As we move away from very large monolithic style organizations, companies are trying to harness the energizing strategies of startups. One technique large companies are adopting is entrepreneurship within their organizations (what some people call intrapreneurship).
What does the research say?
The literature seems to support the belief that technology firms increasing their entrepreneurship (intrapreneurship) see increased firm performance ((Rauch et al., 2009 - LINK).
Why? Because entrepreneurship allows a firm to quickly add new value thus improving the firms profitability. The research shows that this is a curvilinear relationship which means at some point increasing entrepreneurship starts t have a negative impact
What are the components to entrepreneurship?
Entrepreneurship requires a special kind of employee that exhibits the required traits but it is highly dependant on the company creating the winning conditions for it. What are the winning conditions?
- Risk - The firm's culture needs to support initiatives that have uncertain outcomes. Entrepreneurship, like a real business start-up, is risky and this philosophy can only be cultivated in organizations that truly believe in risk taking.
- Industry leadership - The firm's culture must encourage leadership within their industry rather than following. Is your company typically a first mover or do you wait to see how how other firms will attempt new strategies?
- Innovation leadership - The firm's culture must encourage technology leadership. It must encourage everyone in the organization to leverage the latest and greatest tools, techniques and products to simplify, streamline and make everything better.
- Aggressiveness - The firm's culture must encourage employees to aggressively pursue competitors markets with better and/or cheaper offering.
- Trust - The firm's culture must trust employees and allow them to make independent decisions (without too much red tape).
These seem like simple concepts but they are very difficult to implement. I have consulted for dozens of companies that have claimed to support entrepreneurship but that clearly did not meet the above requirements (which ultimately caused their plans to fail). You cannot fake any of the above requirements. Changing an organization's psyche from a traditional risk averse slow mover, to one that meets the above requirements is hard. It requires a leader that is completely dedicated.
If the organization is ready to receive these special type of employees and you are lucky enough to find one of these rare gems, what next?
1 - Understanding your organization - Remember that entrepreneurial employees are a special breed and want to operate like founders in a start-up. For them to make the "right" decisions, they need to know what right is and so the more they understand your company the better equipped they will be to make good decisions.
- Provide social information about the company from articles and media publications (who founded it, why, where and how. what is the company strategy? How does it elaborate its strategic plans?
- Explain how the company makes money and how the financial reporting works
- Be transparent and share publicly available financial information in a timely manner
2 - Understand your competitors - Remember that the company requirements to foster entrepreneurship include aggressiveness and industry leadership.
- Your entrepreneurial employees must understand who your competitors are (direct or indirect)
- They must understand how your customers see your firm (honestly). This can be done through formal 3rd party surveys or by employees calling key customers and asking them
- They must understand how you intend to compete and win against your competition
- They must have a detailed understanding of the offerings from your competitors (and any related literature you can provide)
3 - Encourage risk taking
- Your employees should be encouraged to take calculated risks (never discourage it or indirectly indicate otherwise)
- Remember that someone that doesn't make a mistake has never taken a decision
- Encourage and celebrate success
- Encourage and celebrate initiative (even if it doesn't always work out)
- Work with your employees to mutually agree on good risk versus gambling the company's future
4 - Encourage creative thinking
- Involve your employees (when possible) in strategic decision making
- Challenge your employees for creative alternatives to problems faced elsewhere in the organization
- Ensure creative ideas and initiatives are given the support they need to get implemented quickly and with minimal red tape
Get out of the way
Once all of the elements are in place, you should get out of the way and let the magic happen. Employees will need to understand that entrepreneurship requires self motivation and that they are responsible for their own success and failure.
As a manager, give your employees the responsibility for achieving something and the authority for getting the job done. This is the very definition of empowerment. Don't waste your time with empty motivational tactics.
As much as possible, I try to give away my power to my employees. By doing so, I motivate them to give the job their 100% without resorting to stupid tactics or tricks.
- Help your employees increase their circle of influence
- Where possible, give them authority to sign
- Make sure title isn't used as an excuse to limit work or responsibility
- Break old style rules and policies that stifle innovation
- Minimize red tape for initiative approval