Essec Business School

Intrapreneurship has become, for good or ill, the corporate buzzword of corporate life. Faced with faster and sharper change dynamics induced by information technologies, firms have feverishly espoused the imperative to adapt quickly to changing environments and to match the ability of the startup world.

The ‘As-Soon-As-Possible’ Approach

In the late 90s, large corporations had wished to nail “the internet”… ASAP. Twenty years later, the same large firms are claiming their commitment to nail “digital transformation”… ASAP. Can you see a pattern?

The desire to foster new activities inside large organization dates back to even earlier than the internet bubble. Already, when management literature started evoking entrepreneurship around the 80s, it was meant for managers of large firms who were already hoping to emulate the fascinating world of small organizations.

The need to elaborate new strategies and to diversify activities has been a concern of management practitioners for even longer. The economics literature—e.g., Schumpeter and his creative destruction—had popularized among scholars and sophisticated practitioners the troubling idea that large firms like IBM, Sears, L’Oréal are not “the end of history”. Rather, the history of those behemoths would lead them to soon face an end or at least a drastic decline. Managers have therefore formed a strong desire to renew their existing activities through the emergence of new ones. Thus, management techniques were identified to allow for entrepreneurship inside large firms. This is how the word intrapreneurship and its nearly synonym corporate venturing were coined and everyone started noticing the various challenges they entailed.  

What if We Rebranded Good Old Taylorian Management?

The early approach consisted in adapting the scientific management methods dating from the early 20th century—a.k.a. “Taylorism.” Why drop a good old method when one can get away we just relabeling it? “Strategic thinking” can become an “idea”, the “imperative to report to the boss for resources” can sexily become “fundraising” and the “imperative to plan” can be even further sanctified as the “business plan.”

In that method of approaching intrapreneurship, once everything is properly predicted, planned, validated and resource-allocated, a couple of executioners (developers, marketers, etc.) can act on the plan. Business at its finest.

Business schools were willing to collaborate to that paint-over of good-old Taylorism, as they had been founded to teach scientific management. The method still made sense today for “business as usual", never mind that it did not necessarily apply to intrapreneurship!

The Seductive Attraction of the ‘Silicon Valley Way’

As a quasi-miracle of the 90s, everyone realized that the teaching of business planning logic—one that was growingly viewed as a painful aspect of general management in the 80s—could be attractively rebranded to look like ‘entrepreneurship the Silicon Valley way.’ Once relabeled into “entrepreneurial business plan”, business planning could gain new popularity. How convenient, how attractive! Searching for ideas, and the subsequent process of processing, validating and providing resources for those ideas became in a few decades the dominant perspective on entrepreneurship, and hence on intrapreneurship.

But the inspiration that was being drawn from the Silicon Valley way did not stop there. Incubators were brought in, then accelerators, etc. Various tools such as lean, agile, design thinking, etc. were also inserted here and there, and not all of them were bad ideas. To recreate the spirit that reigns in Silicon Valley, new locales situated in trendy and expensive central districts were furnished with enough orange carpets, hosting visitors and intrapreneurs among transparent walls, firefly-like swarms of Post-its and bowls of free M&Ms all around…

Such party-like atmosphere gave hope to general management of a quick turnaround towards the entrepreneurship spirit. With this many visible activities concentrated in such attractive and central places, it had to be that entrepreneurship would finally return to the good old firm, didn’t it?

Nearly 25 years after having declared their intention to start acting like startups, are those firms actually making any substantial progress towards intrapreneurship? Once these attractive activities—which may not all be completely useless—are initiated, a stark problem remains. Doing organization transformation is hard, and letting new activities emerge from deep inside an existing firm is even harder.

Entrepreneurship Is Different… Really!

Unfortunately, the sexy stack of modern tools such as accelerators and hackathons has unproven efficiency. They have not significantly prevented large news organizations from being gutted by Google and Facebook, nor large hospitality firms from being displaced by Airbnb, nor has it protected the space industry from being seriously disturbed by SpaceX. Most top managers intuitively--but mostly unconsciously--understand that the glowing orange carpet accelerator and the surrounding maelstrom of activities may not lead to serious emergence of new activities. Where is the problem then?

By contrast to this frenzy, following years of research, scholars now know how to describe the functioning of true entrepreneurship, labeled by the term of effectuation. It can be summarized as follows:

• Start with what you are (e.g., start with what you know, who you know, etc.);

• Do with what you got; do not spend too much time trying to predict the future for the purpose of obtaining the necessary funding (this one is really not intuitive);

• Things only get accomplished by willing partners that want to play together;

• The ability to rebound on surprises is more important than the ability to prevent surprises from happening;

• What matters is what you do.

This “true entrepreneurial logic” differs fundamentally from the managerial logic of Taylorism, which researchers labeled causation, i.e., the logic of predicting a chain of causes & consequences. Under causation logic, management values mainly great ideas, supported by plans regarding market responses and plans about execution.

Those mental systems constitute what has been labeled paradigms, and such deep mental models have an unfortunate consequence: in business firms, the causation paradigm thwarts the establishment of the effectuation paradigm. My own academic research focuses indeed on the difficulties to enact both logics at the same time. This concern has arisen from observing—for decades—that even the best-intentioned classical manager, when exposed to entrepreneurial logic, tends to revert—at some point—into a causal logic. This happens even when firms try to adopt methods such as the popular lean and design thinking methods that actually belong to an effectuation logic. Truth is... large organizations remain mostly efficient at managing their usual businesses in a causal manner, but not at effectually letting new activities emerge.

Business plans may not be toxic; nor are the orange carpet hackathons in the beautiful accelerator. Yet, they can become toxic if management—starting at the very top—does not “get” the effectuation logic, do not switch to an entrepreneurial paradigm. The repeated failures come down to ignoring—at a deep level—what it truly means to be frugal, to be deeply lean, genuinely agile and therefore to allow for experiments across the whole organization.

In most managerial brains, Taylorian management lurks as an unconscious model; hence the organization needs mechanisms to consciously counterbalance it. Otherwise, it overwhelms intrapreneurial initiatives, fragile processes that require the deployment of true entrepreneurial logics specifically adapted to large organizations.

A new deal has to be established for intrapreneurship to flourish: managers must know to refrain their desire to predict and control processes; and lower-level employees must understand that they are actually authorized to experiment, under a set of conditions for sure.

Make It a Total Intrapreneurial System

Beyond applying Taylorian predictive method, and beyond the frenzy of sexy tools, we are only starting to have a clearer idea about those organizational mechanisms that could support deep intrapreneurship. Not surprisingly, intrapreneurship cannot rely on quick patches but on the patient deployment of a comprehensive intrapreneurial system. Here are a few directions that could be quite useful:

Attitudes & HR

• Develop a maker attitude (and re-legitimize your engineers’ spirit); and develop a designer attitude (i.e., great ability to understand product and customers, e.g., re-legitimize the salesperson spirit and actual skillset);

• If you want quality executives to actually take the risk of leading the emergence of new activities—most of which start as minuscule and may not even emerge in the end—then make an HR commitment to your high-potential executives. Make sure that if they choose such emerging PM track, they will be treated as if they had chosen to manage existing (larger) activities. This includes the ability to switch back and forth between tracks. If the firm does not commit, why would individuals take the punishing risk of not going for the predictably big activity?

Organization

• Imitate Silicon Valley in giving power to “Product Managers” (PM), those executives—mostly former engineers—that take the deep responsibility of a product by coordinating its engineering, marketing, and design. The existence of the PM position may account for a big part of the SV dynamics, and yet it is often unheard of in managerial circles of large firms;

• Allow for plenty of experimental spaces:  spatial ones, not just incubators but also various types of skunkworks; temporal spaces (e.g., 20% of the time, like Google); processual spaces (e.g., recording and rewarding experiments, including failed ones, in the annual review process);

• Build your organizational system, your IT, nativelyfor experiments. For instance, no customer-facing IT system should be built without A-B testing capability. But this is not restricted to IT: whatever you do, think in terms of “I’m not doing one startup, one idea. I’m in business through the survival power of revenues and selling, and I will inexhaustibly keep on making many experiments.” No more, no less;

Safeguards

• The imperative for profitability and ongoing operations of an existing business organization requires protection against the possible disruption of unbounded entrepreneurship. Hence, allow for plenty of experiments, as long as only a few simple and well-understood safety measures are in place

• Do not require top-management validation for experiments. Instead, implement trust in collective common sense: e.g., have a rule whereby one can experiment as long as at least three organization members are on board with the experiment (like at Zappos);

• Lean governance of security: being constrained to obtain everyone’s approval kills the experimental spirit. Instead, establish a small and lateral vetting office that must be consulted, but whose responsibility is limited to letting things happen as often as possible. It should only be allowed to raise concerns regarding security and block things… if the danger of the experiment is truly too large;

• Scaling vow: we are not in the business of experimenting for the sake of experimenting. No validation will be required, but any experimenter must have scalability in mind; if an experiment cannot be imagined having a large impact, it probably can be skipped. Employees should personally carry the responsibility for that call and document it for themselves—without upper strata of management actually being involved.

The Three Stages of Intrapreneurship Awareness

Understanding Intrapreneurship-how to implement and teach it--is still work in progress for both researchers and practitioners. It undergoes phases similar to those observed in the aviation industry, in its long process of eventually becoming one of the safest transportation means. Faced with accidents, aviation first worked on improving the design of the planes. Then it realized the pilots were the weak spots. Finally, it realized that accidents such as the massive one in Tenerife (1977) were occurring at the level of the social group in the cockpit, in their subtle cognitive and emotional interactions.

Our understanding of the difficulty to let new activities emerge in existing firms has progressed in similarly growing complexity. Intrapreneurship was first approached as a normal optimization problem to be solved with standard business tools (business plan, strategy, etc.). In the second phase, which is now being properly diffused, specific actors/processes/tools were identified (lean method; incubation; maker culture; etc.).

The final phase we enter now consists in understanding how the various logic/tools/etc. interact and may even neutralize each other. The emergence of viable new activities will only occur with a high-level and cross-firm governance of intrapreneurship. Its implementation will keep managers busy much beyond the inauguration of their orange-carpet accelerator