Hercules and Intrapreneurship: 12 Labors To Succeed at Corporate Entrepreneurship
So you've heard about how 3M, Virgin, IBM, Boeing, McKinsey, Dupont and others consistently succeed at monetizing innovations and business ideas by transitioning them into running profitable businesses or lines of business. Yet, there are so many others who fail at this. Remember Target's failed foray into Canada resulting in a $5.4 Billion write down, the shut down of 124 stores and a $2 Billion net loss, which I wrote about in this post earlier this year. What differentiates these winners from the losers is understanding the risks that the new business initiative will face as it tries to establish itself and grow alongside an already established core business.
To succeed, the executive team and the intrapreneurial team must understand the 12 fundamental areas that, when mastered, will allow your fledging new business ventures to successfully grow. I have personally faced these myself as a serial intrapreneur while creating new lines of business or joint ventures to open new markets. These twelve activities are so important and so challenging that I named them the 12 labors because, similar to Hercules' 12 labors, each individual labor is as important as the next and as potentially fatal to the business if not properly addressed. In fact, the original title for the book, Winning at Intrapreneurship was actually The Twelve Labours of the Intrapreneur because I felt so strongly about this. (The book title change was made at the very last minute as a pivot following a survey I made with the book's target audience).
These twelve labors are unavoidable and are covered extensively in Winning at Intrapreneurship. You will have to face them all. How hard it is for you and your team to succeed will be a function of how well you prepare for them.
Labor 1. Battling the myth of entrepreneurship. This requires a fundamental understanding of the differences between an independent entrepreneur launching a startup on his/her own and the world of the intrapreneur working inside a company. Too many leaders announce entrepreneurial initiatives inside their existing business and point to the need to let the entrepreneurs inside act like pure entrepreneurs when the reality is that intrapreneurs have to face internal challenges, entrenched business practices, and rigid business systems and processes that startup founders simply do not. Intrapreneurship and entrepreneurship are not the same.
Labor 2. The dangers of the quick fix. Every study on intrapreneurship points to the fact that corporate entrepreneurship initiatives succeed when led by a qualified and capable intrapreneur. Unfortunately, most companies do not have expertise in this area, let alone a succession plan for intrapreneurs, and they make the mistake of applying a quick fix to their corporate startup leadership needs. Understanding and knowing how to spot the 7 types of intrapreneur pretenders that you will find inside your organization is fundamental and reviewing the list of 19 characteristics that define an intrapreneur is key.
Labor 3. The Sponsor, the gatekeeper, and the allies needed to survive. No intrapreneur can succeed without a senior executive sponsor (ideally the CEO, COO or the president of a business segment), a gatekeeper with significant operational influence and political clout, and strategic allies that will ensure support and resources are freed up when necessary. Understanding the dynamics between these three key players, the intrapreneur and the core business is essential to removing roadblocks.
Labor 4. Creating and mastering expectations. Unfortunately, many great ideas and great entrepreneurs can fail because expectations were improperly set form the start. The problem lies in the core business view of objective setting and key performance indicators (KPIs). KPIs that have been honed for a mature and well established core business simply do not work for a startup. Understanding how to adapt KPIs along the way will often be the deciding factor on evaluating success and approving access to on-going funding.
Labor 5. The long-term benefits of skillful change management. When I am asked what is the one trait or skill that separates intrapreneurs from entrepreneurs, I always point to skillful change management. The fact is that an independent entrepreneur will not have to work alongside an existing corporation. Conversely, the intrapreneur will be begging, borrowing, and down-right stealing resources from the parent company to make the business work. As this happens, existing ways of conducting business will be challenges and systems and processes will have to be adapted or new ones implemented. This requires major change management.
Labor 6. Avoiding the materiality minefield. I have seen many great ideas that would make money and be profitable not get approved because they simply would not amount to a large enough business and be material enough financially to be worth the effort. Ultimately, intrapreneurship is about choice and betting on businesses that have the potential, if executed properly, to make a significant contribution to the overall bottom line or EPS of the corporation. Setting materiality parameters early is important to help you filter ideas.
Labor 7. The compounding cushion and the forecasting trap. This labor has to do with how established business leaders go about estimating for the work to be done and forecasting results. I have seen my fair share of good intrapreneurial businesses almost get axed because the estimates to support them came from seasoned department managers from the core business who put so many cushions in their estimates that it killed the ROI. You must understand how this works and how proper risk management practices can be used to avoid it. Along the same lines, your methods for estimating or forecasting work to be done or revenues must also be adapted to the business of intrapreneurship.
Labor 8. Preparing the startup for corporate exposure. The heart of this labor is the timing between how long to stay under the radar and when to formally expose the corporate new venture to the rest of the organization. With corporate exposure comes increasing access to resources and funding, but with it also comes several internal challenges; two of which are labors 10 and 11.
Labor 9. Rules for designing and positioning the new business. Balancing autonomy with efficiency and providing the right level of decision making and setting business direction is instrumental in ensuring the young business can address its market and customer needs and pivot when required. A lot of this will be determined via the organization and reporting structures. This is one labour which often exposes all the politics of your core business and tests everyone's capacity to give up control.
Labor 10. Leveraging the parent company for strategic advantage. The main and most powerful weapon at the disposal of intrapreneurs compared to his/her entrepreneur counterparts is the access to resources from the parent company. Yet, too often this is left to chance, or to a very informal process at best. I have defined the term "corporate force multipliers (CFMs)" to capture this very important aspect of intrapreneurship and understanding how to identify, select and secure CFMs is fundamental to your success.
Labor 11. The threat of the corporate immune system. Gifford Pinchot said it best when he coined the term corporate immune system when describing the way many departments react when a new business is launched. This corporate immune system is very real and understanding how department heads perceive the risks and trigger their defence mechanism will be to be one of the most difficult labors of all.
Labor 12. How to prevent a controlled descent into failure. The term "controlled descent into failure (CDIF)" points to my experience with the aviation industry and their use of controlled descent into terrain. Understanding how CDIF works and how to establish a formal awareness system within the intrapreneurial team will be your key to seeing the new market and client reactions as they are and not as you wished them to be. Avoiding the startup's failure will be about managing your CDIF indicators and adapting as necessary.