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11/28/2013

INTRAPRENEURSHIP
DEVELOPMENT

Contents
 Entrepreneurship
 Intrapreneurship
 Corporate Entrepreneurship

1
11/28/2013

Entrepreneurship
The pursuit process of opportunities beyond
the resources you currently control
Stevenson, 1983, 1985;
Stevenson and Jarillo, 1991

 Entrepreneurship is a process
 Entrepreneur is an individu doing entrepreneurship
 Entrepreneurial is attitudes, skills, and behaviors of
the entrepreneur
World Economic Forum
Executive Summary, 2009

Entrepreneurship is
a process...
Opportunity
Recognition for
Value Creation
(Innovation)

Willingness &
initiative to seize
opportunities

Strategies to
manage limited
resources

Willingness to take
calculated risks

New Venture Creation, Timmons, 2003,
from research at Boston College

2
11/28/2013

Entrepreneurial
Process Model

Exogenous
forces

Ambiguity

Capital market
context

Uncertainty

Timmons’ model of the
Entrepreneurial Process, 2003

Why Entrepreneurship?

Entrepreneur
population

0.2%

7,2%

11,5%

Indonesia

Singapore

USA

Global Entrepreneurship
Monitoring (GEM) Report, 2007

3
11/28/2013

Who should be
Entrepreneurial?
As Individual:

As Organization:

 Business owner

 Private Corporation

 Private employee

 State Corporation

 State officer

 Government

 Educator

 School/University

INTRAPRENEUR

CORPORATE ENTREPRENEURSHIP

Intrapreneurship
A process by which individuals inside
organizations pursue opportunities independent
of the resources they currently control
Stevenson and Jarillo
(1990: 23)

4
11/28/2013

Intrapreneur - Corporate
Relationship Model
Resources:
Financial, Market Penetration,
Research facility

Innitiative, Innovation

Modified from Intrapreneuring,
Pinchot, 1985

Example: The Intrapreneur
who become Entrepreneur
Steve Jobs & Steve Wozniac
They joined and create
Apple Computer after their
PC concept rejected by HP
and Atari

5
11/28/2013

The Intrapreneur
Intrapreneurs are … ‘dreamers who do’
Those who take hands-on responsibility for creating
innovation of any kind within an organization
They may be the creators or inventors but are always
the dreamers who figure out how to turn an idea into
a profitable reality
Pinchot (1985, p. ix, in:
Sharma & Chrisman, 1999)

Intrapreneurial Grid
High

Artist

Inventor

Idea Generator

INTRAPRENEUR

Manager
Supervisor

Low

Worker

Valuable
Worker

Low

High
Intrapreneuring,
Pinchot, 1985

6
11/28/2013

Example: The Intrapreneur

Example: The Intrapreneur

Cheryl Pohlman
Worldwide Product and
Marketing Communications
Director for inkjet systems,
Inkjet printer division,
KODAK

http://www.bnet.com/article/how-they-did-it-sevenintrapreneur-success-stories/196890

7
11/28/2013

Example: The Intrapreneur

Jeri Yoshizu
Scion Sales and Promotion
Manager
Scion17
TOYOTA

http://www.bnet.com/article/how-they-did-it-sevenintrapreneur-success-stories/196890

Example: The Intrapreneur

Scott Gatz
Former Senior Director of
Advanced Products
Sponsored search engine
YAHOO

http://www.bnet.com/article/how-they-did-it-sevenintrapreneur-success-stories/196890

8
11/28/2013

Example: The Intrapreneur

Alicia Ledlie
Senior Director for health
business development
In-store health clinics
WALL MART

http://www.bnet.com/article/how-they-did-it-sevenintrapreneur-success-stories/196890

Example: The Intrapreneur

Andy Noya
Wartawan, Presenter, Host
‘Kick Andy’
Waklil Pemimpin Umum
Media Indonesia
Pemimpin Redaksi Metro TV
http://id.wikipedia.org/wiki/Andy_F._Noya

9
11/28/2013

Example: The Intrapreneur
Prof. Yohanes Surya, PhD
Wartawan, Presenter, Host
‘Kick Andy’
Waklil Pemimpin Umum
Media Indonesia
Pemimpin Redaksi Metro TV

http://id.wikipedia.org/wiki/Yohanes_Surya

Example: The Intrapreneur

Joko Widodo
Walikota Solo

http://id.wikipedia.org/wiki/Joko_Widodo

10
11/28/2013

Example: The Intrapreneur

Dahlan Iskan
Former President Director of
PT. Perusahaan Listrik Negara
Minister of State-owned
Corporations

Intrapreneurial
Process Model

de Jong and Wennekers (2008), Mair
(2002), Antoncic and Hisrich (2001)

11
11/28/2013

Intrapreneurial is an
attitudes, skills, behaviors
 Taking Initiative: self starting, proactive, persistence
 Innovative: implement vision to increase benefit/cost
 Voicing
 Championing
 Taking Charge
 Some Degree of Risk Taking
Modified from Intrapreneurship,
de Jong & Wennekers, 2008

Intrapreneurship is
a process...
Recombination of
Resources
Resource Acquisition
Opportunity
perception
Idea generation

Planning and
Organizing
Internal coalition Building
Persuading the
Management
Modified from Intrapreneurship,
de Jong & Wennekers, 2008

12
11/28/2013

Corporate Entrepreneurship
The process by which teams within a
established firm conceive, foster, launch, and
manage a new business that is distinct from
but leverages the company’s current assests,
markets, and capabilities
Grow from Within,
Wolcott & Lippitz, 2010

Innovation Radar
A business system innovation
Brand
Networking

Platform

Solutions

Supply chain

Organization

Customer
experience
Value
capture
Grow from Within,
Wolcott & Lippitz, 2010

13
11/28/2013

The 4 Model of
Corporate Entrepreneurship
Enabler

Producer

Company provide funding &
attention to prospective
projects (ex: Google)

Company supports a fullservice group with special
mandate (ex: IBM, Cargill)

Opportunist

Advocat

Internal & external networks
drive concept selection &
resource allocation (ex:
Zimmer)

Company evangelizes for
corporate entrepreneurship,
funded by business unit (ex:
DuPont)

Dedicated

Ad Hoc

Diffused

Focused
Grow from Within,
Wolcott & Lippitz, 2010

Incentive Design for
Corporate Entrepreneurship
1. Prime Factor
 Human Element; Critical Success Factor; Autonomy, Structure,
Processes

2. Incentive System Parameters
 Short-Term vs Long-Term; Performance Relatedness; Attracting
and retaining

3. Incentive System Components
 Financial, Non-Financial, Risk
The 4E Model,
Viswanathan, Nagarajan, 2004
ESADE MBA Business Review

14
11/28/2013

1. Prime Factor:
Critical Success Factors
Success Factor

Incentive Features



Financial and symbolic significance
Rapidity of Feedback
Individualization
Team-wide Incentives



Fairness of Distribution



Recognizing and
Adapting to Reality





Organizational
Support

Competitiveness



Effective Teamwork

Direct relationship between incentives and performance





Enthusiasm and
Continuing
Commitment

Significant Earning Potencial

Team Recognition



Perception of Fairness



Balance between potential risks and rewards



Payment for results, not for strict adherence to plan



Significant personal financial risk for venture managers

3. Incentive System Components:
Financial
Success Factor

Incentive Features


Shares/ Options in parent firm/ venture



Phantom shares: If venture doesn’t exist as a separate entity



Encourages collaborative behavior



Purchased equity in new venture links risk to potencial reward



Relatively long term incentive



Three popular types Fixed amounts known in advance: Variable,
per formance linked, Discretionary bonus after major
contribution



Can be both long term as well as short term

Salary increases



Salary increase is related to Changing role in the venture

Fringe benefits



Holiday trips, Scholarships to Children Sabbaticals ,etc

Equity and EquityRelated

Bonuses

15
11/28/2013

3. Incentive System Components:
Non-Financial
Success Factor

Incentive Features

Recognition

Authority
Responsibility
Power

Presence of a management champion for th



Increased resources: money or personnel



Basic motivation of intrapreneur is to realize his vision in his own
way: Autonomy



Intrapreneur does not have to take management permission for
every move: Freedom & Independence in operation
Recognition is not just a gesture, it is an empowerment tool



Manifested through recognition ceremonies, awards and
corporate publications



Autonomy
Freedom
Independece





Top management
support for
venture

Subtle incentives



Only explicit way of awarding these incentives is through
promotions



Promotion to broadened responsibilities is the fundamental
corporate reward

3. Incentive System Components:
Risk
Success Factor

Incentive Features


Career Risks
Job Security and
benefits related
risk
Effort & Stress



Possibility of missing out on incentives due to the inherent risk of
the new venture



Working for the new venture may become a Stumbling block in
the employee’s career. He may miss out on promotions, etc



Financial Risk

Opportunity cost of leaving some other division and working for
new venture

Firms sometimes don’t guarantee jobs in case of venture failure.
This creates job security risk.



While joining new venture employees often have to give up
standard benefits package



A new venture, by its inherent nature, is often more stressful and
difficult than an established venture

16
11/28/2013

Lifecycle Incentive Approach
Success Factor
Pre-Launch
Product
Development
Stage

Incentive Features
 Small discretionary bonus could be provided on
completions of feasibility and concept study
 Medium to significant bonus on ontime, within estimated
budget, product development

 Needs built in quality protection provisions

Startup

 Bonus could be calculated as a % of the difference
between planned and actual startup expenses

Ongoing Sales
and Production

 Percentage of dollar amount improvement over planned
profit or loss to be shared by venture team

Post Venture
Maturity stages

 Payout mechanism for venture personnel who voluntarily
leave or are transferred or discharged

Intrapreneuring Phase
No

Phase

Description

1

Solo phase self vision, no-ego barrier, write down your idea &
concept

2

Network
phase

share your idea, getting feedback to elaborate
strength & weakness and suggestion

3

Bootleg/
Informal
phase

Start getting supporter without company back-up, fine
tuning style of early team

4

Formal
phase

Getting management support, Recruiting formal
team, legitimacy & leadership, maintain expectation

5

Execution

Resource recombining & acquisition, Implementation
Modified from
Intrapreneuring, Pinchot, 1985

17
11/28/2013

Entrepreneurship vs
Intrapreneurship
Intrapreneurship is part of entrepreneurship, but differ in
term of:
 Resource: existing network, corporate reputation, market
penetration, technology base, competence human resource, financial

 Risk
 Autonomy
 Share

Intrapreneurship
Development
Desentralized
Organization

Learning
Orientation

Learning
Culture

Transformational
Leadership

Organizational
Learning

INTRAPRENEURSHIP

Organizational Performance

Learning Environment
Framework for Successful
Corporate Entrepreneur,
Rupcic, Zekic, Kutnjak,
2010

18
11/28/2013

The Intrapreneur’s
10 Commandments
1.

It’s easier to ask for forgiveness than for permission

2.

Do any job needed to make your project work, regardless of your job
description

3.

Ask for advice before resources

4.

Recruit strong team

5.

Honor your sponsors

6.

Underpromise and overdeliver

7.

Be true to your goals, but realistic about ways to achieve them

8.

Forget pride authorship, spread credit widely

9.

When you bend the rules, keep the best interests of the company
and its customer in mind

10. Prepare to be fired

19

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Intrapreneurship and Corporate Entrepreneurship Development

  • 2. 11/28/2013 Entrepreneurship The pursuit process of opportunities beyond the resources you currently control Stevenson, 1983, 1985; Stevenson and Jarillo, 1991  Entrepreneurship is a process  Entrepreneur is an individu doing entrepreneurship  Entrepreneurial is attitudes, skills, and behaviors of the entrepreneur World Economic Forum Executive Summary, 2009 Entrepreneurship is a process... Opportunity Recognition for Value Creation (Innovation) Willingness & initiative to seize opportunities Strategies to manage limited resources Willingness to take calculated risks New Venture Creation, Timmons, 2003, from research at Boston College 2
  • 3. 11/28/2013 Entrepreneurial Process Model Exogenous forces Ambiguity Capital market context Uncertainty Timmons’ model of the Entrepreneurial Process, 2003 Why Entrepreneurship? Entrepreneur population 0.2% 7,2% 11,5% Indonesia Singapore USA Global Entrepreneurship Monitoring (GEM) Report, 2007 3
  • 4. 11/28/2013 Who should be Entrepreneurial? As Individual: As Organization:  Business owner  Private Corporation  Private employee  State Corporation  State officer  Government  Educator  School/University INTRAPRENEUR CORPORATE ENTREPRENEURSHIP Intrapreneurship A process by which individuals inside organizations pursue opportunities independent of the resources they currently control Stevenson and Jarillo (1990: 23) 4
  • 5. 11/28/2013 Intrapreneur - Corporate Relationship Model Resources: Financial, Market Penetration, Research facility Innitiative, Innovation Modified from Intrapreneuring, Pinchot, 1985 Example: The Intrapreneur who become Entrepreneur Steve Jobs & Steve Wozniac They joined and create Apple Computer after their PC concept rejected by HP and Atari 5
  • 6. 11/28/2013 The Intrapreneur Intrapreneurs are … ‘dreamers who do’ Those who take hands-on responsibility for creating innovation of any kind within an organization They may be the creators or inventors but are always the dreamers who figure out how to turn an idea into a profitable reality Pinchot (1985, p. ix, in: Sharma & Chrisman, 1999) Intrapreneurial Grid High Artist Inventor Idea Generator INTRAPRENEUR Manager Supervisor Low Worker Valuable Worker Low High Intrapreneuring, Pinchot, 1985 6
  • 7. 11/28/2013 Example: The Intrapreneur Example: The Intrapreneur Cheryl Pohlman Worldwide Product and Marketing Communications Director for inkjet systems, Inkjet printer division, KODAK http://www.bnet.com/article/how-they-did-it-sevenintrapreneur-success-stories/196890 7
  • 8. 11/28/2013 Example: The Intrapreneur Jeri Yoshizu Scion Sales and Promotion Manager Scion17 TOYOTA http://www.bnet.com/article/how-they-did-it-sevenintrapreneur-success-stories/196890 Example: The Intrapreneur Scott Gatz Former Senior Director of Advanced Products Sponsored search engine YAHOO http://www.bnet.com/article/how-they-did-it-sevenintrapreneur-success-stories/196890 8
  • 9. 11/28/2013 Example: The Intrapreneur Alicia Ledlie Senior Director for health business development In-store health clinics WALL MART http://www.bnet.com/article/how-they-did-it-sevenintrapreneur-success-stories/196890 Example: The Intrapreneur Andy Noya Wartawan, Presenter, Host ‘Kick Andy’ Waklil Pemimpin Umum Media Indonesia Pemimpin Redaksi Metro TV http://id.wikipedia.org/wiki/Andy_F._Noya 9
  • 10. 11/28/2013 Example: The Intrapreneur Prof. Yohanes Surya, PhD Wartawan, Presenter, Host ‘Kick Andy’ Waklil Pemimpin Umum Media Indonesia Pemimpin Redaksi Metro TV http://id.wikipedia.org/wiki/Yohanes_Surya Example: The Intrapreneur Joko Widodo Walikota Solo http://id.wikipedia.org/wiki/Joko_Widodo 10
  • 11. 11/28/2013 Example: The Intrapreneur Dahlan Iskan Former President Director of PT. Perusahaan Listrik Negara Minister of State-owned Corporations Intrapreneurial Process Model de Jong and Wennekers (2008), Mair (2002), Antoncic and Hisrich (2001) 11
  • 12. 11/28/2013 Intrapreneurial is an attitudes, skills, behaviors  Taking Initiative: self starting, proactive, persistence  Innovative: implement vision to increase benefit/cost  Voicing  Championing  Taking Charge  Some Degree of Risk Taking Modified from Intrapreneurship, de Jong & Wennekers, 2008 Intrapreneurship is a process... Recombination of Resources Resource Acquisition Opportunity perception Idea generation Planning and Organizing Internal coalition Building Persuading the Management Modified from Intrapreneurship, de Jong & Wennekers, 2008 12
  • 13. 11/28/2013 Corporate Entrepreneurship The process by which teams within a established firm conceive, foster, launch, and manage a new business that is distinct from but leverages the company’s current assests, markets, and capabilities Grow from Within, Wolcott & Lippitz, 2010 Innovation Radar A business system innovation Brand Networking Platform Solutions Supply chain Organization Customer experience Value capture Grow from Within, Wolcott & Lippitz, 2010 13
  • 14. 11/28/2013 The 4 Model of Corporate Entrepreneurship Enabler Producer Company provide funding & attention to prospective projects (ex: Google) Company supports a fullservice group with special mandate (ex: IBM, Cargill) Opportunist Advocat Internal & external networks drive concept selection & resource allocation (ex: Zimmer) Company evangelizes for corporate entrepreneurship, funded by business unit (ex: DuPont) Dedicated Ad Hoc Diffused Focused Grow from Within, Wolcott & Lippitz, 2010 Incentive Design for Corporate Entrepreneurship 1. Prime Factor  Human Element; Critical Success Factor; Autonomy, Structure, Processes 2. Incentive System Parameters  Short-Term vs Long-Term; Performance Relatedness; Attracting and retaining 3. Incentive System Components  Financial, Non-Financial, Risk The 4E Model, Viswanathan, Nagarajan, 2004 ESADE MBA Business Review 14
  • 15. 11/28/2013 1. Prime Factor: Critical Success Factors Success Factor Incentive Features   Financial and symbolic significance Rapidity of Feedback Individualization Team-wide Incentives  Fairness of Distribution  Recognizing and Adapting to Reality   Organizational Support Competitiveness  Effective Teamwork Direct relationship between incentives and performance   Enthusiasm and Continuing Commitment Significant Earning Potencial Team Recognition  Perception of Fairness  Balance between potential risks and rewards  Payment for results, not for strict adherence to plan  Significant personal financial risk for venture managers 3. Incentive System Components: Financial Success Factor Incentive Features  Shares/ Options in parent firm/ venture  Phantom shares: If venture doesn’t exist as a separate entity  Encourages collaborative behavior  Purchased equity in new venture links risk to potencial reward  Relatively long term incentive  Three popular types Fixed amounts known in advance: Variable, per formance linked, Discretionary bonus after major contribution  Can be both long term as well as short term Salary increases  Salary increase is related to Changing role in the venture Fringe benefits  Holiday trips, Scholarships to Children Sabbaticals ,etc Equity and EquityRelated Bonuses 15
  • 16. 11/28/2013 3. Incentive System Components: Non-Financial Success Factor Incentive Features Recognition Authority Responsibility Power Presence of a management champion for th  Increased resources: money or personnel  Basic motivation of intrapreneur is to realize his vision in his own way: Autonomy  Intrapreneur does not have to take management permission for every move: Freedom & Independence in operation Recognition is not just a gesture, it is an empowerment tool  Manifested through recognition ceremonies, awards and corporate publications  Autonomy Freedom Independece   Top management support for venture Subtle incentives  Only explicit way of awarding these incentives is through promotions  Promotion to broadened responsibilities is the fundamental corporate reward 3. Incentive System Components: Risk Success Factor Incentive Features  Career Risks Job Security and benefits related risk Effort & Stress  Possibility of missing out on incentives due to the inherent risk of the new venture  Working for the new venture may become a Stumbling block in the employee’s career. He may miss out on promotions, etc  Financial Risk Opportunity cost of leaving some other division and working for new venture Firms sometimes don’t guarantee jobs in case of venture failure. This creates job security risk.  While joining new venture employees often have to give up standard benefits package  A new venture, by its inherent nature, is often more stressful and difficult than an established venture 16
  • 17. 11/28/2013 Lifecycle Incentive Approach Success Factor Pre-Launch Product Development Stage Incentive Features  Small discretionary bonus could be provided on completions of feasibility and concept study  Medium to significant bonus on ontime, within estimated budget, product development  Needs built in quality protection provisions Startup  Bonus could be calculated as a % of the difference between planned and actual startup expenses Ongoing Sales and Production  Percentage of dollar amount improvement over planned profit or loss to be shared by venture team Post Venture Maturity stages  Payout mechanism for venture personnel who voluntarily leave or are transferred or discharged Intrapreneuring Phase No Phase Description 1 Solo phase self vision, no-ego barrier, write down your idea & concept 2 Network phase share your idea, getting feedback to elaborate strength & weakness and suggestion 3 Bootleg/ Informal phase Start getting supporter without company back-up, fine tuning style of early team 4 Formal phase Getting management support, Recruiting formal team, legitimacy & leadership, maintain expectation 5 Execution Resource recombining & acquisition, Implementation Modified from Intrapreneuring, Pinchot, 1985 17
  • 18. 11/28/2013 Entrepreneurship vs Intrapreneurship Intrapreneurship is part of entrepreneurship, but differ in term of:  Resource: existing network, corporate reputation, market penetration, technology base, competence human resource, financial  Risk  Autonomy  Share Intrapreneurship Development Desentralized Organization Learning Orientation Learning Culture Transformational Leadership Organizational Learning INTRAPRENEURSHIP Organizational Performance Learning Environment Framework for Successful Corporate Entrepreneur, Rupcic, Zekic, Kutnjak, 2010 18
  • 19. 11/28/2013 The Intrapreneur’s 10 Commandments 1. It’s easier to ask for forgiveness than for permission 2. Do any job needed to make your project work, regardless of your job description 3. Ask for advice before resources 4. Recruit strong team 5. Honor your sponsors 6. Underpromise and overdeliver 7. Be true to your goals, but realistic about ways to achieve them 8. Forget pride authorship, spread credit widely 9. When you bend the rules, keep the best interests of the company and its customer in mind 10. Prepare to be fired 19