revealed is that entrepreneurship is one long stretch of an entrepreneurial decision-making process. Instead of asking how entrepreneurs became successful, which would mean looking back in time, and getting wrong answers such that entrepreneurs are visionaries and high-risk taker, they looked at the actual behavior of entrepreneurs.

You see entrepreneurs act completely different to what they say they did along the way, rather than making bold leaps they take small steps. Entrepreneurs work from available means and co-create with others to decrease the risk and to gain more access to means.

Looking at the behavior of entrepreneurs, it’s actually the corporates that are taking high risks because they are writing business plans with lack of knowledge and then executing those plan. The entrepreneur would never do that. The entrepreneur thinks of a compelling goal, all the while having an intrinsic motivation, and taking small, not necessarily linear, steps to achieve it.

For Dario, it really comes down to the point where you are in your life.

It depends on how you want to live or how you want to develop your life versus the risk that you want to take. Do you want a comfortable salary or can you manage without? Also it’s about how often, as an entrepreneur, you are willing to try again and again.

## Openness, Agreeableness and Mannerliness

At the Founder Institute, they have carried out personality tests on 35,000 entrepreneurs and measured their performance before, during, and after the program. The Academy for Corporate Entrepreneurship has adapted this test to fit intrapreneurs as well. They use the test to predict who is more likely to be a successful intrapreneur or entrepreneur.

According to Jan, three of the top characteristics that they check for entrepreneurs are:

  • High fluid intelligence – the ability to solve problems and see new emerging patterns coming into play.
  • High degree of openness – the level of intellectual disposition, how curious someone is, and is willing to explore new ideas (this is also one of the big five personality traits).
  • Moderate level of agreeableness – the ability to contemplate new ideas but be stern enough in moving forward when you have to and be tough with decision-making.

They have also observed that being more experienced in the ‘real world’, up to the age of 45, has a positive relationship with becoming a successful entrepreneur.

One of the biggest differences in terms of personality between intrapreneurs and entrepreneurs is mannerliness, Jan explains:

Mannerliness requires you to be compliant and sometimes pleasing towards other people, even people that you may not even like or don’t sell your vision to. It’s about the ability to manage different stakeholders. This trait is a lot more important when you’re working inside an organization than on your own where you don’t have to care so much about other people’s opinions.

Jan would recommend looking for a high degree of social intelligence in the intrapreneur. He adds that being good at communication is important for both. Without the ability to pitch and share a vision in a clear way, it is hard to create a following.

### Team Player or Solo Artist?

Thomas talks about the importance of being a team player as an intrapreneur:

Corporates have all these different departments and most function in a way that you cannot do everything by yourself. You need to collaborate with others.

As an intrapreneur, you need to be more of a change catalyst and build traction within a corporate setting while lacking hierarchical power.

I think this is a really important skill for intrapreneurs and you need less of that skill as an entrepreneur because you’re more autonomous.

As an intrapreneur if you constantly challenge the corporate strategy for the sake of challenging it and being disruptive, I think you’re not going to fit in a corporate setting. You’re going to be unhappy. As an intrapreneur, you need to be more comfortable with being aligned with the corporate strategy and the corporate goals because it all needs to add up to something that is worthwhile for the entire company.

Chances are though that your initiative remains smaller as an entrepreneur than it could be as an intrapreneur because the corporates allow intrapreneurial people to really grow their initiatives because of the corporate’s batting power.

At the Founder Institute, they classify their entrepreneurs into six categories, which represent different styles of working. These are: the hustler, the innovator, the machine, the prodigy, the strategist, and the visionary. Most entrepreneurs are typically a mixture of two of those. When entrepreneurs apply to the Founder Institute, instead of submitting an idea they take an hour-long test to decode their entrepreneurial DNA. Jan reasons further:

It shouldn’t be too different for intrapreneurs. When you build a team, you want to have cross-functional capacities.

You want to have a hacker, a hustler, a visionary, and a designer in your team if you want to have a balanced team that is going to be able to function without too much help from the rest of the organization.

Jan recommends using the personality test as a way to de-risk the overall investment and to help balance the teams working on innovation or intrapreneurship projects. For example, it is rare to find someone that scores very high overall, and although you’d want to certainly include that person, you may also be willing to accept lower scores as long as they balance out other members of the team with certain attributes. This type of analysis has been proven to be 85% accurate in predicting future performance.

difference-entrepreneur-intrapreneur

Working Environment

Both intrapreneurs and entrepreneurs look for creative and independent work environments, as it seems.

Anna says:

Corporates innovation teams will be in search of an environment that is independent from their company culture. I work inside an accelerator at Level39 in Canary Wharf, London, and one of the global banks has an innovation team based there. At WeWork there are global corporations, such as VISA, that locate their innovation labs in these high-energy environments.

These corporates want to have their intrapreneurs off-site in order to get them to focus more on innovation and creative problem solving in environments that encourage out of the box thinking.

Corporates also want to demonstrate to their customers that they understand the new era of innovation, that they’re producing solutions that are more partner-friendly, and embracing open standards. They need to move away from being closed and move towards a culture that supports innovation and partnerships to solve their customers’ problems.

For Jan the environment has to suit the different development stages of the innovation:

In the early stage of the development of an idea teams don’t necessarily have to be in the same physical location. Often I see big companies build incubators in their headquarters and they want anyone that gets chosen to develop a new idea go into the incubator.

But I feel that incubation should come a little bit later on, once the idea has been validated further.

Once you get to that incubation stage, then it can be helpful to have a different environment because then you want to have people involved full-time, preferably in the same physical location.

Similarly to Anna, Jan thinks that creating a culture of openness in the organization is important:

One thing that’s really consequential for entrepreneurs is the support of the startup community. Entrepreneurs that do well seem to be very plugged into their local community and use it as a support network, which can often be missing for intrapreneurs.

It would be interesting if companies are able to do something similar in their local startup ecosystem, and try to expose their intrapreneurs to the local startup community. Let them go to pitching events, let them partake in startup weekends, let them network with other entrepreneurs that are pursuing similar ideas rather than trying to keep everything locked up inside.

It’s that notion of sharing – sharing your idea is okay. It should be done, and we shouldn’t try to protect it. I think that is probably a downfall for a lot of intrapreneurs.

Besides the difference in the community support that entrepreneurs have more of, Jan also points out another important difference, which has to do with using basic tools that help teams collaborate:

I see a lot of intrapreneurs struggling to use basic tools that would help them collaborate as a team, such as Slack or simple conferencing tools, basically anything that can potentially get blocked by the internal server. Thus, intrapreneurs often have to escape those networks and use guest networks or do everything from home. This is a big hindrance. Whereas entrepreneurs take these options for granted. They can download anything they want and log on to anything that can help them move quicker.

 

Never Gonna Give You Up

While a creative and open environment would be a step forward, Dario makes a fair and fundamental point about having to have the support and trust from top management:

If the top management is not convinced to really invest in new developments, in a new way of working, it will be a big failure.

Furthermore, investing in a new way of doing business means having to allow for time and being patient. If you hire someone to work as an intrapreneur or to create a new way of business, you have to give trust to this person.

Anna has seen both: intrapreneurs who bring new ideas and ways of working bottom up, as well as those who rise up when companies pave the path towards identifying innovative opportunities.

Despite seeing some intrapreneurs who shine through without a structural support for the company  Jan and Thomas agree that an organization has to give some form of encouragement in order to bring the intrapreneur out of the box.

When you look at Gardner’s findings, Thomas recalls, you find that ninety-one percent of employees are disengaged. But according to Thomas everyone wants to be engaged:

Everybody who’s taken on a new job goes in there with high energy, willingness to change, and willingness to add value. Then the motivation drops down because these employees are not taken seriously, they’re not challenged, and they’re diminished.

Employees that see that they have no impact because they’re lacking hierarchical power, go from a growth mindset to a static mindset, because they think they cannot influence.

Jan would argue that every organization has potential intrapreneurs. Some organizations such as Rabobank believe that up to 15% of their employees could be somewhat intrapreneurial. Research shows 5% can be considered natural innovators and 0.5% are great intrapreneurs who can build your next business.

In day-to-day life, Jan assumes, it is pretty difficult for a normal manager to notice if someone has the ability to be an intrapreneur. Some of the things they could look for are: individuals who are constantly going up against the status quo, who try to bend the rules all the time, or just can’t fit into the structure that they are being given.

Jan further believes it is better to let employees self-select themselves to participate in innovative projects that are offered by the organization:

One thing I’ve noticed is when corporates are selecting, let’s say, their high-potentials, those people are typically selected because they’re high-potential managers for the existing strategy. But being a high-potential manager doesn’t necessarily correlate to being a high-potential intrapreneur, who can develop new ventures.

 

Building the Entrepreneurial Muscle

One of the crucial questions for both the individual and the organization, is: can “being entrepreneurial” be learnt?

All agree that being entrepreneurial can be learnt, regardless of role, but some argue that occasionally an underlying “entrepreneurial DNA” is needed.

Anna believes that being entrepreneurial comes to people who are naturally curious, who are problem-solvers, and have a drive to make things happen.

From her experience, it is important to have mentors or sponsors that may help develop and coach this kind of thinking.

Working for an Israeli startup really enabled Anna to develop her skills around building companies. Before she joined the startup she worked for companies such as Bank of America, Markit, CME, and SuperDerivatives, while being an intrapreneur herself at Thomson Reuters. Though Anna has many déjà vu moments currently working at a startup, she talks about one of the learning experience that was very prominent:

When you are in a small company, I learned one of the important aspects to operating a business is to understand the focus is all about the customer.  Entrepreneurs understand this very well; the customer pays the bills.

Intrapreneurs, on the other hand, are further away from the customer due to the layers of management within a corporate enterprise; they are more often than not, shielded from understanding who is ultimately paying their salary.

You often get the feeling that big companies lose the respect for “it’s all about the customer.”

While Jan believes that anyone can learn to become more entrepreneurial, becoming a successful entrepreneur or intrapreneur requires a certain personality, a part of the DNA:

You need to have the right mindset, but even this is not a guarantee for success.

Entrepreneurial skills still need to be nurtured and the environment plays a role in how well this can be done. Furthermore, the mindset and skills need to be matched to the problem that an intrapreneur cares about. Passion for solving a problem is really important, and it’s what will keep an intrapreneur motivated.

There is a very small percentage of people that are born as intrapreneurs or entrepreneurs but even these guys learn over time by making mistakes and failing. Those who have an entrepreneurial spark in their DNA (even a small one) can unleash their potential when they are offered the right training and mentoring.

Thomas thinks we still need to discover whether or not it is part of one’s nature or if it’s all about nurturing:

Often, entrepreneurial people have parents that are entrepreneurs. The thing is, do they see behavior that they then copy or is it in their DNA?

We think IQ is static but it’s not. Intelligence is something you can develop during your entire life. Carol Dweck has proved this with the theory of the growth mindset. You can actually change from having a fixed mindset to a growth mindset. In intrapreneurship we need people with growth mindsets. We also need leaders that are multipliers and not diminishers, as Liz Wiseman would argue for. 

 

Who to Hire

What’s the best advice to corporate innovation leaders about whom to hire – intrapreneurs or entrepreneurs?
Thomas thinks there are certain situations in which you are better off hiring one or the other:

If you have a goal that’s really close to the core of the organization, you need someone who’s politically savvy. That means an intrapreneur would work better than an entrepreneur. If you’re further away from the core, you need to be comfortable with being uncomfortable, and then I would choose an entrepreneur.

Anna and Dario talk about the importance of hiring both.

Dario considers mixed teams a matter of balance that provides different skills, which are necessary to survive and be successful in the new era that we live in.  Anna explains how the natural tension that can be created by hiring a mixed group of intrapreneurs and entrepreneurs is beneficial:

One of the good things about big companies is they’re there to protect the shareholders so they have governance processes, but these can sometimes be too heavy and stifle creativity and innovation. Whereas an entrepreneur will continuously push, an intrapreneur will be more accustomed to the processes, so you get a natural tension that’s very healthy in building a business.

Jan, on the other hand, leans towards investing in intrapreneurs, and he explains why:

By developing an “Army of Intrapreneurs” rather than constantly churning through entrepreneurs that come into your organization, you will develop more sustainable methods and develop ideas that are core to the business. From an ROI point of view, I think the return is much greater investing in intrapreneurs because a lot of company knowledge and network does not need to be initially acquired and it will stay within the organization.

 

From Sneakers to Suits (and Vice Versa)?

Can intrapreneurs become entrepreneurs? Or the other way around? Jan thinks that the transition occurs more often from being an intrapreneur to becoming an entrepreneur:

If the organization is not enabling intrapreneurs to explore new ideas that they’re having, then they are more likely to switch to entrepreneurship.

The most famous example is that of Steve Wozniak and Steve Jobs. They were both working within Atari and HP before they came together to found Apple. They simply couldn’t convince HP or Atari to get interested in developing smaller computers.

Furthermore, there’s some data out there that says the average entrepreneur has 14 years of work experience. This shows you they are working in corporate jobs before founding their own companies. There’s other data that says 70% of successful entrepreneurs actually got their idea while working with their previous employer. (Source: Trevor Owens at Javelin).

A more recent example is of Biz Stone who left Google and founded Twitter. Another example is of Joe Tanner who wasn’t allowed to innovate at DuPont as he didn’t have an advanced enough degree. Tanner left and joined a company called Gore; a smaller, younger startup that didn’t care so much about qualifications. Joe Tanner went on to actually develop Gore-Tex which is what we all wear now in our ski jackets.

Anna thinks differently:

It’s rare for someone to be an intrapreneur and then become an entrepreneur. Many times what stops people from taking that step are usually the financial commitments they have in their personal lives and they cannot assume the risk associated with being an entrepreneur.

I think that the personality characteristics of the individuals are also quite different, as I’ve mentioned earlier.

Entrepreneurs are risk-takers by nature and they are also very comfortable with failure and don’t get discouraged by it. Whereas intrapreneurs, because of the corporate environments in which they work, failure is not tolerated; it is not something that gets you promoted into the c-suite.

Entrepreneurs are relentless and won’t take no for an answer. It is unusual to see this type of characteristic in an intrapreneur because they work in cultures that aren’t comfortable with this kind of persistent personality.

Anna actually took on an entrepreneurial role last year, after being an intrapreneur for many years, but in her case she is not the founder so she feels that the risk she took was more manageable. Thus, the shift can happen, but in her opinion it is uncommon.

Dario shifted from being an entrepreneur (after having worked in corporate for several years) to being an intrapreneur at BBVA. For him, making the shift was very easy. He says that it’s not only about the intrapreneur but also a lot about the company:

If a company wants to create something from scratch, something different, and needs an intrapreneur for that, it has to understand that you, as an intrapreneur, needs to be free to create.

From Thomas’ experience, he feels that a lot of entrepreneurs could join a corporate organization and become intrapreneurs, even though they have become accustomed to being autonomous and deciding on the balance between their business and private life.

The main motivation for entrepreneurs to become intrapreneurs is if they have a compelling goal they haven’t reached, and joining a corporate could help them reach that goal.

The point of having purposeful work, and being aligned with the corporate strategy, is key to make the shift to intrapreneurship. Thomas would have a hard time joining a company like Philip Morris, unless he was allowed to use the knowledge available to help people stop smoking (which is probably not going to happen anytime soon).

 

Suits or sneakers? Suits AND sneakers!

While intrapreneurs and entrepreneurs both try to to solve a genuine problem, the level of chutzpah or mannerliness, the risk and reward, the degree of freedom, the resource opportunities, the network, and maybe most prominently the environment in which they function, are different.

They do share having that entrepreneurial DNA, and so it’s no wonder that we see a growing number of people switching roles from being an intrapreneur to becoming an entrepreneur- and vice versa.

In a future workplace where one will pursue several careers in one lifetime, it’s probably best to focus not on the title per se, but on further developing the underlying personality and mindset and improving the environment for accommodating both in your organization.

What other differences have you seen or experienced between intrapreneurs and entrepreneurs? Do you agree that being entrepreneurial is a quality that can be learnt? And whom would you hire?

Add your thoughts and comments below!

 


Bios:

AnnaAnna Mazzone started as a banker and worked for companies such as Bank of America, Thomson Reuters, Markit, CME, and SuperDerivatives. She founded the capital markets industry’s first KYC (Know your Customer) managed service, called Org ID, the first to achieve ISAE3000 accreditation, grew the organization to 150 FTEs within 18 months, and led business expansion into 80 countries. Anna has over 20 years experience in international markets, and recently she decided to take on a Managing Director role at a Silicon Valley based startup specializing in the privacy consent and information management market.


darioDario Okrent is the General Manager of Wibe, a new online car insurance company of BBVA. Previously, he was the head of the eCommerce Division at El Placacio de Hierro, the biggest luxury department store in Latin America. Dario worked for 10 years an independent entrepreneur where he developed a joint-venture skinizate.com with M3, decompras.com, which became the biggest B2C online store in Mexico, and cosmetix.com.mx, the first costmetics and fragrances online store in Mexico, among others.


JanJan Kennedy is the Founder and CEO of the Academy for Corporate Entrepreneurship (AfCE). Previously he was an intrapreneur at Intel, where he developed a new idea for a process that was valued at one billion dollars. He later joined a rapidly growing early stage startup and helped grow the company to 1,000 people in 55 offices. In 2013, Jan setup the Founder Institute in Munich, which is now globally the world’s largest early-stage accelerator program that comes from Silicon Valley and has  120 locations worldwide. Founder Institute was also the motivation to start the AfCE, after Jan saw many frustrated employees looking to leave their corporate jobs.


thomas1Thomas Blekman was project and change manager at ING for eight years before he decided to become an entrepreneur, consultant and international speaker. For the past ten years Thomas has also been a part-time clinical professor in Corporate Entrepreneurship and Strategy at Rotterdam School of Management Erasmus University, where he teaches students the entrepreneurial mindset based on the five principles of effectuation. Among Thomas’ corporate clients are Abbvie, 3M, Rabobank, PostNL, Dupont and TBI. Thomas is also a writer. His first book Corporate Effectuation was nominated for management book of the year and he recently released his third book Ondernemer in 100 dagen that will also be available in English soon.


nitzan-merguei-intrapreneurshipThis is an article by Nitzan Merguei. Nitzan graduated from University College Maastricht with a focus on behaviour economics and entrepreneurship. After working in business development and helping to promote the entrepreneurial eco-system in the Netherlands, she co-founded a startup in Virtual Reality combined with medical imaging (next to trying to de-mystify intrapreneurship).

2 Comments

  1. If I understand it correctly, don’t know that I agree with the statement Thomas Blekman made that “Looking at the behavior of entrepreneurs, it’s actually the corporates that are taking high risks because they are writing business plans with lack of knowledge and then executing those plan.” It depends on how close the target market’s demands are to the demand for similar successful products or services that evolved out of the core competency of the corporate. If the demands are similar, then there is a lot of collective knowledge that can leveraged in the business plan. The question is less about risk-taking behaviour than it is about defining risk and anticipating it.

    1. Thanx for your comment William. It offers me the opportunity to ellaborate a bit more. What I meant with my statement, is that, I believe corporates are taking risks unknowingly as they are approaching the volatile, complex and ambiguous world as if it was predictable. Entrepreneurs start from the downside, the possible loss and then determine if they are willing to put skin in the game. Corporates start from the upside, which business case offers the best ROI. This planned approach is really risky and often business cases aren’t being met at all. Corporates invest what the upside allows them to, considering ROI, EBIT etc. therefore the invest more than an entrepreneur who think in compelling goals and possible profit of an opportunity, but make their descission based on the possible downside.

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