I have always wondered as to why some people choose to start their own companies, while several other equally smart and risk-loving individuals incubate their ideas within the realms of their corporation. This dilemma is particularly important for me personally. So, I’ve discussed this topic with several successful entrepreneurs, intrapreneurs and academicians. A few topics have consistently dominated our discussions. I’ll share the top three factors that dominate people’s decision-making criteria.
The term "intrapreneur" was coined by Gifford Pinchot. According to Wikipedia, intrapreneur is a person who focuses on innovation and creativity and who transforms a dream or an idea into a profitable venture, by operating within the organizational environment. An entrepreneur does the same by starting up his/her own venture independently.
Risk and reward: Individuals perceive that it is riskier to start a venture independently than it is to start a new product group within their own company. It is valid to a certain extent. Individuals will still retain their respective jobs (in most cases), even if the newly started product group fails. In case of entrepreneurship, if the startup fails, the entrepreneur has nothing else to resort to. I’ve seen individuals consider several other risk factors besides job security while making their decision. The major factors include their ability to attract and retain talent, their ability to develop new distribution channels and their ability to defend their idea. But, on the other hand, the potential rewards in choosing the entrepreneurial route can be exponentially higher as compared to the intrapreneurial route.
Impact: Several enterprising individuals (especially at Microsoft) are supremely passionate about making a significant impact on the world. They realize that their idea will get a better platform to make a larger impact on the market, if it is being implemented by their employer (parent organization), than if it is rolled out as a startup. It largely depends on the business-idea or the technology.
Intrapreneurship or nothing: Sometimes, the business-idea is so tied with their parent organization (employer), that the idea can only take shape if it is being implemented as an intrapreneurship project. So, when they have a choice of pursuing their idea or not, they decide to take the intrapreneurial way. Most of the innovative product-launches from 3M, are its living examples. Another example that can be closely applied here is the launch of XBOX. When Robbie Bach, J Allard and team had an idea of creating a new console-based gaming system, to compete against Sony’s Playstation that had more than 50% of the market share, this factor would have played a role. The amount of capital (in order of 100s of millions) and the quality of talent, demanded by the business plan would have not been feasible without the Microsoft umbrella. Another example is the plight of professionals who are working in the US or any other country on some kind of work-permit. These individuals cannot start their own business/startup, due to legal reasons. So, they decide to choose the intrapreneurial path.
Entrepreneurs – according to me are not the greatest risk-takers, but they are the best risk-managers (read risk-minimizers). Personally, I don’t believe that the first factor (risk and reward) should be considered too much in making the decision, as it is the gist of entrepreneurship.One of the most traditional form of intrapreneurship is demonstrated by the hundreds of university-based ventures that are started by student-professor teams in the universities. Unfortunately, the university’s ability to easily file a patent plays a major role in such decisions.
One of my favorite mentors – Guy Kawasaki has written in detail about intrapreneurship.
Let’s go out and change the world.