Monday, August 17, 2015

Intrapreneurship: Challenges of Internal Innovation

Our current business press and academia are in love with the entrepreneur.  Virtually every business magazine will feature an interview with an entrepreneur.   Blog posts are touting the spectacular rise and performance of various entrepreneurs.  Business schools and universities have created MBA and DBA tracks for entrepreneurs.  However, the role of the intrapreneur is largely neglected.

An intrapreneur is an individual, usually a manager, within an organization who promotes innovative product development and marketing.  Now you might say, “Well that sounds like the job of the R&D Manager and the Product Marketing Manager.” What makes an intrapreneur unique is that they conceive, promote, plan and implement their innovative idea.  Also their innovative idea is not just a line extension of an existing product, or a minor packaging change; it is a major innovation that either creates a new product line or transforms an existing product line.  

Most large companies have business processes that do strategic planning, product planning, new product development and product introduction.  There are policies and procedures for accomplishing the work in these processes.  Reviews and checklists are used to track progress and make decisions to ensure the new products will meet the business objectives.  The R&D Manager and the Product Marketing Manager have key roles in these business processes. 

But these processes are designed to control business risk and maximize the use and return of business resources.  Therefore, these processes normally focus on the current business product lines and markets.  When that happens, these processes suppress creating a brand new product line or breaking into a totally different market because of the high levels of uncertainty.  Add to this that the majority of the business resources are focused on running the current business.  It is no surprise that it is typically very difficult to get the needed technical expertise internally to plan and develop a truly innovative new product.  That is one reason that so many large corporations choose to expand their product lines through acquisition instead of innovation.

So the intrapreneur is faced with a daunting task, one that is similar in some respects and yet different in others from that of the entrepreneur. The intrapreneur must overcome the organizational inertia and bureaucracy to get approval and support for their innovation.  This can be much harder than the problem an entrepreneur faces since the intrapreneur cannot just move onto the nest venture capitalist if they get a “No” answer.  However, once they have support, the intrapreneur has an advantage because they have experienced resources available and existing relationships they can leverage.  In both cases they will need good analytical and project management skills to bring their innovation to market.

Let’s look at a few of the challenges a typical intrapreneur faces:
  • The business already has a process for selecting strategic development initiatives.  The intrapreneur’s innovative idea will be compared to other ideas and will inevitably be a higher risk idea than most if not all of the others.
  • The intrapreneur’s innovation will often cannibalize or obsolete an existing product line.  Those responsible for this existing product line will often be antagonistic towards the innovation.
  • The intrapreneur must work with the management team and technical experts within the company, even if some are not supportive of the idea.  He or she cannot find their own support team that shares their vision of the innovative product.
  • Innovation projects are often technically challenging with significant uncertainty that leads to project delays and overruns.  A company that is used to the certainty of low risk development projects will quickly lose confidence in the innovation project.

Which leads us to the identification of some key attributes that are needed by the leader of innovation:
  • Analytical and communication skills to create and present a business case for the intrapreneurial innovation:
  • Facilitation and communication skills to develop and lead a cross-functional team of experts – some of whom are not completely supportive of the innovation.
  • Project management skills to plan and implement the development project and proactively manage risk within the project.
  • Communication and political skills to manage the internal politics of change and innovation within the organization.

Being an intrapreneur can often be a thankless and frustrating role.  Even when the project is successful, the rewards are likely to be miniscule as compared to those of the entrepreneur.  But the advantages are that there are often significant resources available to help the project succeed and the personal risk is less than for the entrepreneur.

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