Igniting innovation. How hot companies fuel growth from within
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22 Martie 2011 |
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ERNST & YOUNG S.R.L. |
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What has your company invented lately?
Every entrepreneur knows the legends of great inventions. Take 3M's Post-it® Note, for example. Back in the 1970s, 3M scientists Spencer Silver and Arthur Fry were toying around with possible uses for an adhesive that Silver had discovered. The invention eventually resulted in the groundbreaking product that 3M launched in 1980 and which has since become an office and household staple.
Or take the Sony PlayStation®, launched in 1994. Originally a sideline project for Sony Sound Engineer Ken Kutaragi — one that nearly got him fired — the gaming system eventually received the blessing of then-CEO Norio Ohga and became the best-selling game console of all time. Kutaragi later founded Sony Computer Entertainment, one of the company's most profitable divisions.
What these and other revolutionary ideas had in common was that their creators benefited from a corporate setting that fostered creativity by allowing them to pursue their own projects. They were classic "intrapreneurs," a term coined in 1985 by Gifford and Elizabeth Pinchot to refer to what they called "free market entrepreneurship within the corporate organization."[1] Also referred to as "corporate entrepreneurship," intrapreneurship involves individuals or groups of individuals exploring high-risk, high-reward ideas within the safety and support of a larger, well-established corporate structure.
There are two factors without which this activity can't get off the ground:
- Encouragement and support from senior management
- Reassurance that even if the ideas fail, the intrapreneur will not lose his or her job or be "punished" in other ways
The second factor is particularly important in today's turbulent business environment. On the one hand, we grapple with a post-recessionary economy that is struggling to recover and propel new growth; on the other, we face fierce global competition that makes it especially difficult to develop speedy innovations to fuel that growth. In a 2010 Ernst & Young survey of 263 of the world's leading entrepreneurs (all winners of Ernst & Young's Entrepreneur Of The Year® awards), 82% of the respondents agreed strongly that the ability to innovate was critical to the growth of their organizations.[2]
But innovation demands a loose and agile organizational structure that fuels creativity and accommodates failure; large established companies are often comprised of rigid, hierarchical institutional structures that can stifle the entrepreneurial spirit and limit their growth. Nearly half of the respondents to our survey said that generating innovative ideas became more difficult as their organizations grew in size and complexity. Enterprising corporations that consider intrapreneurship as essential, however, may find that they have the best of both worlds. They possess the necessary financial and marketing resources and a vast internal talent pool available to supply entrepreneurial ideas. By marrying the two, companies stand to benefit from innovations of all kinds — in products, processes, services and ways to develop and expand their businesses. At the same time, the supportive environment boosts employees' engagement with and loyalty to the organization, as their creativity is recognized and rewarded.
“Entrepreneurial thinking is not optional. Those who stand still fall behind, and market leadership changes regularly. This is why it’s important for all companies — even large, established corporations — to cultivate innovation through intrapreneurship.” — Maria Pinelli, Americas Director for Strategic Growth Markets, Ernst & Young LLP
Effective leaders produce exceptionally creative thinking through diverse perspectives
In the face of vigorous competition from all corners of the globe, now is the time to focus on renewed innovation — to kick into high gear the entrepreneurial fervor that got your organization to where it is today. And the best way to do that is to draw on resources you already have: your own employees.
This report provides an in-depth exploration of the secrets of successful intrapreneurship. How do companies fan the flames of innovation by tapping into the creativity of their existing employees? What are some practical strategies to foster a culture of innovation from within? To answer those questions, Ernst & Young conducted a series of global surveys of senior business leaders as well as interviews with leading academics, industry authorities and winners and finalists of our Entrepreneur Of The Year award. We identified six corporate strategies that underlie the most successful intrapreneurship efforts:
1. Set up a formal structure for intrapreneurship. Give people enough time away from their "day jobs" to work on creative ideas, but set up formal processes to make sure those ideas go somewhere.
2. Ask for ideas from your employees. They have their fingers on the pulse of the marketplace. Encourage everyone from all ranks and functions to contribute to the innovation dialogue.
3. Assemble and unleash a diverse workforce. Statistical research has established that diverse viewpoints result in better ideas and better products.
4. Design a career path for your intrapreneurs. They tend to be nonconformists who dislike conventional administrative jobs, so look for nontraditional ways to advance their careers.
5. Explore government incentives for innovation. Ask how these can support your intrapreneurial ventures. Governments all over the world are offering new tax breaks and other incentives for research and development (R&D) — and corporations in turn are urging governments to support innovation.
6. Prepare for the pitfalls of intrapreneurship. Backing bold ideas can backfire. Be prepared to deal with failed ventures, internal conflicts, financial risks and intellectual property battles.
While these guidelines are by no means guarantees of success, they provide a roadmap that frees up organizational gridlock and sets up a supportive environment for the creative process. In addition, these strategies achieve a key goal: institutionalizing intrapreneurship so that it becomes an inseparable part of a company's operations. Only then can the process of continuous innovation take place — allowing the company to become and stay a market leader.
[1] Pinchot III, Gifford and Pinchot, Elizabeth, “Intra-Corporate Entrepreneurship,” Robert Schwartz’s School for Entrepreneurs, fall 1978.
[2] Ernst & Young internal entrepreneurship survey, September 2010.
