ENTREPRENEURS NECESSITATE INTRAPRENEURS TO FOSTER THEIR ORGANISATION

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1 ENTREPRENEURS NECESSITATE INTRAPRENEURS TO FOSTER THEIR ORGANISATION SHABANA AZAMI LECTURER (BBA DEPARTMENT), MODERN COLLEGE OF PROFESSIONAL STUDIES Abstract It explores both entrepreneurship and intrapreneurship and the relations between them. An important outcome of the review is the identification of the similarities and differences between entrepreneurship and intrapreneurship and also the advantages and disadvantages of both concepts. Nowadays, when we are facing economically difficult times, entrepreneurship and inrapreneurship are an excellent tool for breaking out of the trend trough innovation, by bringing something new on the market. Both entrepreneurship and intrapreneurship are instruments of innovation that help in creating new competencies and accessing new markets. Finally, without developing the insight towards these various aspects, no change of the company can be realized, and changing, so adapting means in fact, the survival of that company. The value created yesterday, can mean nothing today, therefore only a sustainable company, who recognizes the difference between an entrepreneur and intrapreneur, can turn ideas and creativity into successful new values for tomorrow. Intrapreneurship is important for the economic development of an organisation because it: i. Increases employee productivity and motivation. ii. Increases the speed and cost effectiveness of operations and business services. iii. Promotes effective teamwork. Keywords: Intrapreneurship, Enterpreneurship, Developing intrapreneurship, fostering the companies, Economic growth, innovation and technically growth Introduction: The global economy is creating profound and substantial changes for organizations and industries throughout the world, forcing them to carefully examine their purpose and to design strategies to satisfy their multiple stakeholders. The task of management is to be aware of the changing scenario. This Shabana Azami Page 21

2 awareness will allow managers to predict future problems and prepare strategies before crisis arise. The changes are because of a variety of pressing problems, like---- Increased global competition. Continual downsizing in the marketing place, leading to fragmented markets. Dramatic changes in the market place, leading to fragmented markets. Fast changing and less predictable economic environment and therefore, diminishing opportunity streams. Increased resource specialization and nearly unpredictable resource needs.. Intrapreneurship is a concept linked to the entrepreneurial orientation of an organization. Intrapreneurship is the spirit of entrepreneurship within an established organization. Most successful private organizations were once entrepreneurial start ups that grew to the point where they became mature organizations. In situations like this sooner or later the spirit of entrepreneurship is no longer active and alive.hence the need to catalyse the organization and imbue it with a new spirit of intrapreneurship - developing the spirit of entrepreneurship within the realms of an established organization. Intrapreneurs work within corporations to develop new products, increase innovation, and build employee morale. Intrapreneurship appeals to some because it allows them to pursue creative business ideas with the support of a large company's resources. In today s increasingly competitive environment, companies need to find that added extra to stay competitive to retain existing customers and attract new customers. One way to do this is to encourage innovative and creative behaviour within the organisation ie to encourage intrapreneurs. An intrapreneur is a person within a large corporation who takes direct responsibility for turning an idea into a profitable finished product through assertive risk-taking and innovation. They behave like an entrepreneur, except within a larger organization Intrapreneurs can enable businesses to expand into other areas of their market by identifying new products or services to existing or new customers. This can require the organisation to take risks. In large organisations this may challenge the management team who have to report to multiple stakeholders. So an attitude towards accepting and promoting intrapreneurial behaviour needs to be incorporated within the strategy and rules flexible enough to engage the innovative thinker. Management needs to change from a culture of enforcing orders and rules to one with sufficiently flexible behaviour to stimulate innovation and creative visions that guide and focus the efforts of potential intrapreneurs. Shabana Azami Page 22

3 DEFINITION OF INTRAPRENEURSHIP Intrapreneurship refers to employee initiatives in organizations to undertake something new, without being asked to do so. As the detailed behavioural content of intrapreneurship is still uncharted, this paper surveys three relevant strands of literature. These are early-stage entrepreneurial activity (business founding) and two literatures on employee behaviour inside existing organizations, i.e. proactiveness and innovative work behaviour. By combining insights from these domains with those from the emerging intrapreneurship literature, we derive a detailed list of relevant activities and behavioural aspects of intrapreneurship. Major activities related to intrapreneurship include opportunity perception, idea generation, designing a new product or another recombination of resources, internal coalition building, persuading the management, resource acquisition, planning and organizing. Key behavioural aspects of intrapreneurship are personal initiative, active information search, out of the box thinking, voicing, championing, taking charge, finding a way, and some degree of risk taking. Intrapreneurship is a special type of entrepreneurship and thus shares many key behavioral characteristics with this comprehensive concept, such as taking initiative, pursuit of opportunity, and some element of 'newness'. At the same time, intrapreneurship also belongs to the domain of employee behavior and thus faces specific limitations that a corporate hierarchy and an intraorganizational context may impose on individual initiative, as well as specific possibilities for support that an existing business may offer to a nascent intrapreneur. ENTREPRENEURSHIP VS INTRAPRENEURSHIP Unlike the entrepreneur, the intrapreneur acts within an existing organization. The intrapreneur is the revolutionary inside the organization, who fights for change and renewal from within the system. This may give rise to conflicts within the organization, so respect is the necessary key in order to channel these conflicts and transform them into positive aspects for the organization. Even though intrapreneurs benefit from using the resources of the organization for the implementation of the emerging opportunities, there are several motives why innovation is more difficult to implement in an existing organization, such as (Malek & Ilbach, 2004): The size: the bigger the organization the more difficult it is to have an overview of the actions of every employee Lack of communication: Specialization and separation, help in concentrating on the areas of interest, but hinder communication. Internal competition: Internal competition amplifies the problem because instead of sharing the Shabana Azami Page 23

4 knowledge with others it borders the knowledge sharing. Everyone wants to keep the information for themselves. Feedback received in case of success/mistake: Costs in case of failure are too great and the reward for a successful outcome too small. Intrapreneurs must be allowed to commit mistakes, because such mistakes are an inevitable part in the entrepreneurial process. The recognition of success is also very rare. No company provides payment in advance for what an entrepreneur might accomplish, but a lot of them like to talk about the concept of intapreneurship and expected their employees to get involved and assume their risk. But finally, when motivated employees get involves and have success their only reward is a small bonus. Dullness: Many companies are slow and reluctant to change. Intrapreneurs bump many times into the well known sentence We always did it this way, which leaves little or no space to creativity. The willingness to try new things appears only when the company's shortcomings become apparent, but even so they don t give room to an innovative leadership. Hierarchies: Organizational hierarchies compel employees to ask permission for actions that fall outside their daily duties. The more complex the hierarchy the more difficult it is to impose change. Hierarchies have also tended to create a short-term thinking. Employees on lower hierarchical levels have a Victim- Mentality due to a reduced area of action and reduced responsibilities The Importance of Intrapreneurship to Economic Growth Allowing employees to introduce and implement innovation within an organisation is a means of fostering economic growth. Few innovations have been derived from a flash of genius, most are the result of a conscious, purposeful search for innovation opportunities. Drucker (1998) has identified four areas of opportunity which exist within a company and three that exist outside a company: Areas of opportunity within a company or industry: Unexpected occurrences. Incongruities. Process needs. Industry and market changes. Shabana Azami Page 24

5 Additional sources of opportunity, which exist outside a company in its social and intellectual environment: Demographic change. Changes in perception. New knowledge. Drucker acknowledges that the sources overlap and differ in the nature of their risk, difficulty and complexity, and that the potential for innovation may well lie in more than one area at a time. However Drucker stresses that they account for the majority of all innovation opportunities. Purposeful, systematic innovation begins with analysis of new sources of opportunities. Innovation is both conceptual and perceptual, an intrapreneur therefore must look, ask and listen. They must consider people and figures to work out analytically how an innovation can satisfy an opportunity. The most effective innovations are simple and focused, they should be directed towards a specific, clear and carefully designed application. Most usually only do one thing. Intrapreneurism is work rather than genius, it requires integrity, knowledge and focus. Intrapreneurism has evolved to include a number of concepts, Kautz (2003) lists the following: 1. Identifying and fostering employees who are considered to have intrapreneurial traits; 2. Developing intrapreneurial processes for all or part of a business. 3. Developing innovation through rewarding intrapreneurial behaviour. INTRAPRENEURIAL ORGANISATION Intrapreneurs have been credited with increasing the speed and cost-effectiveness of technology transfer from research and development to the marketplace. While intrapreneurs are sometimes considered inventors, inventors come up with new products. Intrapreneurs come up with new processes that get that product to market. Part of the reason they are considered similar to inventors is that they are creative and are risk-takers in the sense that they are stepping out of their traditional role within the business. however, their risk-taking behavior is personal. In terms of the business, they actually work towards minimizing the risk through the innovative approaches they use to more efficient and effective product production and sales. Some methods that have been used by businesses to foster intrapreneurship are: Users of internal services are allowed to make their own choice of which internal vendor they wish to Shabana Azami Page 25

6 use. Intrapreneurial employees are granted something akin to ownership rights in the internal interprise they create. Companywide involvement is encouraged by insisting on truth and honesty in marketing and marketplace feedback. Intrapreneurial teams are treated as a profit center rather than a cost center (i.e, they are responsible for their own bottom line). One way some companies handle this is for the team to have their own internal bank account. Team members are allowed a variety of options in jobs, in innovation efforts, alliances, and exchanges. Employees are encouraged to develop through training programs. Internal enterprises have official standing in the organization. A system of contractual agreements between internal enterprises is defined and supported by the organization. A system for settling disputes between internal enterprises and between employees and enterprises is part of the intrapreneurship plan. Intrapreneurism in business has evolved to encompass a variety of concepts: identifying and fostering employees who have what a considered to be intrapreneurial traits, developing an intrapreneurial process for part or all of a business, and developing innovation through rewarding intrapreneurial behavior. NASCENT INTRAPRENEURSHIP INTO ORGANISATIONS Many organisations have placed greater importance on a service-orientated approach to their business activities. Customers are seen as both internal and external and employees are expected to be positive, polite and professional. This customer service focus has resulted in an emphasis on being a team player. In such a team performance environment employees must manage their own time, solve problems, apply logic and reasoning skills and be able to set and follow through goals. They need to be self-motivated entrepreneurs who are fixers, not finger pointers. Consequently, the culture and ethos of a customer service focus has enabled an increase in intrapreneurism. This in turn has led to the development of intrapreneurial competing teams within a company. Teams can function as small businesses within the organisation, which are nested and networked together. Teams can focus on either a product or a process (such as secretarial services or PR). Such practices result in a free market system where work is more effectively co-ordinated and responsibility is distributed more evenly. Pinchot (1999) has noted that Shabana Azami Page 26

7 intrapreneurial activity increases the speed and cost-effectiveness of technology transfer from research and development to the marketplace. Pinchot has developed the Ten Steps to an Entrepreneurial Organisation based on need factors, which he considers vital for the development of organizational intrapreneurism. 1. Give users of internal services a choice of more than one internal vendor. 2. Give employees the security. 3. Demand and engender truth and honesty, marketplace feedback and marketplace discipline, to support widespread decision-making. 4. Give intrapreneurial teams responsibility for their own bottom line even if they are subsidised as a profit centre rather than a cost centre. 5. Allow many options and diversity in personnel, in jobs, in innovation efforts, alliances, and exchanges. 6. Provide extensive training and education, and safety nets, so employees can develop and take risks as their organisation develops. 7. Create an internal bank account for every internal enterprise. 8. Streamline systems for registering internal enterprises so that they have standing in the corporation. 9. Establish a system for registering agreements and contracts between internal enterprises, so that people can give their word and trust the system. 10. Establish a justice system for adjudicating disputes between internal enterprises and between employees and enterprises. CONCLUSION It focuses on how different organizational factors affect intrapreneurship. Both the terms intrapreneurship and entrepreneurship are used here. Generally intrapreneurship can be defined as entrepreneurship without leaving the corporation. An intrapreneur is an entrepreneur within the confines of an established organization. Therefore it is difficult to discuss intrapreneurship without basing it on the term entrepreneurship Intrapreneurs are the ones to promote technological innovation in the companies, putting into practice their new ideas. But what happens with most organizations is that they do not present a favorable environment so that entrepreneurs appear, which usually blocks the innovation process. When intrapreneurs appear, the way to the innovation becomes fertile and facilitated, once these intrapreneurs are always open to continuous learning and to apply their new ideas. Pinchot and Pellman Shabana Azami Page 27

8 (2004) also point out that the success of innovation depends much more on fast learning and quick response to the new learning rather than on being sure one is right. They also say that in the complex current world, mainly regarding multinationals, one or two people involved in the creation of a favorable environment to intrapreneurs is not enough. It is necessary to develop a shared belief in the innovation and the clear determination to keep it through the maintenance of intrapreneurs. For Santos and Zaffalon (2005), technological innovation has close relationship with intrapreneuring in big organizations which have already consolidated in the market where they are inserted. Intrapreneurs can enable businesses to expand into other areas of their market by identifying new products or services to existing or new customers. This can require the organisation to take risks. In large organisations this may challenge the management team who have to report to multiple stakeholders. So an attitude towards accepting and promoting intrapreneurial behaviour needs to be incorporated within the strategy and rules flexible enough to engage the innovative thinker. Management needs to change from a culture of enforcing orders and rules to one with sufficiently flexible behaviour to stimulate innovation and creative visions that guide and focus the efforts of potential intrapreneurs. Therefore, a direct relation between the existence of an intrepreneurial culture and technological innovation becomes a real fact for the modern organizations. The incentive to the appearance of intrapreneurs generates innovations that promote several competitive advantages for the companies which lead the markets in which they are inserted. References: 1. Amo, B. W. & Kolvereid, L. (2005). Organizational strategy, individual personality and innovation behavior Journal of Enterprising Culture, 13(1), pp Antoncic, B. (2001). Organizational processes in intrapreneurship: a conceptual integration, Journal of Enterprising Culture, 9(2), pp Antoncic, B., & Hisrich, R. D. (2003). Clarifying the intrapreneurship concept, Journal of Small Business & Enterprise Development, 2003, pp Churchill, N. C., Reserch issues in entrepreneurship (2003). în Antoncic, B & Hisrich, R, D, Clarifying the intrapreneurship concept, Journal of Small Business & Enterprise Development, pp Davis, K. S. (1999). Decision criteria in the evaluation of potential inrapreneurs, Journal of Engineering & Technology Management, pp Honig, B. (2001). Learning strategies and resources for entrepreneurs and intrapreneurs, Entrepreneurship Theory and Practice, 26(1), pp Istocescu, A. (2006). Intreprenoriat şi intraprenoriat în România, Editura ASE, pp Volume 12, Issue 5, December 2011 Review of International Comparative Management Shabana Azami Page 28

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10 35. L2S Incorporated, Fostering Intrapreneurial Ideas, Visions for the Future report, April, 21, Pinchot G. & E. What Senior Managers can do Miller R. & Floricel S. Value creation and innovation games No date given Pinchot & Company (1999) Shabana Azami Page 30