The Anatomy of Innovation

Friday, November 1, 2013 - 10:12

Managers can help foster creativity by encouraging intrapreneurs. By Leon Gettler

Companies everywhere are looking to become more innovative and entrepreneurial. Many have turned to intrapreneurship, getting employees to act like entrepreneurs within the larger organisation which sees them devoting time to specific projects.

Intrapreneurship is all about entrepreneurship within a corporation. This also creates greater staff engagement.

There are many successful examples. Intrapreneurs at Lockheed Martin developed a number of famous aircraft designs. At 3M, intrapreneurs produced Post-It Notes and at Google, they were the ones responsible for creating Google News, AdSense and Gmail.

Companies have several strategies to implement intrapreneurial programs. Google famously encouraged employees to spend about 20 per cent of their time experimenting with their own ideas. Although the company is cracking down on this now, it's still in play.

Lockheed Martin has thousands of employees working on programs in the Advanced Development Programs division, more commonly known as Skunk Works. The division got its nickname in 1943 because it was located next to a manufacturing plant that produced a strong odour.

Shopping centre owner Westfield has set up a separate entity, Westfield Labs, in San Francisco with the aim of building and testing digital retail technologies for shopping in the 21st century.

Intrapreneurs like to reinvent and put their entrepreneurial instincts to work within the business environment they're employed in.

But intrapreneurship can also challenge some managers who want everything running smoothly and prefer conformity. Intrapreneurs by their very nature are disruptive.

Managers and intrapreneurs are two very different beasts. Managers tend to be motivated by promotion and traditional rewards, while intrapreneurs want freedom and access to corporate resources.

Handling intrepreneurs requires deft management skills. Paul Stapleton, a partner at the Sydney office of the global consultancy Blanchard International, says managers need to establish boundaries.

"Part of what successful managers do is to define the boundaries of the game," Stapleton says. "You don't want someone who works for the Ford Motor Company designing a new pizza base because that's not in their realm of responsibility.

"But within clearly defined expectations and boundaries, you let creative people do what they're capable of doing. You create an environment where all your employees, but in particular your front-line employees, act like owners of the business."

Managers have to insist on milestones, clear transparency and make sure the intrapreneur understands the mainstream culture.

"Each manager with the people in their team has to clearly understand what they're trying to achieve collectively and what role they play in that," Stapleton says.

"A lot of people can come up with creative entrepreneurial ideas but again they have to be in the framework of the needs of the organisation.

"You only grant independence to people with the right knowledge and skills. If you grant independence to what we call an enthusiastic beginner, you create chaos. That's where the boundaries come into play."

He says managers should not punish failure and the company should fund the work of the intrapreneurs.

"You've got to be prepared to spend money, whether it's pure R&D, development or marketing of new ideas."

Jeffrey Tobias, an angel investor who runs Sydney consultancy company The Strategy Group and teaches entrepreneurship at the Australian Graduate School of Management, says companies have no choice these days.

"The smart organisations realise they have to build the culture of intrapreneurship within the organisation because if they don't, anyone who is entrepreneurial will leave and then you are left with a bunch of non- entrepreneurial people and that's a pretty boring organisation, particularly if you are looking for growth," Tobias says.

And unfortunately, he says, most organisations do it badly.

"They talk about doing it and they don't know how to execute on it," he says.

Tobias says it all starts with the organisation's culture. If it's a risk-averse culture, it's not going to happen. And they should not expect a 100 per cent success rate.

"Entrepreneurship by its nature means some things will work and some things won't work," he says.

"It means bringing in the ability to fail and bringing in the power to enable managers to get on with the job and not micromanage. Empowerment, collaboration and failure are important, and if you're a CEO where those words don't scare you too much and you're willing to empower people and let them make decisions and allow them to fail every so often, then you start to bring in a new culture of entrepreneurship."

How does the culture change?

"The easy way is that it starts with the person at the top who says 'this is important to our organisation and I'm going to build the culture over the next few years of entrepreneurship'," he says.

"The hard way is where the CEO says 'I am not interested', and the management team says 'if we don't do this we will fail as a company', and so you end up with a bottom-up approach."

Tobias says managers have to become leaders.

"If you are looking to build an organisation of leaders and not managers, then those managers who are not leaders need to get some training, coaching and mentoring to understand the difference between the managing and leading."

Some intrapreneurs say their work set them up well.

Calvin Ng, 30, created his boutique advisory firm Aura Capital after he lost his job as a hedge fund analyst at Everest Babcock & Brown during the global financial crisis. But he had started work on Aura while he was still at Everest Babcock & Brown. That allowed him to hit the ground running.

"I was applying the things I learnt at the big end of town," Ng says. "In terms of relationships, mindset and being able to look at documentation and execute transactions, those are the things I picked up at Everest."

Jackie Taylor, a product manager at Rubik Financial, works as a free agent and it suits her. Rubik this year acquired Provisio Technologies which creates software that makes financial advice more accessible to Australians. She was a Provisio partner and owner.

"My title is product manager but that's only for the sake of having a title really," Taylor says. "I can be a resource for any project going on in the company. I write tenders, I've done sales and marketing work, lots of marketing writing and I put together an online marketing strategy. That's where I am happiest, rather than 'No this is not your job'."

She admits it has frequently got her into trouble but the company sees her as the chief problem solver.

What advice would she give intrapreneurs? And how should they handle unenthusiastic managers?

"It's easy if you genuinely have passion for what you do and I have absolute passion for what we do," she says.

"If you're in that environment, it's not the end of the world. If you're willing to let your ego go, you can accomplish those things but make it their idea."