The South East is currently being used as a testbed for an innovative European funded study into intrapreneurship. The study will examine the entrepreneurial behaviour of employees and the development of new ventures within an organisation, with a particular focus on SMEs. The aim is to develop a toolbox to help SMEs with their intrapreneurship efforts.
The first report is out
The first report has just been issued, and it is an inventory of the entrepreneurial activity in the South East. There are quite a few interesting findings an as usual when academics are involved, it starts with the confusion of definition. There is no generally accepted definition of intrapreneurship. The short definition is that intrapreneurship is about setting up new ventures within the existing structure of an organisation. Not spin-off, not continues improvement, not innovation. However, these were included in the report as they are part of the innovation spectrum. The truth is that there is very little intrapreneurial activity in SMEs in the South East (or in Ireland).
Chris and Declan (the researchers and authors of the report) did identify a number of case studies of companies that apply intrapreneurship. When you study the characteristics of their intrapreneurship programmes, you will find the following.
Innovation and ideation
One company runs a structured innovation ideation process which is championed by the CTO. The company’s intranet includes a dashboard where anybody in the organisation can log ideas that can be brought to the innovation board. The company’s intranet includes a dashboard where anybody in the organisation can log ideas that can be brought to the innovation board. The innovation team will meet to do some initial technical consideration and marketing evaluation. This involves leaders in terms of process R&D, formulation development, regulatory affairs, patents, business development and so forth. A steering committee, which again includes a combination of staff at different levels in the organisation, will then undertake a final review of the nature of the ideas and whether they should be taken forward for presentation at corporate headquarters.
If an idea is taken forward as a project, time and capital resources are allocated to it. All ideas are coded and people can assign their time to an innovation code. This means the company has a handle on the amount of time and resources dedicated to those ideas. The whole process is managed by the Project Management Office.
Relevance for SMEs
What you will notice here is that the company has a CTO and a project management office. Functions and resources that the average SME does not at its disposal
Lean and agile and ideation
Another company operates a Lean and Agile Continuous Improvement programme. Leveraging from this, there is a formal ideation structure. The structured process involves accelerator tools to speed up the innovation process. Staff are perpetually challenged to come up with ideas which might be worthwhile to explore. Intrapreneurship is not a mandated element in the personnel performance review, but it is an area that is encouraged. Within the operations department, an idea gets submitted to an individual technical director from a given employee and then up to the Technical Director group. It is then submitted to Chief Operating Officer and, if significant investment is required, on to the senior management team. If technical directors and management above that level approve the idea, it will be given the requisite supports.
Resources are put to approved ideas, and subsequent investment is provided to bring it to maturity. The original idea generator remains part of the development team, but resources are added. The company operates a “bench” system, similar to a substitute bench in team sports. Staff are circulated on and off the bench to support ideas. Completion of a project typically takes 12-18 months. Individual projects can require investment of €1-2 million.
Relevance for SMEs II
Again, the conclusion is that the average SME in Ireland does not have these type of resources at its disposal.
Idea box and training
A medium-size Irish multinational ICT company, developing security monitoring systems for international markets. The company had always operated an ideas box in which people could make suggestions. High-quality ideas were regularly submitted, but it was noted that there was a gap between senior management and other staff who didn’t have the tools or formal training to develop ideas. In response, the company, in conjunction with a local university, organised an 18-month bespoke training programme for its employees. Staff worked on identifying inhibitors and ideas of how to do things differently.
This resulted in an internal template for managing innovation – the company’s Innovation Project program. To make sure that all ideas were respected, one of the company’s founders acted as the intrapreneurship manager. Individual staff members are encouraged to make presentations to the board. As part of that, staff has to outline what their “ask” is: what they need to complete the project, as well as the anticipated outputs of the project. Most of the participants in the training programme ended up heading projects. All participants have to sign a contract to ensure that the IP is protected for the company. Intrapreneurial action is not part of a formal personnel performance review, but the company does recognise intrapreneurial action with a monthly award and cash bonus.
There are evident lessons from the case studies, that dovetail with the research that we are doing in phase 3
- Idea logging or idea box
- Staff engagement
- Innovation board
- Training of staff
- Reward systems
Other case studies in the report identified setting up skunkworks and applying continues improvement plus as factors. Where continues improvement plus is seen as a springboard for more innovation.
In our literature studies and conversations with experts we came up with this list of factors (and not complete yet).
- Management support
- Attitude to failure
- Reward systems (financial en emotional)
- Access to information
- Positive reinforcement
- Time horizons
- Strategic intent
- Motivating purpose
Translation to phase 3
That brings me to phase 3. Our job is to translate the findings in phase 2, add the findings in phase 3 and translate that into a toolbox that SMEs can use to improve or start their intrapreneurial activities. That means that we need to become very practical. And we need to start somewhere. That is why most of our focus is on table 6 in the report that maps out the barriers and possible solutions. Here it is:
|Continuous improvement: Barriers and challenges||Solutions|
|Lack of engagement by management in the continuous improvement can undermine the process and result in staff disengagement.||
|Continuous improvement programmes that are foisted on employees as an instruction are not conducive to employee participation.||
|Lack of timely & detailed feedback for employees that have proposed improvements can cause employee disillusionment with continuous improvement programmes & can ultimately lead to the flow of proposed changes drying up.||
|Companies must be willing to adapt existing organisational practices in order to implement continuous improvement programmes.||
|Reluctance among employees to engage in formal continuous improvement programmes can arise in the context of labour unions.||
|Intrapreneurship: Barriers and challenges||Solutions|
|Limited functionality of the subsidiary in a broader corporate structure
Level of staff of the subsidiary in a broader corporate structure
Ideation can lead to toomany, often poor, ideas. & potentially lead to a serious draw on time and capital resources.
The weakness of the ideas is in some cases related to the fact that ideas were generated & developed by individuals with bounded skill sets
Unsuitable global company structure, the lack of a suitable ideation programme & the absence of appropriate tools.
|Developing an intrapreneurial enterprise involves change which brings challenges that need to be managed.
Key pitfalls include a lack of buy-in and communication.
|Challenge of securing the benefits of the intrapreneurial activities for the company.||
|Subsidiary Intrapreneurship: Barriers and challenges||Solutions|
|Being part of an integrated global production network where the functions of sites are clearly set by corporate management.|
|Limited discretionary resources at subsidiary level limits the size of the initiative before the involvement of corporate.||Drawing resources from a range of sources & projects|
|Intrapreneurship in context of serial entrepreneurship: Barriers and challenges||Solutions|
|The perception at group level that intrapreneurial initiatives are outside the remit of subsidiaries & their employees||Support agencies should inform serial entrepreneurs of the benefits that formal intrapreneurship programmes can deliver to their business groups.|
|Dominant role of the serial entrepreneur in approving employee intrapreneurial initiatives & allocating the requisite resources can lead to tensions with employees.||The serial entrepreneur should ensure that employees are aware of the aims & objectives of the business group, in order to ensure that intrapreneurial proposals align with organisational strategies at the group level.|
|Family businesses can bring with them organisational features particular to familial relations.
While the founders of the family business play an entrepreneurial role, the second generation may be inclined to assume the a more risk-averse role of guardians of the family business.
|Developing formal intrapreneurship structures may offer a means for family businesses to discover new market opportunities
Add new ventures to the existing family business group.
Again the overlap with our research is evident: The factors we identified are
- Management engagement
- Staff engagement
- Speed of decision making
- Quality of ideas
- Organisational change
The sample is skewed
Our challenge is that the SMEs that were examined are exceptional in an Irish context, Netwatch, Red Hat and Taxback are the creme the la creme in Ireland (and anywhere in Europe).
The research shows that over 60% is involved in continues improvement, 10% is involved in intrapreneurship, and another 10% is involved in what the report calls “Intrapreneurship in context of serial entrepreneurship”. We also know that this is a skewed sample where we actively looked for examples of good practice in intrapreneurship. If we would have taken a random sample of a 1000 SMEs in the South East, I am sure the percentages would be very different.
The good news is that there is enough to work with. With continues improvement as a starting point, with some learnings from the best and with the link to serial entrepreneurship, an area that is well developed in Ireland, there is plenty of scope.
An area that is also well developed in Ireland is the ecosystem. However, there is no evidence of any specific intrapreneurship programmes for SMEs in Ireland, which again corresponds with our research in government policy in intrapreneurship in other countries. We have found very little.
We do know it is starting to get the attention of government, a very recent example from the national sustainable finance roadmap:
Pillar 2: Technology and Innovation
Action 18: Continue the rollout of Ireland’s sustainable finance innovation programme supporting the development of new IFS environmental, social, and governance products and services: In light of the European Green Deal and the forthcoming EU Renewed Sustainable Finance Strategy, an increasing number of firms in Ireland are exploring the development of new products and services in support of the sustainable finance and the broader ESG agendas. Sustainable Finance Ireland will accelerate the rollout of this development via a dedicated intrapreneurship programme, in support of Irish firms’ efforts, thus contributing to Ireland’s emergence as a ‘Living Lab’.
As Declan and Chris show, there is huge variety of programmes and initiatives that dovetail intrapreneurship (as part of the innovation spectrum and programmes). We do know of initiatives by Dogpatchlabs (at corporate level), Enterprise Ireland (midlands region as a response to Bord Na Mona closures) and a Skillnets initiative which is linked to the national sustainable finance roadmap.
All the elements are there
Ireland has a dense and well-developed enterprise ecosystem, particularly in the start-up and innovation space. SMEs has always been the less developed part of government policies, linking intrapreneurship to clusters, succession and angel funding (which are ideas we found in our research). Intrapreneurship for SMEs could be the missing link.
Translation into a toolbox
Back to phase 3 and 4. Our biggest challenge is to translate the findings in this report, the findings in phase 3 into something that makes sense for an SME with an average size of fewer than ten people. We have plenty of examples of good practice, but how do we translate that to a toolbox that works? What role does the owner-manager play? How do you design reward systems? How do you assess the ideas? How do you reduce the disproportionate opportunity cost for micro-businesses? And how could government support intrapreneurship without overlapping with all the support structures already in place?
If you have an opinion, drop me a line or give me a call (firstname.lastname@example.org or +353851006307).