Larry Smith does not like buzzwords – and he isn’t shy about speaking his mind.
“You and I both know that intrapreneurship is now a buzzword,” he said at the Waterloo Intrapreneurship Conference event last June.
“You know it’s a buzzword because the consultants are using it. They’re going to use it for about five to six years and beat the word to death and then move on to something else. I’ve been through them all. If I hear one more corporate improvement buzzword I’m going to freak out.”
Buzzword or not, he says that intrapreneurship a concept that works.
As an economist and professor at the University of Waterloo, Canada, Larry assures us that this model of innovation – intrapreneurship – is driven by fundamental economic considerations and that as long as we’re in a marketplace oriented economy, it’s here to stay.
Why is that? It all comes down to competition, which drives innovation. Ironically, innovation creates more competition, and so the dance, as Larry puts it, begins.
“If your name is innovation then you grab your partner competition and you will dance a jig at an ever, ever faster pace. Competition drives innovation, innovation creates more competition, which drives more innovation, and so it goes. Dancing faster and faster… where’s the limit? Who knows? We may not see it in our lifetimes.”
For innovation to stop being important in our economy and in our future economy, competition would have to stop – and that’s not going to happen, says Larry.
“Are you prepared for the China price? Do you obsess about China? Do you celebrate China? Do you worry about China? You should be doing all of those things. Because Chinese enterprise is on the march. The Chinese government is primarily slowing down Chinese entrepreneurs. Just imagine what would happen if the Chinese government got, you know, sensible and unleashed the talent of more than a billion people. You would see an explosion of competition which would make the competitive pressure from China today look minor,” he says.
So if the market is crowded with competitors, what should you do?
Innovate faster, says Larry. True, if we were seeing rapid economic growth there wouldn’t be such a strong need to move innovation along so quickly. We’d have a bit of breathing room, time to experiment and to adapt.
But the reality is with the birth rate falling under replacement throughout the industrial world, “there is no economic boom coming any time soon. Innovation is the only answer. There isn’t any other. You have to innovate.”
Larry’s not talking about some quick one-off innovation competition but rather innovating at all levels within the organization: human resources, finance, product development, and so on.
Innovative organizations, he argues, are made up of a whole series of innovation – a lot of which outsiders to the company may never even see.
Without innovation, how will your company respond to competition? “You have to worry about some smartass with a new idea that’s going to completely make your marketplace disappear overnight,” warns Larry.
And this, of course, is where intrapreneurs can help. But working entrepreneurially within a company isn’t a new concept. Larry points out that it was talked about back in the 1960s, when David McClelland wrote about how entrepreneurial employees will change the world in his book, The Achieving Society.
The idea of the entrepreneurial employee is quite straightforward, says Larry: “It’s a man or woman with initiative, who sees problems, and then decides to own one of them and fix it. Not say to the boss, ‘Should I fix it?’ ”
David McClelland wasn’t using the term “intrapreneurs,” of course, since the word didn’t yet exist. It wasn’t until 1978 when Gifford Pinchot and his wife wrote a paper on entrepreneurship inside large organizations and coined the term that this concept had its own unique name. Soon after his paper was published, Gifford started getting calls from businesses looking for help implementing intrapreneurship. He was also asked to write a book about it, which was published in 1985. Time Magazine published an article about intrapreneurship – “Here come the Intrapreneurs”– bringing the concept to the mainstream. This was the first burst of interest in intrapreneurship, which lasted until around 1990.
“Intrapreneuring has had its ups and downs. It got off to a big start in the 80s, and then died in the 90s, and here it is coming back again,” says Gifford in his talk at the Intrapreneurship Conference event in Chicago last June.
The are a few reasons for intrapreneurship’s downturn in popularity.
Gifford points to the financialization of our economy: “It used to be that finance was a service that was provided to business but now business is a service that is provided to finance. More and more finance is calling the shots. That led to a financial takeover of corporations and the result of that was that ideas were not valued and intrapreneurs were not valued.”
As well, intrapreneurship wasn’t the only popular management approach of the time, and had to compete with others for attention. Some of these theories, such as the stage gate process, actually ended up blocking new ideas, which discouraged and disempowered intrapreneurs.
“At each stage gate a committee decided whether to let the intrapreneurs proceed to the next gate. This created many ways to say “no” and almost no way to say “yes.” Since it requires great imagination to understand the value of a really new idea, only mediocre ideas (if any) survived the process.
Often the wrong lesson was learned, giving up on internal innovation rather than giving up on a process that looked good on paper, but didn’t work in practice,” writes Gifford.
Theories such as these don’t allow for flexible planning or pivoting – important for innovation because often what a team might start out with as an idea isn’t what it ends with. A good example of this, shares Gifford, is how James Gosling ended up creating the programming language Java when he was actually trying to develop a new universal remote.
“What venture capitalists say about how to manage innovation in the face of the fact that innovation never turns out according to plan, is bet on people- not ideas,” says Gifford.
The relationship between an intrapreneurial team and its sponsors is key.
As well, there just wasn’t such a strong need for disruptive innovation. Globalization meant that many businesses moved their manufacturing facilities to developing countries, allowing them to cut costs. Emerging economies grew and opened up opportunities for new markets and customers.
Businesses could do well simply by repackaging existing products and services for these new markets. The status quo – or a slightly modified version – was proving to be successful for companies, and so the push for intrapreneurship didn’t exist.
Whatever the reasons for its decline, by the time the 1990s were well underway, intrapreneurship had fallen out of fashion.
But it returned in 2011, says Gifford. What caused this renewed interest?
“One reason was we’d pretty much exhausted cost cutting opportunities and we’d pretty much exhausted the easy pickings from taking whatever you were doing in your home country and going global,” says Gifford.
A tougher market calls for creative thinking and new ideas – relying on the easy option no longer works.
As well, the corporate world was emerging from a recession, which increased the need for innovation.
You can also thank the millennials, says Gifford.
“The word, “intrapreneur” is iconic for many millennials. They use it as shorthand for the freedom to pursue their own ideas and the chance to make a meaningful difference early in their careers. This is what millennials are demanding. So, companies are implementing intrapreneuring to recruit and retain the best and the brightest millennials.”
The increasing popularity of agile, lean startup and design thinking has also benefited intrapreneurship. These theories cover ideas such as rapid prototypes and minimum viable product, concepts central to intrapreneurship. “It legitimized a way of managing that made it more possible for intrapreneurs to function effectively,” says Gifford.
Competition is growing. Industries are in a state of disruption as we speak, and businesses need to be changing rapidly to keep up.
So, who needs intrapreneurs? Any company that wants to survive and thrive in an uncertain future.
As Larry so ominously puts it, “We’re just beginning with the horrors that are the economy of the 21st century. Or the great advantages which will drive us to heights of innovation we can’t imagine.”