Why entrepreneurs can teach us a thing or two
(As originally appeared in the Toronto Board of Trade's OnBoard magazine, January 2011)
By Colleen McMorrow, Leader, Entrepreneurial Services, Ernst & Young LLP
There is no doubt that entrepreneurship has been a driving force behind the economic recovery. Ambition to innovate and the ability to recognize new opportunities first are essential to business growth. And while these characteristics are associated primarily with smaller, start-up companies, very often it’s large companies that harness the entrepreneurial spirit and emerge on top in the long run.
A recent report by EY, Igniting innovation: how companies fuel growth from within, reveals a growing concern that generating innovative ideas becomes more difficult as organizations grow in size and complexity.
Instead of stifling the essence of entrepreneurship, large companies need to redefine the sometimes rigid and bureaucratic nature of well-established corporate structures and place more value on fresh thinking, with the aim of spurring innovation internally. Companies of all sizes should focus on establishing a culture that embraces “intrapreneurship” — entrepreneurial thinking within the company — in order to maintain a competitive advantage and enhance their presence on the global stage.
There are several well-known examples of successful intrapreneurship stories. 3M’s Post-it® Note, for example, now a household and office staple, was discovered by 3M scientists after they stumbled on a new adhesive.
More recently, the Sony PlayStation® began life as a side project that almost got a Sony engineer fired. But after receiving the go-ahead from the CEO, it became the top-selling game console.
Once considered revolutionary, these ideas went to market because their inventors benefited from a corporate environment that fostered fresh ideas and the liberty to pursue them.
So what are the secrets of successful intrapreneurship? To answer this, EY conducted a series of global surveys of senior business leaders as well as interviews with leading academics, industry authorities and winners of the EY Entrepreneur Of The Year® Awards. The findings expose key strategies companies can embrace to achieve effective intrepreneurship:
- Set up a formal structure for intrapreneurship. Set aside time for creative thinking, allowing people time away from their day jobs to explore innovative ideas. Create processes to follow through and drive innovation.
- Ask for ideas from your employees. They know better than anyone what’s buzzing in the marketplace. Encourage everyone — from all levels and functions — to participate in the innovation dialogue.
- Assemble and unleash a diverse workforce. Research shows that diverse viewpoints result in better ideas and superior products. Leading companies recognize the competitive advantage in a workforce that draws from different backgrounds, perspectives, languages and life experiences.
- Design a career path for your intrapreneurs. Creative thinkers can feel restricted in conventional administrative jobs. Find non-traditional ways to advance their careers. Create an intrapreneurial element to the job ladder so that people feel their creativity has a place and contributes to their growth within the company.
- Explore government incentives for innovation. Tap into the increasing number of programs supporting entrepreneurial ventures to help fund innovation — including new tax credits and other incentives for research and development.
- Prepare for the pitfalls of intrapreneurship. Business ventures are something of a gamble. Be prepared for failure, internal conflicts, financial risks and intellectual property battles.
Sticking to these guidelines can help companies work around the traditional barriers to innovation and facilitate a work environment that cultivates creative thought.
To drive successful innovation, the crucial factors remain: the support from senior management and an intrapreneurial framework. Employees championed to explore high-risk, high-reward ideas have to feel they are protected by the safety of a well-established corporate structure. And the processes need to ensure intrapreneurship is carried out from the beginning of the idea to the market debut of the product or service. To accomplish this, organizations should embrace a cultural behaviour shift and challenge the conventional way of thinking.