Entrepreneur vs. Intrapreneur

Does your business encourage intrapreneurism?

“Intrapreneurship” is a relatively new concept that is gaining traction in a variety of forward-thinking enterprises. Simply defined (by Investopedia), intrapreneurship is “acting like an entrepreneur within a larger organization.”

A more colorful description came from John Landrum, vice president for innovation at Intralox, a division of Laitram, a local industrial machinery company. According to Landrum,  Intrapreneurism “offers a chance to be entrepreneurial without risking your kids’ tuition. It’s entrepreneurism without the chest pains.”

As explained by Mike DeBoer, director of transformation and operations at GE Digital, intrapreneurism “takes the principles of entrepreneurism and applies them to large organizations internally. Employees can take risks, define new products and continue to develop them over time.”

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Intrapreneurship is credited with producing products as diverse as Post-It Notes and Gmail. Clearly, a company that encourages intrapreneurship can benefit in many ways: creation of new and/or improved products and services, better internal processes and systems, and even less tangible rewards such as higher employee satisfaction and retention rates.

All this said, there are still significant differences between being an intrapreneur and an entrepreneur. Closer examination of the circumstances of intrapreneurship, and some of the assumptions associated with it, suggest that the simple definition may not be especially accurate.

To begin with, intrapreneurs still must understand, and operate within, the principles and boundaries of their organization; their undertakings must be aligned with its business model. Also, while an entrepreneur must have a wide range of skills to succeed, an intrapreneur looks at one piece of a company or organization rather than its entire entity. Intrapreneurs can focus on narrower problems, such as improving a specific process, product or service; in turn, this may require a more narrow, targeted skill set.

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And as Landrum pointed out, using company resources instead of personal resources, thereby eliminating personal risks and costs, creates a vastly different environment.

Still, it is easy to see why both employees and organizations benefit from establishing an intrapreneurial culture. Landrum described this as creating a “challenge culture, where you manage by principle, not by authority.” Decision-making is at least partially decentralized, and employees feel more empowered.

DeBoer used the term “agile culture” and emphasized how GE is encouraging staff to spend more time with customers in a non-sales environment. “We are becoming more customer-focused, measuring success by customer outcomes,” he explained. “We are bringing the customer into the product development cycle.”

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With customer input in hand, GE then allows employee teams to work on ideas while coming from the perspective of being a startup venture.

Landrum offered the example of a new product developed within Laitram. One of the company’s account managers saw a customer need, and despite being part of the sales force rather than the product development unit, took the initiative to invent a new product. He was given the latitude to pursue his idea, and it resulted in a popular new item for the company to sell.

As intrapreneurship becomes a larger presence within more companies, some interesting theories are emerging. For example, many business experts recommend rewarding successful intrapreneurs with rapid promotions and envision them as future company leaders. Remembering the Peter Principle, one has to question whether entrepreneurial skill sets really align with the skills required to manage larger enterprises.

Another question is whether people who emerge as intrapreneurs in a larger organization could go on to become independent entrepreneurs.

Intrapreneurship is a fascinating trend, and clearly a positive one. How it will play out over the longer term will be something to keep an eye on — maybe even fodder for a thesis by an entrepreneurial MBA candidate.

Keith Twitchell  spent 16 years running his own business before becoming president of the Committee for a Better New Orleans. He has observed, supported and participated in entrepreneurial ventures at the street, neighborhood, nonprofit, micro- and macro-business levels.


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