Even though it has been proven that intrapreneurs drive up business results, Latin American companies are still not taking enough advantage of their enormous amount of innovative potential. The most creative workers are waiting to be pushed toward the entrepreneurial culture.
Although the concept of intrapreneurship is more than 30 years old, this type of activity is still not commonly seen in companies around the world. In Australia, the most intrapreneurial country in the world, according to the 2016 Global Entrepreneurship Monitor report, the percentage of the adult population who have taken part in the development or launch of new products or services or the creation of a new business unit, establishment, or affiliate for an established organization is only 9%.
The percentage of intrapreneurs is not even 2% among the actively economic population in Latin America, with the exception of the countries on the Southern Cone: Chile (5.4%), Argentina (3.1%), and Uruguay (2.6%). This contrasts with other sectorial and geographical contexts, which show a positive relationship between corporate entrepreneurship and business results, especially in terms of growth in sales and turnover, profit, and an increased market share. In many cases, intrapreneurship has helped generate new and disruptive businesses, which were also very profitable, such as PlayStation by Sony, Gmail by Google, Post-It by 3M, or Java by Sun Mircrosystems.
Although corporate entrepreneurship is recognized to be a source of success and a competitive advantage, companies are continuing to squander the enormous innovative potential of their own employees. Let’s review a few common scenarios to see who corporate entrepreneurs are and why and how entrepreneurship is generated.
Entrepreneurs are not born, but are self-made. However, there are some common psychological traits that make them stand out, such as a strong will to achieve, the ability to take responsibility and risks, and the desire for independence and internal control.
Equally, corporate entrepreneurs tend to take initiative, accept challenges, and discover new opportunities of growth for the company that they work for. They look to be leaders and put their ideas into practice. Nevertheless, they have a lesser desire for independence and prefer the security of their workplace as opposed to the uncertainty of starting up their own company.
Traits intrapreneurs have in common with independent entrepreneurs: Intrapreneurs identify new opportunities of growth for the company, they develop a business model, they form teams, and they present their ideas and projects to the various evaluating committees at the company. Overall, they are aware that their success will depend on their ability to manage their network of internal supporters, namely those people who are higher up in the organization and who support their ideas.
Intrapreneurs can also be identified by the following traits:
- The main motivation for an intrapreneur is to achieve hierarchical independence and the possibility to move up the reward scheme within the company.
- Their time orientation depends on the urgency to meet deadlines set by themselves and by the company.
- Their activity is based on direct participation and team leadership instead of delegation and supervision of others.
- Instead of carefully managing risks, which is a characteristic of management, intrapreneurs take moderate risks, as if they were independent entrepreneurs.
In terms of status, corporate entrepreneurs are not worried about traditional status symbols; they are looking for independence.
- When making decisions, they are not dependent on superiors. They are able to make others agree with them in order to achieve their goals.
- Unlike a manager, who guide others, an intrapreneur guides themselves, their clients, and their internal stakeholders.
- They predominantly establish transactional relationships with others, without being left out of the organization’s hierarchy.
All companies need employees with entrepreneurial instincts, and the challenge for businesses is to include tools in their human resources policy that attract and retain people with these characteristics. Correctly managing these employees’ motivation and competitive edge will stop them from leaving the company, whether that be to start their own business or to join another company with a more entrepreneurial culture.
How far does intrapreneurship reach?
Even though corporate entrepreneurship encompasses the strategies and practices that companies use to look for new business opportunities via the promotion and management of entrepreneurial competences, the overall impact of intrapreneurs can be seen in two ways.
On one hand, they may focus on generating new business for companies, or even new companies or spin-off companies. This involves searching for new opportunities to amplify the activities of the company in terms of its related sectors, as well as the development of new products, markets, and technology. They create fresh activities within the organization, which of course involves a larger risk of failure than the company’s business lines, as well as an overall degree of uncertainty. Firms such as P&G, 3M, Google, and more recently Tesla are clear examples of strong intrapreneurial dynamics and a continuous development of new business within the companies.
On the other hand, a strategic renovation can take shape, which can imply a new combination of resources and a full transformation of the company’s foundations, changing it into a different company from what it was before. The process of strategic renovation often includes the redefining of the company’s mission, the creation of a new business model, the reformulation of the competitive base strategies, and the acquisition or generation of new competences. The success of this process mainly depends on the entrepreneurial instinct similar to what is seen when companies are first created, with a committed entrepreneurial leader who has the same motivation, attitude, and behavior of a traditional independent entrepreneur. Some notable examples of companies in which intrapreneurial leadership has driven relevant strategic renovation are IBM, Xerox, and Lego.
Creating an entrepreneurial culture
The relatively small amount of intrapreneurs in Latin America is due not to a lack of entrepreneurial initiative within businesses, but rather to a lack of an entrepreneurial culture in businesses. Unentrepreneurial companies are unable to generate an environment that encourages individual initiative among employees and are unlikely to attract entrepreneurial leaders. Intrapreneurs should be able to use their skills and knowledge creatively across different areas, and the company has to create a climate that encourages the development of this type of creativity.
A business with an entrepreneurial culture is characterized by:
- Having a system with information on the needs and opinions of clients.
- Being at the forefront of technology and including these advances into their value chain.
- Respecting individuals and the ideas that come from “lower down,” as any employee from any level can be a key player in terms of innovation.
- Tolerating well-intentioned failures because they are a learning tool, although intrapreneurs must also follow the rules established for the development of new ideas.
- Sharing knowledge and not allowing it to just stay within one department.
- Encouraging informal networking, as creativity often happens outside of designated frameworks in excessively rigid organization designs.
- Creating multi-skilled teams with different outlooks and complementary skills, mirroring what happens in the creation process in independent businesses.
- Having a long-term objective, along with the pressures of a short deadline. Management allows new risky projects enough time to prove their viability.
- Having available and accessible resources for the development of new projects, even though they may be high risk.
- Higher management supports the initiatives and creating the conditions for intrapreneurs to strive in the development of their ideas.
- Celebrating internal success. Successful intrapreneurs are rewarded and recognized by the organization.
An “entrepreneurial” company is one that integrates these characteristics, regardless of the people who are leading the entrepreneurial process. Thereupon, the organizations with an entrepreneurial culture achieve a balance between individual entrepreneurial initiative and a spirit of cooperation, as well as an overall innovative group identity. Thereby, the entrepreneurial culture can penetrate all levels of the organization, and the processes in the search for innovation can continue to strengthen in time.