How do large companies continue to innovate and respond rapidly to new opportunities as if they were start-ups, asks the Financial Times?
By developing a corporate culture in which innovative opportunities are spotted, nurtured and championed in an entrepreneurial manner, the paper says. In short, a culture that is "intrapreneurial".
Apple seemed to produce the iPod out of thin air in 2001 – at the time, a personal digital music player was not regarded as the obvious progeny of a personal computer manufacturer. Yet the company has since re-entered the FT Global 500 ranking of the world’s largest companies after a four-year absence. The iPod now accounts for one-third of Apple’s revenues and its "halo effect" has contributed to a 35 per cent increase in sales of the company’s Macintosh computers over the past year.
The iconic music player has also given critical mass to an entirely new market – the selling of digital music online. Even with his expertise in marketing, Steve Jobs, Apple chief executive, could never have predicted such success.
The FT article says individuals could act like entrepreneurs within a large organization to the benefit of both employee and employer, provided they were willing to risk something of value to themselves – a portion of their salary, for example. Such intrapreneurs could exchange a completed project for a cash bonus or capital to invest internally in future projects.
The article gives other examples of this intrapreneurial spirit, including two equally-iconic ones - IBM's development of the personal computer which came to fruition in the early 1980s, and Apple's first Macintosh:
[...] During the 1970s, [...] units were set up inside many organisations to think "disruptively" – to look at products or markets outside their usual offering. One of the most famous was Project Chess, the 12-man team at IBM that developed the first personal computer in 1981. Similarly, after the Macintosh computer was launched in 1984, Steve Jobs described its development as an "intrapreneurial venture" within Apple since the machine would compete with the Apple II, previously the company’s core product.
"Intrapreneurial" ventures should be "opportunity-based rather than resource-based", he says, explaining that most large organisations try unsuccessfully to develop new ideas from their existing resources and competencies, rather than look outside for ideas. "The problem in so many existing markets is that product lines have already overshot what most consumers can absorb," he adds.
In such an environment, companies should be aiming for “disruptive” ideas of the sort described by economist Joseph Schumpeter when, in 1934, he described the “creative destruction” of established businesses by entrepreneurs.
“We find big firms are interested in disruption only when they think it will overlap or attack their business,” says Prof Gilbert. “Yet it always leads to growth in the overall market. The personal computer did disrupt the mainframe but it caused the total market for hardware to grow.
Financial Times | Smart companies show 'intrapreneurial' spirit (paid sub required)