What Could Kill Intrapreneurship?
In previous chapters, we discussed the components and setup of a corporate environment that cultivates and supports intrapreneurship. This chapter will cover the common pitfalls that can kill intrapreneurship. Pay attention to these signs, any one of which might become a roadblock in your organization.
Not Walking the Talk
Some corporations promote themselves as innovative and claim that they support intrapreneurs. They even make intrapreneurship a key priority in their strategy. But actions speak louder than words. What did the corporation invest in? What program did it set up? What practice has it put into place? What ideas did it support? Corporations need to demonstrate their commitment, or else innovation and intrapreneurship are just buzzwords to make a strategy look fancy. Messages to the outside world should be consistent with messages to employees. Employees feel confused when they read about innovation in the corporation’s annual report and marketing campaign but do not see any activity in their workplace. Intrapreneurship shouldn’t just be a catchy slogan. Find out which components you need to put in place to provide an ecosystem for intrapreneurship and sustainable innovation. Make a plan that is aligned with your corporate and innovation strategy and communicate it widely with your employees. Make the leadership team accountable for making those changes. Keep track of progress and share it transparently with your organization.
In most cases, intrapreneurship requires top-down support, and C-suites are common early adopters as they see how this investment benefits their organization in the long run. Employees are also excited about intrapreneurship as they find a way to flex their creative muscles. They have ideas they cannot wait to pitch. But why do you not see more ideas coming from them? It could be because your middle management is an impediment. They might still be lukewarm toward the idea of intrapreneurship. They see it as a distraction from current productivity, shaking up their well-established routine. They are focused on their Key Performance Indicator (KPIs), which set targets they need to achieve in the near term. Any deviation from those affects their performance. What’s in it for them to support an idea that might be realized in two years if they are measured against this year’s targets. What’s more, might their jobs be at risk if KPIs are not met? If their immediate supervisors and managers do not support intrapreneurship, employees will be skeptical about joining in, no matter how much top management wants to push it. At the end of the day, their supervisors have a direct influence on their performance evaluation, which affects their job security and rewards.
There are two ways to tackle this roadblock:
1. Build intrapreneurship or innovation metrics into your managers’ KPIs. The major reason why middle managers are not aligned is that they are measured by conventional metrics which focus on the short-term goals of productivity and efficiency. Refer to the “intrapreneurship Metrics” in Chapter 6. Find out which ones are relevant to your organization and build those into managers’ metrics to encourage intrapreneurship activities in their business lines.
2. Build direct access to senior leaders. With limited access to top management, many good ideas can be buried or lost for various reasons. These include managers not seeing the value of the idea in their own business, the idea being deemed too big to execute in the department, or the idea seeming too futuristic. In this case, giving your employees direct access to pitch to top management or a panel is the recommended approach. Refer to the “Idea Evaluation Panel” in Chapter 6.
Have you heard someone say,
The idea sounds good. Let’s check with X in another department. We also need input from Y from this team. By the way, ask Z if this is in line with their plan too. I have no issue if they are all fine with it.
It is natural for people to seek input and alignment for an idea before they proceed. However, this process should neither take too long nor involve too many stakeholders. I have been in teams that have this groupthink culture. This cycle never ends, as once you check with the suggested person, that person then asks you to check with at least three more people to confirm. I have seen an intrapreneur having to seek input from more than 50 people over three months and still have no clue whether or not their idea can be pursued. After a while, the intrapreneur felt that they were going around in circles and became less passionate. Without a clear decision, they stopped pursuing their idea and walked away from it.
You should have a clearly defined process and roles to manage intrapreneurs’ ideas and projects. The decision-making criteria and process should also be transparent to employees. Refer to “Idea Management” in Chapter 6 to find out more about how to set up a proper framework.
Intrapreneurial Theater
Many corporations that find themselves new to the intrapreneurship space, and lagging, naturally want to catch up in the game. The first thing they do is hire large consultancy firms to come up with strategies and plans. The consultants talk to the C-suite to find out the current state, advise them on all the best practices, build a playbook, and put together a blueprint. The next thing is innovation events. They host hackathons, bootcamps, and workshops. Every employee is excited to contribute and finds it fun to be involved. They feel energized and refreshed. The culture shifts. But nothing happens after the events. Why?
All of the activities up to this stage are intrapreneurial theater. The consultant work and events make people feel like intrapreneurship is important and they feel that the corporation is going to become more innovative. The activities were designed to help the employees “experience” innovation. Unfortunately, the events were not built around the objective of achieving sustainable innovation. Don’t get me wrong: there is nothing wrong with the activities mentioned. It is the intention behind them. Corporate leaders need to recognize that intrapreneurial activity without a clear objective and infrastructure to support it is merely for show. Employees will feel inspired at that moment in time. But once they find out that the ideas from those activities are going nowhere, they will be more disappointed than ever. They will lose faith in your intrapreneurship talk. To avoid that, remember the following:
1. Have a clear innovation-driven objective. Target solving real problems and build new ideas that are aligned with your innovation strategy from innovation activities. The objective should never be the event itself.
2. Provide infrastructure to progress. Figure out the mechanism and support system before you launch the activity. Decide the framework for how the ideas can proceed and the resource that is put in place to support them. Don’t leave ideas hanging or let the intrapreneurs figure them out for themselves.
Asking for Immediate ROI
Conventionally, estimated ROI is a typical metric that corporate leaders ask for before they decide whether or not to invest in a project. Some corporations set a minimum required return on their investment (e.g., 20 percent) and any project ROI should not be lower than that to justify the deployment of capital. Sometimes, due to the urgency of fulfilling business goals, the project team is expected to bring in the actual ROI within a short period. However, asking for immediate ROI endangers intrapreneurship.
First, the more disruptive the ideas are, the more uncertain the ROI is. For core and adjacent innovation, employees can still try to draw data from existing products or markets to estimate the ROI. But for disruptive ideas, there is no benchmark in the market. Because the product is brand new, it is challenging to estimate the pricing and profit in the early stage. Asking intrapreneurs for a solid estimated ROI is simply not realistic for disruptive ideas. By doing this, you will drive away disruptive ideas in the funnel, and only the core and adjacent ones will remain.
Second, many corporations require a product’s launch to perform immediately to the ROI expected, and they shut down projects that are not up to ROI requirement. However, innovation is an iterative process and the first launch is usually an minimal viable product (MVP) to test the market for feedback. Based on the learnings, the team would pivot and adjust their offerings. If the corporation is asking for immediate ROI within the MVP launch period, it might risk losing a good idea by shutting it down too early.
Instead of asking for estimated ROI, evaluate the ideas using a more innovation-relevant framework. Allow the team to validate the idea using the proper innovation methodologies. Refer to “Idea Evaluation Framework” in Chapter 6. Embrace the uncertain nature of innovation and instead of asking for immediate ROI from each project, manage your innovation work as a portfolio. Some ideas will fail, some will break even, and some will provide your exponential growth. Refer to “Innovation Pipeline Management” in Chapter 6.
Bureaucratic Red Tape
Bureaucracy is the art of making the possible impossible.
—Javier Pascual Salcedo
Sociologist Max Weber defined bureaucracy as the systematic processes and organized hierarchies necessary to maintain order, maximize efficiency, and eliminate favoritism. Sounds nice, right? Unfortunately, I have never come across anyone in the workplace using the word “bureaucracy” as a positive word. Bureaucracy is usually associated with multiple layers, complex hierarchies, and complicated procedures and rules. Understandably, bureaucracy occurs in large organizations to maintain stability and reliable operations.
But the impact of bureaucratic red tape goes far beyond its intention. Rigid conformity to formal rules is considered redundant and hinders or prevents action or decision making. In their work “Emotional Responses to Bureaucratic Red Tape,” Hattke, Hensel, and Kalucza found that bureaucratic red tape evokes significant negative emotional responses, especially confusion, frustration, and anger. The negative responses were evoked regardless of whether an individual perceives the bureaucratic procedure to be meaningful or meaningless.
In the study, they recognized that bureaucratic red tape creates delay and burden, which affects the individual’s feeling about power and status, and this affects the person’s emotions. They concluded that bureaucratic encounters are emotionally exhausting for individuals. Confusion, frustration, and anger may cause employees’ inability to distinguish between functional rules and dysfunctional red tape.
Here’s what your employees are feeling when they face different types of bureaucratic red tape:
• Intransparency: I have no idea about the situation/I do not know what is required of me/I do not know what it takes to get this done.
• Excessive rules and policies: Why is this necessary? What good does it do?
• Excessive approvals: I am not in a position to make any decision/I am not empowered/This is beyond my paid grade.
• Excessive procedures and paperwork: This is endless and whatever I do will take a long time/Things are slow/I am wasting my time.
Fighting bureaucratic red tape is one of the major reasons behind intrapreneur burnout. It is defined by feelings and behaviors such as loss of motivation, performance decrease, absenteeism, frequent resting or getting permission, and even walking off the job. This sort of behavior is clearly undesirable in any organization.1
In their work “Effect of the Burnout Syndrome on Intrapreneurship: A Practice in Province Ankara,” Aykut Ekiyor and Gökçen Şenel studied the correlation between burnout and intrapreneurship.2 In the study, they sampled employees working as nurses in Ankara X State Hospital. They found that burnout led to emotional exhaustion, depersonalization, and reduced personal accomplishment. The study further found that the results of burnout negatively impact intrapreneurial tendencies. Beware of what bureaucracy is costing your corporation.
To break down bureaucracy for intrapreneurship, you need to build both culture and infrastructure. Creating an ecosystem for intrapreneurship using the components discussed in Chapters 5 and 6 will help solve some of the issues caused by existing bureaucratic red tape.
Hiring Entrepreneurs Instead of Grooming Intrapreneurs
Many corporations recognize that they are weak in innovation. To rectify this, they seek entrepreneurial talent from the outside. They often look for serial entrepreneurs, people who are between entrepreneurial projects, or those who have built businesses before and want to rejoin the corporate world. They are hired because of their entrepreneurial experience.
Don’t get me wrong. I am not saying that corporations should not hire entrepreneurs. In fact, there are many advantages that entrepreneurs can bring to the corporation. They might even be the best ones to question the status quo. However, it does not mean that the entrepreneurial job in your organization can only be done by external entrepreneurs. I have seen entrepreneurs get uncomfortable with corporate operations and struggle to navigate large organizations. Plus, hiring only outsiders to pick up innovative work sends the wrong message. It tells employees that they are not innovative enough and that their ideas do not matter.
Your employees deserve the chance to be at the forefront of innovation for your company as they know your customers, your product, and your strategy the best. Intrapreneurs should never be viewed as the second-best option for hiring entrepreneurs. There are pros and cons to both approaches. They are not mutually exclusive and, at times, entrepreneurs and intrapreneurs can complement each other’s skillsets. As discussed in Chapter 7, the skills required of an intrapreneur are not entirely the same. In some areas, they even go beyond what is required of an entrepreneur.
I have discussed several practices in this chapter that can diminish your effort to build intrapreneurship. Take a moment to reflect on whether these scenarios occur in your organization today or would potentially be roadblocks when you kick-start your transformational journey. If so, research ways to tackle specific pitfalls using the tips mentioned under each section. Preempt the practices you need to put in place to ensure your investment is not wasted.
In the next and final chapter, we will discuss some actionable next steps and prepare you for building intrapreneurship in your organization.