Analysis, presentation, and compilation by Said El Mansour Cherkaoui, Ph.D. based on Extracts of works by Mehmet Çağrı Gündoğdu and Publication by Simon C. Parker as well as Larry Myler.
Small and Medium Sized Enterprises (SMEs) are the potential stars of this new economic model. Thus, they can fulfill customer needs before their larger competitors in the market can. On the other hand; it’s significant for SMEs to adopt and implement proactive strategies while being aware of the opportunities and threats inside and outside the market. There are 28.8 million small businesses in the United States, according to the U.S. Small Business Administration, and they have 56.8 million employees. Small businesses (defined as businesses with fewer than 500 employees) account for 99.7% of all businesses in the United States of America. *
Informal Sector versus Corporate Corporatism: To be Intrapreneurship or to be Entrepreneurship?
What are the qualities/Characteristics of an Entrepreneur?
Entrepreneur takes an idea & makes it into reality.
Entrepreneurs take risks. Risk of time, money, etc.
Entrepreneurs is optimistic about the future.
Entrepreneurs are innovators. They invent new products, services, processes, or methods.
Entrepreneur enjoy freedom & use it betterment of their customers & ultimately for society.
Entrepreneurs have a strong focus on anything they are doing.
Entrepreneur is confident, optimistic & loves facing challenges in life & business.
Entrepreneurs make decisions independently.
There are various types of entrepreneurs. We will see some of it.
Industrial Entrepreneurs: They are in the business of manufacturing products. E.g. Manufacturing of automobile parts.
Trading Entrepreneurs: They are in the business of buying & selling products or services. E.g. Traders of Houses.
Imitative Entrepreneurs: These types of businesses copy other successful businesses & run the business similarly.
Drone Entrepreneurs: These types of entrepreneurs don’t like to change their business style. They don’t involve innovation. They just want to be like how they are.
Fabian Entrepreneurs: They don’t change until it is very much needed. They adopt change when it is very necessary.
What are the various functions of Entrepreneurs?
The main function of an Entrepreneur is to take risks.
The second function is to start the enterprise.
The third function is to keep an eye on the internal & external environment.
The fourth function is to make arrangements for necessary resources.
The fifth function is to deliver products/services to customers.
Concept of Intrapreneurship
Entrepreneurship in any business is called Intrapreneurship. The development of a product/service in a corporation as a semi-autonomous business unit is called Intrapreneurship.
What causes barriers to Intrapreneurship?
Rigid nature of big corporations.
Expectations of profit in very short duration.
Lack of entrepreneurial qualities.
Lack of resources required for entrepreneurship.
Innovation
One of the key requirements for entrepreneurship is Innovation.
Innovation is nothing but new ways of doing old tasks. Innovations can be Chemical, mechanical, managerial, technical, institutional, service, etc.
According to Joseph Schumpeter, there are five types of innovations.
Introduction of new & good quality product.
Introduction of a new method of production.
Introduction of a new market.
Use of some new sources of supply as raw material.
They are making a new organizational form of industry.
The innovation process in Entrepreneurship includes the following steps.
Research of market
Development of product/service
Marketing of product/service
Production
Use by customer
Feedback from the customer
Natalia Nikolova (NN): Typically, intrapreneurship is defined as entrepreneurship initiatives and practices within existing organizations. The goal of intrapreneurship is to revitalize and keep established organizations competitive long term. Established companies are generally found to be less innovative than smaller ones or startups.
Intrapreneurship is key to addressing disruption – studies have found that corporations are becoming increasingly short-lived, thanks to being disrupted by newcomers. For example, since 2000 more than half of the S&P 500 companies have disappeared. With accelerating technological change, innovating becomes critical if companies are to survive.
The implications for the future of work are that every employee will be expected to have an entrepreneurial mindset and contribute to the innovation capability of their company.
MMP: In what ways do intrapreneurs contribute to the development and success of innovative organizations?
How are innovation-led organizations different from their competitors?
NN: Intrapreneurs contribute to the renewal and competitiveness of organizations given constant technological changes. For example, through the development of new business ventures that could either be integrated into the existing organization or be spun off independently; new products/services, product/services improvements, and new strategic directions for the organization.
However, established organizations can’t just rely on a few ‘lonely’ intrapreneurs. Research has shown that the most successful intrapreneurs and innovation-led organizations have supportive cultures and structures, and are connected with external partners in extensive innovation ecosystems, including universities, research institutions, and other companies.
This is what sets innovation-led companies apart: they have been successful in establishing organizational cultures where initiative is rewarded and failures are encouraged. They have structures, processes, and senior leadership that are supportive of innovation, and they have built an ecosystem of partners that enables these organizations to constantly bring in new ideas into their organizations.
MMP: Can any organization be innovation-led, or is it more relevant for some rather than others? Are there simple changes that can be implemented in the short term? And what about the long term?
NN: With accelerating innovation change, every organization needs to aim to become innovation-led. We all have been reading about significant changes caused by new technologies such as AI, VR (virtual reality), blockchain, and big data. These technologies will impact every type of organization. However, some researchers have argued that in highly turbulent and uncertain markets, it could be beneficial for companies to scale back on innovating until they can better understand the future directions of these markets.
In the short term, many established organizations have chosen to set up separate innovation labs. These are usually set apart from the rest of the organization so they can operate uninhibitedly. However, such labs often don’t work, as this recent commentary demonstrates.
My own research, though, on the innovation lab of an Australian ASX 200 company, shows how they can be a good starting point to establish an innovation mindset and culture. Longer term, companies need to pursue a double strategy: developing an internal innovation capability and partnering externally – including cooperating with and even acquiring, innovative companies/start-ups. This is a strategy many leading tech companies are pursuing.
MMP: Do you have any guidance regarding the challenges creative companies face when developing innovation strategies? What can they take from tech companies and vice versa?
NN: Research on creative companies has shown that many creative companies while being quite innovative, are less business-savvy concerning turning new ideas into profitable business models. This is something that has plagued the creative industries sector for quite some time – individual creativity often drives the success of the organization, but they struggle to create a sustainable business model to scale up this creativity.
Creative companies could learn from tech companies to put more focus on the scalability of their creative ideas and how to develop financially sustainable business models. On the other hand, tech companies can learn from creative companies how to ensure that their employees remain creative and innovative, even if they are part of larger organizations with bureaucracy and managerial practices that often stifle innovation. In many ways, the stories we hear from organizations like Alphabet/Google and Apple, about the playful environments they have created for their employees and the flat hierarchies they have established, are in line with how smaller creative companies operate. Yet, Amazon, for example, has been under the spotlight, because of the stifling practices and toxic culture its employees have experienced.
The question of how to keep the creative/innovative mindset as organizations grow is critical to ensure that large organizations, whether tech or not, can continue to be innovative.
Dr Natalia Nikolova is a Senior Lecturer, at UTS Business School and Faculty of Transdisciplinary Innovation. Professor Margaret Maile Petty is UTS Executive Director, Innovation and Entrepreneurship.
Innovative corporations cultivate entrepreneurial-minded professionals to become actively engaged in creating new business opportunities within the firm, often called corporate venturing–or intrapreneurship. Intrapreneurship is also known as corporate entrepreneurship and corporate venturing (Burgelman 1983; Burgelman 1984; MacMillan et. al. 1986). it is the practice of developing a new venture within an existing organization, to exploit a new opportunity and create economic value (Pinchot 1985).
Entrepreneurship by contrast is the act of developing a new venture outside an existing organization. The traditional entrepreneur shall now act as an innovation hunter to proactively be able to set up new smart businesses; ideally from the beginning, till the end of any business life cycle.
The term entrepreneur, etymologically originates from the French word entreprendre meaning “to begin something, undertake.” During medieval times, this word was being used to describe an active working person [4]. However, in economic theory, it was Richard Cantillon (1759), -an Irish economist of French descent- first, who first used the term entrepreneur. According to Cantillon, the entrepreneur is a specialist in taking risks [5].
Risk-taking is one of the famous attributes of entrepreneurs which is also frequently emphasized in the literature. Spiritually, some people are observed to tend to behave extra-ordinarily. As Jobs addresses; “You have to trust in something—your gut, destiny, life, karma, whatever—because believing that the dots will connect down the road will give you the confidence to follow your heart, even when it leads you off the well-known path, and that will make all the difference [6].” Taking the risk phenomenon and the spiritual reflections into consideration; it can easily be summed up that entrepreneurship has something to do with inner-journey.
Another emphasis on entrepreneurship is its presentation as a mindset. “Entrepreneurship is first and foremost a mindset. To seize an entrepreneurial opportunity, one needs to have a taste for independence and self-realization.” said Olli Rehn, a member of the European Commission [7]. Understanding the entrepreneurial mindset requires a certain threshold of empathy. First of all, entrepreneurship is the story of ambiguity. An anonymous supporting quote is likely to highlight the gist of entrepreneurship. It’s as follows: “Anyone, (can be an entrepreneur) who wants to experience the deep, dark canyons of uncertainty and ambiguity; and who wants to walk the breathtaking highlands of success. But I caution, do not plan to walk the latter, until you have experienced the former [8].” In this regard, as Schumpeter also points out; entrepreneurs seem to have some heroic vision. Schumpeter focused on high-level entrepreneurship, and larger businesses [9]. On the other hand, Marshall examined smaller businesses, partially [10]. It was Hayek and Kirzner, who examined the entrepreneurs as middlemen hoping to profit by buying cheap and selling expensive [11].
Stopford and Baden-Fuller considered entrepreneurs as opportunists even in chaotic situations, and they also metaphorically approached entrepreneurship. According to them, entrepreneurs are like Olympic athletes, long-distance runners, symphony orchestra conductors, and top-gun pilots…These metaphors underline the entrepreneurs’ being ambitious, determined, self-challenging, and talent for synchronizing [12]. [Source: Mehmet Çağrı Gündoğdu]
[youtube https://www.youtube.com/watch?v=ya4acTFOzLk]
When it comes to defining entrepreneurship; it can easily be discovered that various people have defined entrepreneurship differently. Despite this fact, the most common classification follows the mainstream of Collins and Moore; who claimed two types of entrepreneurship, differentiating due to the context of entrepreneurial activities undertaken. These are, firstly, independent entrepreneurship and independent entrepreneurs (similar to entrepreneurship/traditional entrepreneurship and entrepreneurs/traditional entrepreneurs in this paper), implying the process whereby an individual or a group of individuals, acting independently of any association with an existing organization, create a new organization [13].
Secondly, corporate entrepreneurship and administrative entrepreneurs (similar to intrapreneurship and Mehmet Çag˘rı Gündog˘du / Procedia – Social and Behavioral Sciences 41 ( 2012 ) 296 – 303 299 intrapreneurs in this paper), implying the process whereby an individual or a group of individuals, in association with an existing organization, create a new organization or instigate renewal or innovation within that organization [14]. A brief definition of an entrepreneur, inspired by Kuratko, can be made as the following: An entrepreneur is an undertaker who notices and seizes opportunities; converts those opportunities into commercial ideas; adds value via processes, effort, capital, or capabilities; and confronts the risks of the competitive market to apply those ideas; and what an entrepreneur accomplishes, is therefore called entrepreneurship [15]. Now, entrepreneurial activities within an existing organization, namely intrapreneurship will be discussed.
Intrapreneurship
The study of intrapreneurship, implying entrepreneurial activities conducted within existing organizations, has expanded over the last three decades [16]. Most research in this field has focused on the possibility; that managers and individual employees could be inspired to behave entrepreneurially; create innovations, and obtain profit and growth through these innovations [17], [18], [19], [20], [21].
This is about a powerful foresight that managers and their organizations can form an ambiance that fosters to create and manage new businesses within the existing organizational framework [22], [23], [24]. Scholars have shown the tendency to divide entrepreneurship into two sub-titles according to its operating context. On one hand, it’s common to use entrepreneurship or independent entrepreneurship to describe the entrepreneurial efforts of individuals operating outside the context of an existing organization.
On the other hand, different terms can be seen in the literature implying the entrepreneurial efforts within an existing organization such as corporate entrepreneurship as Burgelman and Zahra used respectively in their separate studies; corporate venturing which Biggadike mentioned; Pinchot’s intrapreneuring; internal corporate entrepreneurship of Jones and Butler; Schollhammer and Vesper’s internal entrepreneurship; Guth and Ginsberg’s strategic renewal and venturing of Hornsby, Naffziger, Kuratko, and Montagno [25], [26], [27], [28], [29], [30], [31], [32].
Here, only intrapreneurship is being used for a common purpose, referring more likely to Pinchot’s view of defining intrapreneurs as the “dreamers who do”; those who take hands-on responsibility for creating innovation of any kind within an existing organization [33]. Innovation is the next topic to be examined.
Entrepreneurs willingly sign up for a wide spectrum of possible outcomes, ranging from big wins on one end to massive losses on the other. Not so with intrapreneurs who have made the conscious decision to receive a paycheck from an organization largely to avoid risk, and they therefore do not expect huge financial gains.
Entrepreneurs have the luxury of building a company’s culture from scratch, while intrapreneurs often fight against a long history of many deeply held and widely shared beliefs, assumptions, and practices—some of which run counter to intrapreneurship itself. Is innovation infused into the DNA of your organization, or is your culture lethal to innovation?
The cultural archetype of the Intrapreneur serves as a prototype for the employee of the future.
Intrapreneurship as the new way of working?
That is where intrapreneurship comes in. Originally, when first introduced by Gifford and Elizabeth Pinchot in 1978, intrapreneurship referred mostly to managing a P&L inside of a larger organization. Since then, the concept has expanded beyond the structural into also covering cultural domains.
Intrapreneurs are sometimes referred to as corporate entrepreneurs, and while they both require self-reliance, self-management, and self-organization, there is a big difference between the two: On a most basic level the risk and reward structures: As an entrepreneur, the risk is high, but so are the potential rewards (you might just create the next unicorn and become a gazillionaire). As an intrapreneur, there is lower risk, there is that steady paycheck, but there is also a much lower reward, often at best a promotion — at least until corporations catch up and create new appropriate incentive and ownership structures.
That is why purpose and permission are key to intrapreneurship. They provide the necessary intrinsic motivation to keep going — often despite the organization and its response to innovation.
Personal purpose connected with organizational purpose, the permission and psychological safety to act on it, and the effective use of AI support will define the successful intrapreneurial workforce of the future.
It will require individuals on any level of the organization to understand and live the organizational purpose, continuously focus on creating customer value, empathize and learn, and build new processes and systems — and ultimately offerings — together with AI support to provide better intelligence, enable repeatable processes and allow a new level of adaptability.
Companies like IBM have already successfully begun another transformation phase. To support the use of their AI Watson and turn their employees into customer advocates enabled by intelligent technology, they have trained more than 90,000 of their employees in design thinking.
Design thinking is only the first step, we need LEAN and agile methods to move new ideas into actual businesses, as well as the organizational support to take an idea from the first signal to launching prototypes, MVPs, and ultimately ever new product line.
Many companies are beginning to understand that leadership and innovation have to come from everywhere in the organization and have initiated various forms of intrapreneurship programs.
From our work with clients and conducted workshops at several intrapreneurship conferences over the last years, we have noticed how the themes of culture and human transformation have continued to gain momentum and attention.
Intrapreneurs by definition are not as autonomous as entrepreneurs, although they’re typically (and mistakenly) made to believe they are. When reality hits and would-be intrapreneurs are told that they can’t do something, disillusionment quickly eclipses optimism, and cynicism takes root. Because they are part of a bigger organization with well-established policies and procedures, they will most likely never become completely independent.
Entrepreneurs directly hire marketing, advertising, R&D, design, engineering, and sales talent. They establish these relationships from the vantage point of a boss or customer. Intrapreneurs, however, are employees and must negotiate for these and other scarce resources, subject to internal availability and competing projects.
Innovation
Innovation has emerged as a headline in the field of business management, recently. Kuratko determines the magic words to describe the new innovation way of our time: Dream, create, explore, invent, pioneer, and imagine [34]. Innovation itself is undergoing change [35]. The etymological roots of innovation stretch to the Latin word innovare, meaning to do something new [36]. Most of the innovation definitions have focused on similar points with different perspectives. The key common points imply change and renewal for a better situation. The Organization for Economic Cooperation and Development (OECD), inside the Oslo Manual—the source of information regarding international technological developments— defines innovation by linking it to technological change.
According to OECD, innovation means “completing products and services by developing them technologically [37]. The European Union (EU) has made a broader definition. To the EU, innovation introduces the change in workforce talent, working conditions, and managerial and organizational jobs. Also, it’s about renewal and growth in product and service range [38]. In addition to this, a well-known expression about innovation; characterizes it as the process of converting new ideas into value-creating outputs such as new products, methods, or services. With the help of innovation; companies acquire the 300 Mehmet Çag˘rı Gündog˘du / Procedia – Social and Behavioral Sciences 41 ( 2012 ) 296 – 303 ability to develop and apply not only new products, processes, or designs but also new operation and business models [39].
After having experienced enormous financial crises all over the world in recent years; company survival has emerged as the most crucial issue both for SMEs and even some large companies [40]. SMEs, as the increasing value of the new economy, are obligatorily undertaking the mission of being innovative. It’s innovative SMEs that will lead the way to economic recovery. Now, the innopreneurial thought will be scrutinized in the light of entrepreneurship, entrepreneurship, and innovation.
The traditional definition of entrepreneur and intrapreneur has become insufficient in the new economy
Intrapreneurship, innovation, and the future of work
30 NOVEMBER 2017
How are entrepreneurial approaches disrupting the corporate world from within? Professor Margaret Maile Petty and Dr Natalia Nikolova caught up to discuss how today’s businesses anticipate and prepare for the future of work. Margaret Maile Petty (MMP): We hear a lot about entrepreneurship from the government and in the media, but not so much about intrapreneurship. What is it, and why is it central to addressing disruption and adapting to the future of work?
A Prototype Emerging From the New Economy
The Innopreneur— Beyond the Optimum Synthesis of Entrepreneur, Intrapreneur and Innovation. It has been long, having dispelled the myth that “the entrepreneurs are born, not made.” Drucker confirms this opinion regarding entrepreneurial thought: “Most of what you hear about entrepreneurship, is all wrong. It’s not magic; it’s not mysterious; and it has nothing to do with genes. It’s a discipline and, like any discipline, it can be learned [41].”
Likely, innopreneurship, can be learned via education, training programs, strategy formulation, and a well-comprehended strategic management view. Undoubtedly, a certain level of enterprising talent is underlying. It’s not a desired outcome to be thought that the traditional entrepreneurs will be eliminated because of the new emerging character, innopreneur. But, it’s true for traditional entrepreneurs, who take the risk and invest the capital in a self-confident manner, that they should remedy themselves by making the necessary adjustments; to become an innopreneur.
Like the organizations being exposed to entropy; traditional entrepreneurs are facing the danger of being pushed to the outside of the system. The concept of entropy implies the tendency that exists in every system; toward the exhaustion of energy, losing the balance, disorder, and finally leading to demise of the system [42]. Besides; negative entropy, which is possible in open systems (biological and social systems that interact with the environment), means preventing the negative effects of entropy with the help of knowledge, energy, and materials taken from the environment [42]. In biological systems, entropy may cause death; and in social systems like enterprises, it may cause all the operations to stop, ultimately [42]. To make it reverse, and maintain sustainable competitive advantage; traditional entrepreneurs should transform themselves into innopreneurs.
The increasing significance of SMEs as the main constituents of the new economy was emphasized at the beginning of this paper. Innopreneurs; as the steering leaders of SMEs in this new economic framework, while protecting the traditional values and traits of entrepreneurs; will have to reach beyond. Innopreneurs should constantly enter into positive change and make efforts for innovation. They should continuously update and develop themselves also intra-business, maintaining the aspects of being an intrapreneur.
Innopreneur, the prototype for the Artificial Intelligent employee?
Entrepreneurial factors like capital, self-confidence, motivation for the start-up, commitment to the business, optimism, managerial skills, and leadership characteristics are certainly also valid for innopreneurship. It would be acting unjustly to traditional entrepreneurs by saying that the above-mentioned attributes are unimportant. Indeed, entrepreneurship is at the core. It’s a strong pillar of the business and management discipline, on top of which, innopreneurship is built. Innopreneurs can be made. Entrepreneurs can learn to become innopreneurs with the help of education and training. An innopreneur can lead to innovation. So, she/he has the characteristics of an innovative leader in this regard. She/he is also an effective manager to accomplish the business. It’s not an absolute necessity for an innopreneur, to apply hands-on-management in every step of the business. Whatever the case is; the innopreneur’s leading role stays constant.
It’s noteworthy; that every innopreneur is also an entrepreneur but not every entrepreneur can be classified as an innopreneur. Every innopreneur is an innovation-oriented entrepreneur. Every innopreneur, has powerful attempts toward innovative new ventures. Not every entrepreneur makes innovation but every innopreneur does. In this sense, the intrapreneur resembles the innopreneur in terms of innovation and orientation. Despite this, the intrapreneur differs from the innopreneur in performing environment of innovation. The scope of intrapreneurship is constricted to the existing organizational area. On the other hand, the innopreneur, is not subject to such criteria.
The innopreneur performs at a new stage, which is called the new economy. The innopreneur, is a prototype, self-developed to meet the needs of the new economy. The innopreneur is the new evolutionary model, the cumulative advanced type that emerged from this environment. In addition, she/he is the leader who forms a suitable environment; in which the intrapreneurs are empowered, and their ideas and attempts to make innovation are strongly encouraged. While serving as a catalyst, the innopreneur may also take an active role in these efforts. Innopreneurship, for now, is a concept dealing with the ideal rather than what exists. It harmonizes its predecessors entrepreneurship, intrapreneurship and the popular concept of innovation through an integrative perspective and fulfills the unique requirements of the new economy.
The innopreneur undertakes to manage, and take the risks of a business model. In our time, an innopreneur is interested in research and development and is characterized as an innovation hunter who aggressively seeks for opportunities; transforms those opportunities into concrete marketable ideas; creates value-added; makes maximum efforts, assesses and undertakes the relevant risks to apply those ideas; and gathers the crops at harvest time.
Bibliographical References:
SBA, the U.S. Census Bureau, and the National Small Business Association, there are a lot of small business statistics
Simon C. Parker: Intrapreneurship or Entrepreneurship?, IZA DP No. 4195, May 2009: http://ftp.iza.org/dp4195.pdf
Mehmet Çağrı Gündoğdu: International Conference on Leadership, Innovation and Technology Management
Re-Thinking Entrepreneurship, Intrapreneurship, and Innovation: A Multi-Concept Perspective: Procedia – Social and Behavioral Sciences 41 ( 2012 ) 296 – 303: www.sciencedirect.com
Africa Startup: Boomerang of Micro-ECommerce
Continuously updated with new inputs and trends For Better or Worse Emergent Technologies Changing Africa! Are these efforts going to increase the use of Information Communication Technologies and develop broadband penetration in Africa? Will technology increase the divide or help to integrate Africa? What are the Destiny and the Reality of the Technology in the … Lire la suite
Know Your Data – Know Yourself Better
★ CHRONIQUE 🌎 CHERKAOUI ★ « Know what Data knows about your business, and you will know what is your market status » The biggest challenge is the training of staff that goes hand-in-hand with the breakthroughs and innovation that the virtual world and digital social marketing are experiencing almost daily. This sizeable pitfall is not unique to micro-enterprises and small and medium-sized … Lire la suite Know Your Data – Know Yourself Better
TRI Consulting Kyoto [English and French] – Africana Enterprise Cherkaoui Journal and African Start-Up Expo – Oakland California by Said El Mansour Cherkaoui is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License. Based on a work at TRI Consulting Kyoto [English and French] – Africana Enterprise. Permissions beyond the scope of this license may be available at http://www.cherkaouijournal1.weebly.com