Corporate entrepreneurship is not a new concept, but it is one that is beginning to gain momentum and be seen as a resolution to common organisational and competitor challenges.
In recent years, large corporations have come under increasing pressure from brand new agile companies who harness innovation to exploit market opportunities, gain significant market share and edge ahead of long established competitors.
We need look no further than Netflix for an example. Netflix began by mailing out copies of DVDs to select groups of people – a business model which the likes of Blockbuster never expected to face competition from. That all changed once Netflix made a profit, was able to pivot, and began streaming its movies online. Blockbuster were blindsided, failed to adapt and innovate in time, and subsequently not only lost their share of the market but their entire corporation.
This is where corporate entrepreneurship is capable of making the difference. Large companies are able to leverage the behaviour of a startup by giving employees the freedom to proactively develop new ideas and strategies that the business can use to adapt, innovate and thrive.
But what does corporate entrepreneurship mean, and how can your organisation adopt it? In this blog we’ll define corporate entrepreneurship and its importance, plus provide you with four ways to transform your employees into corporate entrepreneurs.
What is Corporate Entrepreneurship?
Corporate entrepreneurship, also referred to as intrapreneurship, is a concept whereby employees are encouraged and supported to behave and think like entrepreneurs within the structure of their existing organisation.
Employees who possess the right skill sets and have innovative visions are actively encouraged to develop new ideas and identify new market opportunities. Eventually this entrepreneurial process should result in new business deliverables like new products, services or even new arms of the business.
Ultimately the goal of any corporate entrepreneurship is to develop ideas which are disruptive to the market and competitors, as opposed to focusing on smaller organisational changes. The projects must also be led and developed by select employees, instead of pressed upon by managers.
What is the importance of Corporate Entrepreneurship?
The importance of corporate entrepreneurship lies in its ability to completely innovate a company, which protects it against things like stagnation and loss of market share.
Large corporations especially are at risk of unsuccessfully innovating or adapting because of their ingrained (and sometimes archaic) organisational structures, bureaucracies and cultures. Adopting a concept such as corporate entrepreneurship provides the company with a systematic way to innovate, and that innovation itself then provides significant benefits.
Significant benefits of corporate entrepreneurship include:
● Surges in growth
Successful corporate entrepreneurship results in a consistently innovative stream of new ideas, which deliver new products and services, and in turn leads to boosts in both revenue and organisational growth.
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● Increases in employee morale and productivity
Corporate entrepreneurship schemes engage employees, giving them freedom and self-expression to immerse themselves in new opportunities. This boosts their confidence, enhances their skillsets, and most importantly because employees feel valued and motivated, increases their productivity.
● Competitive advantage
Competitor analysis is all well and good, but did you know that your best sources of competitor analysis, and therefore, advantage, are right under your nose? Yes, we’re talking about your employees! Employees are naturally able to identify opportunities and threats within the market because they may talk to former employees, have good relationships with clients who pass on information, or may even be contacted by recruiters who unknowingly pass on vital information about rival companies.
● Increased employee recruitment and retention
By involving employees in the direction of the business raises job satisfaction levels because employees feel included and trusted. This results in much lower levels of staff turnover because employees are invested in the company. Corporate entrepreneurship opportunities may also attract other talented, entrepreneurially minded employees who would relish the challenges to disrupt and innovate markets.
What are the characteristics of a corporate entrepreneur?
One thing that’s important to mention is that businesses do not create corporate entrepreneurs. Just like those with growth mindsets: They’re already present.
What businesses must do is identify their corporate entrepreneurs, and then actively encourage and support them.
To identify the right candidates, you need to look for the right characteristics. Corporate entrepreneurs come in all shapes, sizes, backgrounds and abilities but they tend to share the following traits:
- Courageous and confident: Corporate entrepreneurs are often willing to challenge the status quo, look at things from different angles, and suggest new ideas. They’ll also possess the confidence to take risks in order to try new things, or learn from mistakes.
- Curious and open minded: Corporate entrepreneurs are curious about everything. If you hear an employee asking “Why is Product X like this?” Or “What can we do to improve the Y aspect of product Z?” you’ve probably found the correct mindset.
- Not driven by financial motives: Corporate entrepreneurs rarely pursue financial motivations. Instead they’re just openly passionate about transformation, challenge and innovation. They also may care openly for the business’s consumers, so will look for ways to benefit lives.
- Resilient: Corporate entrepreneurs know that not every idea is a winning idea, but they see failures as lessons to learn from and improve the next time.
What are the four key elements of successful corporate entrepreneurship?
In the book Corporate Entrepreneurship by Professor Veronique Bouchard and Alain Fayolle, both business specialists identified four key elements involved in implementing successful corporate entrepreneurship schemes.
1. Decentralised management structures
Corporations that wish to harness a culture of corporate entrepreneurship should have flat management structures. According to Professor Bouchard, flat management structures “foster entrepreneurial environments” by removing multiple management levels and lines of reporting which slows down the instant decision making needed in innovative thinking.
2. Formal project processes
Formal project processes don’t need to be comprehensive – they just need to be succinct and in place. Should a new project be given the go ahead its development must be supported with company resources, time and money.
3. Open communication
Businesses must encourage and facilitate open lines of communication between departments if innovative projects are to get off the ground. Successful collaboration is borne from open communication, and so workshops should be held regularly to allow for the exchanging of ideas which could provide entrepreneurial breakthroughs.
4. Risk taking opportunities
Corporate entrepreneurs can only flourish in a company where risk taking is accessible, encouraged and supported. To implement a risk taking culture businesses can identify team leaders (such as those with growth mindsets) to embody the entrepreneurial line of thinking and promote risk taking as a path to creativity and innovation.
Are you ready to implement corporate entrepreneurship?
Corporate entrepreneurship is vital for the continued success of large corporations, especially as new ways to enter markets become more accessible for start up businesses and SMEs.
At Growth Idea, we help businesses of all shapes, structures and sizes to continue to grow by working with the business to implement proven growth methodologies which reap success. To learn more, read all about our High Performance Executive Board Growth Programme, or contact us today to receive your free strategy review.