A few months ago Paul O’Connor from the The Adept Group asked some very interesting and insightful questions about Intrapreneurship. Why did intrapreneurship die in its initial roll out back in the 1980’s and why will it stick now? What has changed outside of intrapreneurship and inside of intrapreneurship now, in 2016, to enable it to endure?
Answering these questions may be the key to its survival NOW and into the FUTURE.
Intrapreneurship was introduced to the business world in the 1980’s by Gifford Pinchot, author of the international bestselling book Intrapreneuring. At the time Intrapreneurship was competing with a number of other management practices and approaches. The evolution of Quality Control to Total Quality Management, the growing demand for Corporate Strategy and Organization consulting, the development of the Stage-Gate Process for Product Development, and the Organizational Development focus on structure versus behavior, performance versus people. These were only a few of the management concepts competing for management attention.
The overall goal of Intrapreneurship was new business growth but there was a difference of opinion in how to achieve that goal in the academic and business world. The academic world took a more systems view – a companywide perspective. While the corporate world looked at innovation as the means to accomplish this goal – more of a practical, process perspective. These two different perspectives blurred the lines between innovation and intrapreneurship – the words were often used interchangeably. Although people and culture were always part of the discussion, the challenge was how to change culture and all that goes along with culture to foster ongoing innovation.
Intrapreneurship was proposed as the answer to this challenge because it focused on getting things done. Organizations like 3M and DuPont sent hundreds of people through Intrapreneurship training. Gifford Pinchot’s lectures were packed. Whole new groups were set up inside some organizations. The individuals that had invested part of their careers in this action-oriented approach soon found out that things did not work out well for them. Intrapreneurs were, in hindsight, entrepreneurs in training.
It is important to acknowledge that Intrapreneurship existed before and it failed. We tend to ignore that fact, especially given the growing demand and desire for intrapreneurship today. Unless we unravel the reasons why it failed we may not understand how to support it now and in the future.
PAST:
In looking back the 1980’s was a decade of great socioeconomic change due to advances in technology and the growth of globalization. The United States had rebounded from a recession and began a sustained period of economic growth. Japan and West German saw large economic growth while many developing countries faced economic and social difficulties. The AIDS epidemic became widely recognized, there was widespread famine in Ethiopia, and the scientific and political community warmed us of the effects of global warming. The world saw major civil discontent and violence throughout the Middle East, nationalism in the Eastern Bloc and a desire for democracy in communist-led socialist states. This period also gave us great advances in digital and genetic technology, the internet became a global system and television viewing became commonplace in the third world. The 1980’s also gave birth to a new generation – the millennials.
The 1980’s were a time of economic growth. Globalization increased in the developing world and corporations relocated their manufacturing facilities into Thailand, Mexico, and China. Emerging economies were growing which opened up new opportunities – new markets and customers. Extending and repackaging existing products for these markets provided new revenue opportunity and growth. Product development processes improved and new products could be brought to market more quickly. Incremental innovation was key to driving growth. Disruptive innovation was not yet on the radar.
It was also a period of significant growth in the management consulting business dominated by the “Big Five”. Consulting services had expanded beyond the traditional accounting and auditing services. The consulting firms organized themselves around a number of different consulting practices bringing their own proprietary methodologies and frameworks to clients. Much of their growth was driven by the demand for strategy and information technology advice. For years the main focus was on strategy – less on implementation. Intrapreneurship was all about strategy, execution and implementation.
The workforce of the 1980’s was dominated by the baby boom generation. Women started entering the workforce in greater numbers. The workforce was becoming more diverse. The proportion of the employed workforce that was foreign born had increased. The impact of globalization resulted in a decline in manufacturing and the growth in the service economy. The shift to an information and technology based economy was effecting all workers. Computer technology was enhancing productivity and changing the way organizations operated. Workers were organized into teams, had more decision making authority and received more specialized training. Keep in mind that this was the age of the liberal, hippy, age of Aquarius, baby boomer generation that had ousted the proverbial “organization man”.
The changing business landscape was impacting the way large corporations were being managed. During this period Jack Welch was CEO of General Electric (GE). “Under his leadership, GE increased market value from $12 billion in 1981 to $280 billion, making 600 acquisitions while shifting into emerging markets. Welch pioneered a policy of informality at the work place, allowing all employees to have a small business experience at a large corporation. Welch worked to eradicate perceived inefficiency by trimming inventories and dismantling the bureaucracy. He closed factories, reduced pay rolls and cut lackluster units. Welch’s public philosophy was that a company should be either No. 1 or No. 2 in a particular industry, or else leave it completely.”1
At the same time organizations were experimenting with skunk works. The designation “skunk works” was used in business, engineering, and technical fields to describe a group within an organization given a high degree of autonomy and unhampered by bureaucracy, tasked with working on advanced or secret projects. As a registered trademark of Lockheed Martin, the idea of skunk works was adopted by a number of large companies in the 1980’s including IBM, Texas Instrument and Apple. According to Marc Winn in his article The Skunk Works, “In the early 1980s, Steve Jobs leased a building behind a restaurant in Silicon Valley, installed twenty brilliant designers, and created the first Macintosh computer.” In 1985 Time Magazine popularized the term intrapreneurship in its article, “Here come the Intrapreneurs”.
Perhaps this gives you some insight into what was happening in the 1980’s. It does not address the reason why intrapreneurship died. It only sets the context for understanding some of the factors that may have contributed to its demise.
We want to know why you think Intrapreneurship did not survive in the 1980’s.
Here are some of our thoughts to get you started.
- Intrapreneurship failed to cause the necessary organizational change needed to enable it to survive.
- Structures, behaviors, and culture had to change more than they did for intrapreneurship to be sustainable.
- Organizational barriers and obstacles were large and more complex than anticipated.
- Intrapreneurs were limited in their ability to use organizational resources freely.
- Growth was more about driving existing products into new emerging markets.
- Perhaps the principles touted by Pinchot in the Intrapreneurs Ten Commandments were not realistic given the business environment.
- …….
Let us know what you think.
In our next article we will look at Intrapreneurship NOW and what has changed that might make intrapreneurship more enduring today and into the future.
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Paul O’Connor contributor to this article.
1 GE History
Great inquiry. Thanks. A factor that you have not mentioed in detail is the “Home Run Philosophy.” As big companies expanded globally and by acquisition, they were not interested in small wins. They looked for opportunities that would produce as several clients told us, “a billon dollars in sales in two or three years with little risk or new technology.” That is not intrapreneuring’s sweet spot. Individual intrapreneuring projects do not produce billions that fast. Intrapreneuring had a Lean Startup flavor: Entering the market with small probes and learning by actual experience in the market rather than by writing projections for billion dollar businesses based on theory. Individual intrapreneuring projects that we helped to launch did in the long run produce billions in sales and become the primary business of their companies, but that was not accomplished in two or three years. And it was not easy in advance to project billion dollar sales.
What worked was establishing a beachhead with a new product, service or technology and then, from the beachhead, seeing the billion dollar opportunity.
Probing the market is the way distruptive innovation takes place, but CEOs did not have patience to grow businesses from scratch unless they were agreed upon by the panels of executives in the stage gate process. Unfortunately the stage gate processes screened out the truely innovative ideas, which are hard to understand in advance. They win over foresighted sponsors who really work to understand them, they don’t win unanimous approval by a bunch of bureaucrats.
Rather than the reality of cost effective innovation, CEOs bet on the stage gate process which produces grand projections in theory. However, for the most part, as mentioned above, stage gate did not work.
To make intrapreneuring work CEOs have to have the patience to delegate the activity and let it grow out of sight until it surfaces both the big disruptive products and a host of smaller innovations that together also add up to billions. That produces a great return on investment, but requires a longer time frame. In the politics of corporate life too often promising predictions combined with plausible process trump what actually works.
Gifford,
Great insight. Thanks for sharing your thoughts. It raises a few key questions. Has the corporate world changed enough to embrace Intrapreneurship today? Is this a movement that is being driven by individuals who seek a more entrepreneurial environment and are putting pressure on organizations to become more entrepreneurial? Are investors and the Board of Directors willing to accept and balance the short term and long term demands required for Intrapreneurship? Would like to share your comments in the follow-up blog posting on Intrapreneurship – Now. Regards, Susan
The climate if very different now than in the 90s. Then Stage Gate ruled, which looks good on paper but produced very few results.
I have a recent blog entry on exactly why intrapreneuring is getting so much more implementation today. A major reason is that it works. It is a cost-effective way to greatly accelerate innovation with good short time returns.
I ran a three-course distance learning intervention in a German drug company. It included taking teams through the process of planing how to implement their inventions. 6 of the 12 teams developing their intrapreneurial business plans were funded on graduation by a team of executives. Within one year the program produced a 10:1 return on investment including all investments and all the cost of the program. This kind of result is very easy for executives and company directors to take.
What works to support intrapreneurs is a relationship, not a process. The relationship is between an intrapreneurial team and one or more sponsors. The sponsors deeply understand the value of what the intrapreneurs are trying to do and trust the intrapreneurs to make good decisions. They are betting on the people as much as on the ideas. They help the intrapreneurs find resources and guide around political dangers. They defend them with higher ups and help them to hide when hiding is the best strategy.
Check out my blog
http://www.pinchot.com/2016/03/why-intrapreneuring-is-suddenly-happening-again.html.
Gifford,
We need to hear more success stories like your German drug company. Hope everyone reading this will read your article Why Intrapreneuring is Suddenly Happening Again. http://www.pinchot.com/2016/03/why-intrapreneuring-is-suddenly-happening-again.html.
I couldn’t agree more with your comments about relationships versus process. Although process is important it is individuals that make things happen. Readers may want to read my article Intrapreneurship – Let’s End the Debate. http://www.intrapreneurshipconference.com/intrapreneurship-lets-end-debate/
The words maverick and champion have been so over used that the people side of intrapreneurship is too often ignored. It still takes individuals with a unique combination of competencies to be successful in the role of Intrapreneur or Social Intrapreneur. Their ability to build strong relationships with all stakeholders is paramount but especially sponsors. Needless to say too few companies are systematically identifying and developing their intrapreneurs. Isn’t it time we put people back into the equation.
Susan
Susan,
Great conversation. The addition is that in the last century there was a series of bubbles created because mass production could produce for a population of employed people with money to spend beyond food and shelter.
The more the buyer spent on cool stuff the more cool stuff got produced, the more people got hired and the bubbles got created. All the bubbles eventually burst (cars, homes, electronics, etc.) and settled in to a traditional buyer seller model that is thousands of years old.
In that traditional model the seller and buyer lived near each other and understood the value needed and the value provided. Since the seller knew the buyer they would develop something to help the buyer and the buyer would pay for the real value.
Last century we lost that relationship and companies looked for the biggest bubble they could find to fulfill. They would fulfill bubbles like cars, appliances, trains, planes, electronics (Ford and GM did all of these) for decades while the market bought the best available with little regard to price or quality.
Today the WHOLE world fulfills, with at least good enough products at an ever decreasing price to the buyer. There will be few massive bubbles not shared by many sellers and the life of a bubble is getting shorter and shorter.
Today most things a buyer purchases are not in a bubble and the internet has replaced living on the same block with the seller from the pre-bubble economy. Today the buyer wants the relationship from the past and tries to get if from the transparency and real-time nature of the web.
The billion-dollar startup will be rare since whatever the seller has will have a short bubble before good enough and lower priced competitors show up to burst the bubble.
Today everything needs to be designed from the buyer back with the focus on the problems the buyer has today and will have as the world keeps up its high speed change. We know today the engagement model is often as important or more important than the product. How we engage supports, educates, and facilitates the buyer becoming better off, not just the owner of a new “product.”
What Intrapreneurs offer is the chance to engage with buyers not corporate spread sheets and use this buyer / seller engagement as a way to grow both companies, not just help the seller meet investor goals.
Thanks for the great conversation.
Rick, The bubble idea is very intriguing. As the market has evolved so has the relationship between buyer and seller. It’s as if we have come full circle. I can’t agree with you more that organizations need to work from the buyer back. That engaging with customers and rebuilding those relationships is key. That intrapreneurs can and are taking the lead. More importantly your comments provide greater insight into why Intrapreneurship may not have gotten the traction in the past and why it might be the answer to instituting it today. Bursting bubbles is a lot easier than creating new ones. Thanks for sharing your insights. Susan
very good article