Intrapreneurship: Corporate Entrepreneurship ◾ 27
explore, express, and undertake their creative insights in a culture of innova-
tion. Therefore, management is challenged with creating incentives that are
consistent with an innovation-friendly culture. Table2.5 presents the primary
differences between traditional corporate and intrapreneurial cultures.
In an established company, the intrapreneur can be a change agent, pro-
viding a much-needed competitive advantage. This is depicted in Figure2.2.
2.7 Corporate Support for Internal Business Creation
“Don’t fund the problem; fund the solution.”
Surprisingly, the biggest barrier to intrapreneurship is corporate culture.
Culture is the set of shared attitudes, values, goals, practices, and expecta-
tions that characterize an organization. Culture is the crucial intrapreneurial
ingredient. Without a corporate culture supportive of internal innovation,
there can be no intrapreneurship.
Table 2.5 A Clash of Cultures
“Be a coach, not a judge.”
Corporate Culture Intrapreneurial (Innovation) Culture
Rewards ultraconservative decisions Trial and error
“You will miss 100% of the shots you
don’t take.”
Demands to wait for instructions
“It usually takes 3 weeks to prepare a
good impromptu speech.”
Rewards quick actions
“Don’t punish failure; reward
success.”
Expects “no surprises” Encourages new approaches that
may fail
“Starting up is hard to do.”
Collects information
“Paralysis of the analysis.”
Expects decisions even under
imperfect information
“Take risks, not chances.”
Controls information
“Information is power.”
Encourages open discussion
“Gentlemen do read each other’s
mail.”
28 ◾ The Guide to Entrepreneurship: How to Create Wealth for Your Company
An intrapreneurial culture:
1. identies sources of opportunities,
2. codies the process of initiation, development, and introduction of
opportunities, and
3. selects individuals most likely to discover, evaluate, and exploit
opportunities.
Top management can encourage intrapreneurship in many ways.
Table2.6 provides a summary of some established methods of encouraging
and fostering intrapreneurship.
2.8 Critical Issues in Intrapreneurship
“From know-how to innovation.”
Intrapreneurship within a large organization starts with an idea and ends with
commercial application. An innovation must be new, better, cost effective,
and solve a screaming need in the market. The intellectual process of trans-
forming an idea into know-how can be summarized by the acronym DIKK
(Data, Information, Knowledge, and Know-how), as shown in Figure2.3.
2. Intrapreneurial Culture
(approved by top management
)
1. Need for Innovation
(Internal or external)
3. Com
petitive
Advantage
Central Role of the Intrapreneur
Intrapreneur
Figure 2.2 Central role of the intrapreneur—As change agent, the intrapreneur
should clearly articulate the need, culture, and competitive advantage of the proposed
business.
Intrapreneurship: Corporate Entrepreneurship ◾ 29
Approach to solving problems:
◾ Data: Individual elements.
◾ Information: Categorization, summarization, classication.
◾ Knowledge: Analysis, comprehension, relationships, acquaintance with
the facts and information. You know it, in your head.
◾ Know-How: Competitive intelligence; ability to perform a task or
action in a highly competitive environment.
Table 2.6 Encouraging Intrapreneurship
“Uncertainty makes innovation less expensive.”
Formal steps that lead to the creation of a more innovative culture within an
existing corporate organization
Parameters Measures Factors
Regular compensation, job
security, innovation time
Personal rewards
Specic goals
Promotions, autonomy,
peer recognition,
bonuses, empowerment
High-level support
Executive encouragement
Top management buy-in
under corporate
umbrella
Public commitment,
space, semi-autonomy
Materials, budgets, data
analysis, attendance at
trade meetings
Competitive intelligence
Establish well-dened
project resources
Feedback and positive
reinforcement
Know-how, knowledge,
access to competitive
intelligence
Hierarchy Clearly dened
organizational chart
Formal control structure
Skunk Works,
brainstorming, cross-
functional teams
Tolerance of failure Risks, grieving period
Support system
No penalties or dismissal
Table2.7 Data vs. IKK
Data IKK
Parts per hour manufacturing or
assembly
Maximizing prots
Receiving governmental approvals Entering new market; new product launch
Reducing device-associated infections Greater market share
30 ◾ The Guide to Entrepreneurship: How to Create Wealth for Your Company
In plain English, information is what you store in your desk; knowledge
is what you carry in your head. While everyone else is drowning in a sea of
information, the intrapreneur uses knowledge as a life raft. The process of
innovation generally starts with a single visionary, as shown in Figure2.4.
2.9 The Spin Zone
“Killing two stones with one bird.”
There are two types of corporate venturing: external and internal. External
corporate venturing is the creation of a semi-autonomous entity, known as a
spin-out, separate from the parent organization. External ventures, known as
spin-offs, also include divestitures, that is, selling assets, divisions, or sub-
sidiaries to another corporation, a combination of corporations, or an indi-
vidual. A variation on the spin-off is an equity carve-out.
Internal corporate venturing is the creation of an entity residing within
the existing organization, for example, a new division, and is often run by
managers-turned-intrapreneurs.
Data
Unorganized facts
Unprocessed facts
Information
Intelligent aggregation of data
Ready for decision-making
Know-How
e DIKK Opportunity
Knowledge
Acquaintance and understanding
of science, technique or art
Data mining
Observations
Practical application on how
to accomplish something,
particularly when related
to competitive technologies
Figure 2.3 The DIKK opportunity—Data, information, knowledge, and know-how
(DIKK).
Intrapreneurship: Corporate Entrepreneurship ◾ 31
Clearly, a spin-out is not the same as a spin-off, as spin-out is a type of
spin-off whereby a company “splits” a section to be operated as a separate
business. The common denition of spin-out is when a division of a company
or organization becomes an independent business. The “spun-out” entity takes
assets, intellectual property, technology, or existing products from the parent
organization, but remains rmly within the corporate umbrella.
2.9.1 The Spin-Out
“Making the children behave.”
The poster child of the spin-out technique was Thermo Electron (“Thermo”),
now known as ThermoFisher Scientic.
10
While most companies “spin-off”
their failures, Thermo demonstrated in the early 1980s how to “spin-out”
their successes. Thermo contributed seed capital, but when a new business
started requiring signicant capital, the venture was permitted to “go public.”
At the time Thermo sold minority shares to the public in one of its emerg-
ing businesses, those operations were marginally protable or running at an
operating loss. However, under the Thermo corporate umbrella and reputa-
tion, the edgling company commanded an enviable initial valuation.
Value added
Proof of principle
Working prototypes
Management buy-in
Innovation
Evolutionary
Revolutionary
Disruptive
Groundbreaking
Expert Analysis
Competitive intelligence
Market analysis
Expert knowledge basis:
Explicit: knowledge attained from education, trade reports, etc.
Tacit: knowledge gained thru experience and personal insights
Heuristics: rules of thumb gained by experience
Figure 2.4 The innovation process—You as the innovator.
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