Intrapreneurs: Who They Are and What They Do
Origins of intrapreneurship. The difference between intrapreneurs, entrepreneurs, andmanagers. Why large companies resist innovations
An internal entrepreneur, or intrapreneur, is an employee within a large corporation who is directly responsible for creating new products, services, businesses, and systems at the expense of the employer.
Sometimes intrapreneurs don’t take part in a company’s routine. They are allowed to focus on entrepreneurial activity completely. However, you can engage in such activity regardless of the position you hold and to any extent you wish — for example, you may employ the entrepreneurial approach to solve everyday problems.
Basically, intrapreneurship is a transitional stage between an ordinary employee and an autonomous entrepreneur. By working for a company that encourages corporate entrepreneurship, employees develop commercial skills and get a chance to try out a new business role. They can use this experience to create their own business afterward.
Advantages and disadvantages of intrapreneurship
Internal entrepreneurship is a valuable resource for every business since intrapreneurs may improve their employers’ performance significantly. However, not every company (and certainly not every employee) has what it takes to practice intrapreneurship as a format of work.
Why would you need corporate entrepreneurship (hereinafter CE)? Let us consider its advantages and disadvantages:
|CE allows employees to discover and develop their entrepreneurial skills||Intrapreneurs get their profit from a salary raise, receiving lesser returns than business founders|
|Employees become more autonomous while learning to work independently and without constant supervision||Identifying potential intrapreneurs may be a difficult task, especially in well-established corporate structures|
|CE motivates employees to develop and implement innovations in the workplace||Corporations are usually not flexible enough to implement innovations|
|Companies share their resources, partnerships, finances, and workforce with intrapreneurs so that they can test and implement new ideas||An intrapreneur who is not satisfied with their salary may quit the job to start a business on their own|
|Corporate support notably lowers the risks associated with entrepreneurship||An intrapreneur might be fired if their project fails|
Origins of intrapreneurship
The term “intrapreneur” is a relatively new one: it came to be actively used in the ’80s. This recent phenomenon is widely discussed and analyzed by leading businessmen and economists.
Why is this relevant? The level of competition between corporations is so high today that it forces them to rethink their operations regularly. Any modern business must recognize market trends and change accordingly. Otherwise, a company cannot survive, and its market share will be taken by savvier competitors.
Corporate entrepreneurship is a company’s reaction to rapid market changes. Intrapreneurs recognize growth possibilities, propose innovative solutions to improve operational processes, and introduce new services, products, or businesses. As a result, an intrapreneur may help their employer improve some procedures, create a new unit or department, or design a new product line.
Example. Let’s imagine a non-existent company Timex Ltd. that is a well-known manufacturer of mechanical wristwatches. Suddenly it faces a new market trend: technologies are making digital watches more affordable. Consumers are now starting to prefer Timex’s competitors who specialize in electronics. In order to secure the company’s profits, its corporate entrepreneurs create a new business model — a digital watch manufacturing line. Later on, this development branch joins the company’s main product range.
It is important to differentiate the terms “entrepreneur” and “intrapreneur”, especially considering how similar they sound. Intrapreneurs differ from entrepreneurs for a couple of reasons, and we’re going to discuss them in the next section.
Difference between entrepreneurs and intrapreneurs
The term “entrepreneur” usually refers to a person who builds a business on their own and runs it as they see fit while embracing the associated risks. Meanwhile, an internal entrepreneur (“intrapreneur”) creates innovative solutions for a corporation they work for. Their employer mitigates the risk of failure remarkably by taking on some of the most tedious tasks and sharing its entrepreneurial experience.
These things are hardly opposites: it’s the same activity but in different conditions. While an entrepreneur operates at their own risk, an intrapreneur works inside a company. However, both of them aim to create new products and services, develop original ideas, and come up with solutions for everyday problems.
Entrepreneurs have full control of their business and the products they create, but they are also responsible for the entirety of the capital and resources required to bring the idea to life. The capital usually consists of the entrepreneur’s own money, posing a serious threat to their personal finances. In that sense, being an intrapreneur is much easier, but intrapreneurship does not provide as much freedom as the private business does.
Different risks mean different profits. An entrepreneur may suffer great losses but make greater profits if their business makes it big. Meanwhile, intrapreneurs bear minimal risks and therefore can expect only relatively modest returns. Of course, they remain valuable employees with a good salary, but most of the benefits from their ideas and projects get reaped by the company they work for.
The main difference between an entrepreneur and an intrapreneur is this: an intrapreneur is an employee, and an entrepreneur is an independent head of their own business.
Intrapreneurs and managers: Are they the same?
If intrapreneurs manage their own projects within a company, what’s the difference between them and regular managers? That’s a fair question. We will put it this way: all intrapreneurs must have management skills, yet not all managers need entrepreneurial drive.
Basically, a manager puts into practice all those innovations and solutions created earlier by an intrapreneur or a company founder. Therefore, an intrapreneur is mostly motivated by the company’s growth and evolution, while a manager works mainly for their paycheck.
You could say that an intrapreneur is an entrepreneur assigned to a management position in a corporation. In other words, an intrapreneur is a manager who has considerable freedom to implement innovative ideas and treats the business they work for as if it were their own project.
The next table shows the main differences between entrepreneurs, intrapreneurs, and managers.
|Role||A private businessman who builds their own business on the basis of an original idea or concept||An employee who uses their entrepreneurial skills to add innovations to the products, services, and business processes of their employer||An employee who supervises the execution of a project|
|Main goal||To offer customers and the market something new||To make the company more stable in the long term||To organize a manageable workflow inside a project|
|Benefits||Private earnings, autonomy, and innovations||Revenue growth for the employer||Salary|
|Risks||All risks associated with entrepreneurship||The employer gets rid of the majority of risks, but a failed project may get an intrapreneur fired||No risks, but a failed project may get a manager fired, too|
|Resources||All resources and capital an entrepreneur owns. Usually, projects get funded by angel investors and venture funds||The corporation provides all of the resources and capital needed to implement the project||The corporation provides all of the resources and capital needed to implement the project|
|Autonomy||High level of autonomy since entrepreneurs work entirely on their own||Medium level of autonomy as intrapreneurs work for corporations but retain control over their projects||Low level of autonomy; managers work for corporations retaining less control over key decisions on their projects|
Difficulties of implementing intrapreneurship
Intrapreneurship is not some kind of magic pill. Many market sectors are inherently unlikely to be revolutionized, and an internal startup won’t be able to shift the existing paradigm. For example, in the aviation industry, it’s impossible to just raise venture capital, make the company public, and sell it in 5–10 years. And when it comes to the power industry, the task gets even more complicated since you have to work within the existing grid and adapt to current energy prices.
Even if corporate entrepreneurship is good for your business, it’s important to remember that it differs greatly from a traditional startup built from scratch. After all, a big company burdens you with its history, interests, policies, and the entire variety of contexts. That is not necessarily a bad thingю An established business already has everything a startup founder can only dream of: its own products, income, workforce, money, organizational structure, and processes.
However, each of these factors makes the system less flexible. Roughly speaking, a startup founder has almost nothing to lose since they start with nothing, too. But a large corporation always has something to lose, so it has to limit the freedom of its employees. That is why an intrapreneur should take into account possible threats, risks, and losses the company may face.
Lastly, many companies evolve to resist any changes, including the ones driven by their employees.
Example. You have been running a department for 5 years. One day, you find out that your employee is working on an automated system that may facilitate the department’s work, thus making some of your skills obsolete and irrelevant. You have to choose between improving the department’s operations and saving your position and salary. In the former case, you increase funding for the employee’s project; in the latter, you cut it off for good.
Encouraging and motivating intrapreneurs
Here are some means of motivating your employees to use the entrepreneurial approach when dealing with a variety of corporate tasks:
- Hackathon. This short-term irregular event is usually dedicated to solving a certain problem.
- Idea fair. This less formal version of a business plan pitch allows employees to present their concepts, ideas, design options, and advances to the company executives.
- Sandbox fund. A specialized company account used to fund the development of innovative projects, including the money needed to recruit contractors.
- Innovation hour. A clearly specified time during working hours that may be used by the employees to work on their own projects.
It should be noted that giving an employee a share in their own project allows them to control its income and expenses, thus motivating and inspiring them to work even more diligently.
Intrapreneurship is a form of corporate activity that encourages employees to develop internal projects. They receive all of the necessary resources, money, tools, and support from the company, thus significantly reducing the risks.
Intrapreneurs and entrepreneurs are different since the former create startups, products, projects, and solutions within the company they work for. Generally, they receive less money than independent start-up founders, yet their salaries are rather high by the corporate standards.
Intrapreneurs are not managers, either. They employ the entrepreneurial approach for solving everyday tasks and retain greater freedom of action within their own projects.
Corporations frequently get stuck within the bounds of their current activity: the more advanced a company is, the harder it is to change its course. That’s why intrapreneurship is so valuable. When fresh ideas do not fit into the existing business model, a company may decide to give up development and lose a fair share of income, growth potential, and positive changes later on. However, intrapreneurs stimulate the development of employers, for example, by creating innovative solutions or performing process optimization. Basically, an intrapreneur creates a startup within a company, and in the future, this startup may become a valuable tool, process, department, product, and even a subsidiary.