The Benefits of Intrapreneurship
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Intrapreneurship may be key to driving sustainable innovation within large organizations.

Over the last decade, companies have begun investing more time and resources into innovation, with an ever-growing list — including Kohl’s, Staples, Coca-Cola, and Volkswagen — going so far as to launch in-house innovation labs.

However, while 84% of executives believe their organization’s overall growth is heavily dependent on innovation, research conducted by McKinsey & Company finds that an overwhelming number of corporations struggle to innovate. In fact, a mere 6% of executives are pleased with their company’s performance in this area.

While large organizations often have both the budget and the personnel to pursue corporate innovation programs, factors like strict hierarchy and bureaucracy often make them difficult to successfully implement. And while the “move fast and break things” ethos may be an effective way to drive innovation at tech startups, for most corporations — particularly publicly traded companies — that approach can actually be a liability.

As a result, some large organizations are turning to “intrapreneurship” as a strategic and sustainable way to encourage innovation.

What is Intrapreneurship?

Deloitte defines intrapreneurship as “a people-centric, bottom-up approach to developing radical innovations in-house.” Simply put, employees are encouraged to treat their area of expertise as their business, empowering them to work, think, and tackle problems like an entrepreneur.

The Benefits of Intrapreneurship

For many organizations, intrapreneurship can help secure a competitive advantage that not only has a positive impact on their bottom line and overall growth, but also their corporate culture.

An intrapreneurial culture can help employers gain access to a wider talent pool, appealing to those who might otherwise be drawn to startups or other organizations where they feel they’ll have more opportunity to make an impact. Likewise, an intrapreneurial culture may also be more appealing to younger talent who may otherwise shy away from more traditional corporate environments.

How to Encourage Intrapreneurship

In order to effectively build a culture of intrapreneurship, employees must be given time, support, and freedom. Perhaps one of the most well-known examples of intrapreneurship in action is Google’s 20 percent rule, which allows employees to spend up to one-fifth of their time on passion projects. However, the concept goes back much farther, stemming from an initiative developed by 3M in 1948 as a way to drive innovation and foster creativity — and it did. The Post-It Note — arguably one of 3M’s most innovative products — was dreamed up by a 3M scientist during his “15 percent time.”

Most companies likely can’t give their employees a full day per week to pursue a side project, but simply giving your employees the freedom to work on passion projects during slow periods can go a long way toward driving innovation within your organization.

In addition, for creativity and innovation to thrive, employees must feel safe sharing their ideas, even if those ideas might not ultimately pan out. This starts with leadership: Managers should make an effort to acknowledge and encourage their employees’ ideas, while also giving them the freedom to fail. Likewise, their superiors should provide the appropriate level of support to help them bring successful ideas to life.

Barriers to Innovation

For many organizations, hierarchy can get in the way of innovation. Junior-level employees often have an unique level of insight into a company’s strengths and weaknesses. They’re the ones in your organization who are interfacing with clients, responding to customer service inquiries, and handling execution. Unfortunately, in many organizations, these employees don’t always have the means or ability to relay feedback or share ideas up the ladder.

Managers should work to bridge the gap between their direct reports and senior stakeholders to help improve idea sharing. In addition to removing barriers and reducing bureaucracy, employees should also be able to share ideas that may pertain to projects or responsibilities outside of their immediate realm.

Deloitte advises companies to adopt a decentralized structure that empowers lower-level employees — those that often serve as a company’s “feet on the ground” — to participate in the decision-making process. For example, a member of your support team may have keen insight into a specific product. Giving them the freedom to provide feedback and participate in the decision-making process with your R&D or product teams can prove invaluable.

Striking the Right Balance

While intrapreneurship can benefit a company’s culture, it can — and likely will — change it, as well. While this might be appealing to many of your employees, it’s crucial to note that intrapreneurship isn’t for everyone, particularly those employees who are comfortable in a more traditional corporate environment. Expecting existing employees to abruptly change the way they work, think, and communicate can often lead to culture problems that may actually stifle innovation.

Instead of forcing change throughout your organization, you may wish to start by building an in-house innovation team — a single department that operates free from the constraints of the main organization. Starting with a small group of employees gives you the opportunity to find out what barriers might exist and discover the pros and cons prior to rolling the program out across your organization.

For many organizations, intrapreneurship requires both structural and cultural change. However, when executed with both commitment and care, intrapreneurship can help drive sustainable innovation in even the most traditional environments.

For more on operations, risk management, innovation, and financial management, visit regions.com/commercialinsights.

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This information is general in nature and is provided for educational purposes only. Information provided and statements made by employees of Regions should not be relied on or interpreted as accounting, financial planning, investment, legal, or tax advice. Regions encourages you to consult a professional for advice applicable to your specific situation. Information provided and statements made by individuals who are not employees of Regions are the views, opinions, or positions of the individual who made the statement and do not necessarily reflect the policies, views, opinions, and positions of Regions. Regions makes no representations as to the accuracy, completeness, timeliness, suitability, or validity of any information presented.