The Ultimate Intrapreneurship Primer
Intrapreneurship is often talked about but frequently misunderstood. In this FAQ, we look at what intrapreneurs do and how to foster intrapreneurial innovation.
An intrapreneur is an employee who creates a new business venture within the organization. They pursue an entrepreneurial opportunity and turn their idea into action.
Intrapreneurship is finding an opportunity or taking a concept, showing that it has transformative potential, and bringing it to life—all without leaving your day job.
As Steve Jobs put it in a 1985 issue of Newsweek, intrapreneurs are “a group of people going, in essence, back to the garage, but in a large company.”
The most likely origin of the term “intrapreneur” is a white paper titled “Intra-Corporate Entrepreneurship,” by Gifford Pinchot III and Elizabeth S. Pinchot. It’s defined as “employee entrepreneurs who work within the corporation.”
Intrapreneurship isn’t just making an improvement, or saving the company money, or being part of a traditional R&D department, or helping launch products similar to what the company already sells. It’s not being assigned a task and then doing it. It’s not just contributing to the innovation process.
The way it’s typically practiced, corporate VC—or corporations investing directly in external startups—isn’t intrapreneurship. It’s merely an extension of existing corporate development initiatives, and acquiring innovation from the outside-in.
Incubators, or innovation hubs or labs, foster entrepreneurship by giving external startups access to mentors from both inside and outside the company. Incubators often also provide a fast track to run pilots with the company, with the possibility of the company then becoming a customer. This is entrepreneurship.
It isn’t intrapreneurship if a CEO, who’s responsible for the strategic vision of the company, starts a new business or pivots the main one. This is simply the CEO carrying out their responsibility for aligning company strategy with opportunity.
It isn’t intrapreneurship unless the concept is developed, tested, and deployed in a way that has a substantial impact on the overall business.
Intrapreneurs “combine vision and action” (Zhu, et al., 2014). They look for opportunities to solve a problem within an organizational process or to develop something new, whether that’s a product or service. Intrapreneurs experiment, test, and iterate their solution, then commercialize it (and this may be after many iterations and many failures), bringing a product or service to market.
Intrapreneurs benefit themselves by making their work more engaging, productive, and meaningful. They can receive promotions, bonuses, and even some portion of equity due to the success of their new venture, though that’s not usually their primary motivation. And they can create a competitive advantage in their own career by developing their leadership skills.
Intrapreneurs have a love of learning, and are dedicated to learning through formal and informal channels. The breadth and depth that intrapreneurs gain from continuous learning can provide greater insight into understanding the potential of organizational products and ideas. Learning by doing is the best way for learning to stick, and intrapreneurs are doers.
The Stanford WELL for Life Study defines the components of well-being in the US and globally. Exploration and Creativity is one of those dimensions, and intrapreneurship could be a great way to fulfill that.
While both small and large companies play key roles in the economy, Fortune 500 companies generated aggregate revenues of $13.7 trillion in 2019, which made up about two-thirds of US GDP. Many new products and services come out of the Fortune 500, and intrapreneurship provides those companies with a channel for innovation that generates value for consumers, creates new jobs, and drives overall economic growth.
Intrapreneurs benefit the companies they work for in many important ways. Their innovative solutions can help the company gain a competitive advantage in the market against more nimble competitors.
An intrapreneur’s work can lead to new products, services, technology, or processes that benefit customers. Intrapreneurship helps corporations and other large organizations stay relevant, compete in new markets, and increase performance with additional profitability and growth.
A Deloitte study on intrapreneurship discovered that almost 88% of the companies on the Fortune 500 list from 1955 were no longer on the list in 2015. They recommended that companies should harness innovation via employee intrapreneurship for growth and profitability.
When employees like their work and feel a sense of connection to it, they develop a strong commitment toward their organization. This commitment supports a variety of positive outcomes for the employee, including increased job satisfaction, and for the organization, including reduced turnover.
Intrapreneurs can also help the company in intangible ways. By socializing their efforts inside the organization, they can motivate and energize other employees and contribute to a culture of innovation.
Intrapreneurs can develop a new initiative within the company by being on the alert for problems, opportunities, and needs, then taking action to develop a solution. Though they may tackle this alone at first, they usually find colleagues who join in their mission to form a project team.
Intrapreneurs don’t follow standard procedures and must be willing to efficiently change course. They experiment, make a small prototype or pilot, test it to see if their hypothesis works, and keep testing and iterating from there. They often form a project team to work on the concept.
Intrapreneurs make their case to leadership to secure funding, resources, time, and possibly a separate space to continue their work. They find champions inside the company in leadership positions to help them navigate internal channels and access funding and resources.
Intrapreneurs like action and learning through doing. They’re doers and problem-solvers. They’re intrinsically motivated and resilient, with the perseverance and adaptability to navigate the barriers in a large corporation. Intrapreneurs take action, learn, and take action again.
Intrapreneurs tend to connect with people across departments and teams, industries and disciplines. They do this to share knowledge, make unusual connections between and among concepts, help others, and foster innovation. Intrapreneurs seek out strengths and build on the capabilities of others.
Intrapreneurs have a higher level of risk tolerance than other employees. This doesn’t mean that they’re going to Vegas every weekend or doing free solo mountain climbing—just that they’re comfortable with taking some calculated risks with their career and with creating a new venture in the organization. They learn to recognize when risk-taking is a good opportunity.
Other common traits are curiosity, openness to ideas, self-confidence, and future-focused thinking.
Some of the best-known examples of intrapreneurship are the Post-It Note and PlayStation. We’ll look at these plus a few more examples.
The Post-It Note at 3M: Spencer Silver, a 3M engineer, had invented a new adhesive and was trying to get traction with it. Arthur Fry, a product development researcher, hated how his bookmarks fell out of his books, and he remembered hearing Silver talk about his adhesive. In 1973, Fry started experimenting and testing the product, which was finally brought to market in 1980.
At the time, 3M had a “bootlegging” policy that let employees spend up to 15% of their time at work developing their ideas. This influenced Google’s 20% Project, which led to Gmail, Google News, and AdSense, but was later discontinued.
LMIT: Intrapreneur Linda Gooden worked on what became Lockheed Martin Information Technology for months, collecting research and getting a proposal together, before she pitched it to corporate leadership. She got them to invest in it and became president of the new IT division, which she expanded from a small team to a multi-billion dollar business.
Elixir Strings: W.L. Gore, a materials science company, offered a “dabble time” policy of 10% of a work day. In the mid-90s at Gore, they were working on push-pull cables for Disney animatronics. They came up with a coating for the cables, and Dave Meyers, an engineer, thought the coating could be used for guitar strings. He assembled a project team and after extensive market research, John Spencer realized their true value proposition was better sound with longer-lasting tone, not more comfortable strings. Gore launched them under the brand name Elixir Strings.
PlayStation: Ken Kutaragi, a junior employee at Sony, developed the PlayStation as a side project. When Kutagari started working on his sound chip, the SPC700, Sony had no interest in video games, so he continued his sound chip project in stealth mode as an add-on for Nintendo products.
When Sony leadership found out, they were initially planning to fire him, but the CEO, Norio Ohga, stepped in and offered support. The sound chip project turned into an attempted joint venture with Nintendo that went nowhere, so Sony developed a gaming console in-house. That console—the PlayStation—became a huge commercial success for Sony.
Flamin’ Hot Cheetos: Richard Montañez was a janitor at Frito-Lay’s Rancho Cucamonga plant when he heard a video message from the CEO telling employees to “act like an owner.” Frito-Lay wasn’t doing well at the time, and this message was supposed to boost morale. The video motivated Montañez, who knew that Frito-Lay didn’t have any spicy products. After a machine in the factory broke down and failed to dust a batch of Cheetos with the cheese flavoring, Montañez took home some of the undusted product. Inspired by the flavorings on an elote, a grilled corn cob he got from a street vendor, he tried his wife’s recipe for chile sauce to flavor the Cheetos.
After extensive experimentation and testing with Mexican spices, Montañez asked his friends and family to try the product. They loved it. He then managed to get an audience with the Frito-Lay CEO, who wanted Montañez to make a presentation. Montañez was freaked out about this, but he and his wife went to the library and copied some pages from a marketing strategy book.
Montañez designed his own mock packaging for 100 samples and pitched his billion-dollar idea to the CEO. Frito-Lay tested the product in Los Angeles, and soon it was being sold in stores across the US.
Montañez became the first Latino executive at Frito-Lay, leading his own division. Flamin’ Hot Cheetos rose to become Frito-Lay's best-selling product line. Plus, he wrote a book about it—and there’s a movie in the works, too. “If you have confidence, you can walk into any room,” Montañez said. “Your job is to prepare yourself to walk through the doors.”
Dafina Books: Karen Thomas developed Dafina Books as an imprint of Kensington Books. It launched in 2000, publishes about fifty books each year, and is the leading publisher of fiction and nonfiction written by and about people of color.
United Airlines’ Ted: Ted, the brand name for United’s all-economy service, was an intrapreneurial venture. Ted began service in 2004, had 56 aircraft with 23 destinations, but was discontinued in 2009.
Intrapreneurs have bureaucratic constraints
Since intrapreneurs are employees of a large organization, they face specific restrictions and limitations. They have to operate in and navigate the hierarchy and constraints of a bureaucracy. They pitch and sell their idea to corporate decision-makers, not outside investors, to gain funding. They also have access to a large corporation’s considerable resources. An intrapreneur typically prefers the stability and access to resources they enjoy as an employee.
Intrapreneurs sell to people within the corporation, not on the free market
Entrepreneurs operate in the free market with greater flexibility than intrapreneurs. They also have different options for funding their venture. One way is by bootstrapping the company with their savings until the product begins generating revenue. Another option is asking friends and family to invest. Or for faster growth, they may seek out funding from angel investors and venture capital firms. Entrepreneurs typically have access to more advisors than intrapreneurs, either through investors, a board of directors, mentors from an accelerator, or peer groups including other founders.
Intrapreneurs have more access to resources
Entrepreneurs often don’t have access to adequate resources, especially if they’re bootstrapped. They take risks by quitting their job to pursue their vision and incur substantial opportunity costs—they could be in a salaried job making market rate or higher instead of starting their own company.
Intrapreneurs are managed
Another key difference is that entrepreneurs aren’t managed, and want to be in control. Intrapreneurs don’t mind being managed, and must share control.
Intrapreneurs operate in an established culture
An entrepreneur defines their own company culture, whereas an intrapreneur must operate within an established culture that may not have an entrepreneurial orientation.
An intrapreneur has a lower equity stake
If an entrepreneur’s company is acquired (which could be a large or more modest sale) or goes public, they receive a return based on their likely substantial equity ownership. The intrapreneur may be given a small stake in their venture or realize promotions or bonuses arising from it, but the corporation they work for will reap the lion’s share of financial rewards.
Intrapreneurs operate within a corporation
Let’s take intrapreneurship in a university as an example. Generally, when an innovation developed by a university has commercial potential, it’s spun out into a separate business and the university receives royalties from the IP. This is an example of entrepreneurship, not intrapreneurship. But if someone has the idea for a new initiative that can operate within the university’s existing boundaries and they help launch it, that’s intrapreneurship.
Intrapreneurs are always on the lookout for entrepreneurial opportunities to pursue inside the corporation. They notice things and ask ‘why do things have to be this way,’ ‘what if there were another way,’ ‘how can I solve this problem,’ or ‘how can I create something to do this.’ Like an entrepreneur, they see a gap in the market or an unfulfilled need, and they take action by testing micro-pilots of their idea.
In addition, an intrapreneur tends to be skilled at connecting and building networks. Research shows that innovation comes from our weak links, not our close ones. Intrapreneurs continuously look for opportunities, resources, and chances to share knowledge with both strong and weak connections.
When intrapreneurs make connections across divisions, especially dissimilar ones, this helps them identify opportunities, have creative insights, find allies, and share knowledge. This kind of interdepartmental collaboration fosters divergent thinking and is important for innovation.
The rules and processes of a traditional corporation may actually be useful, as long as the barriers aren’t too rigid and leadership isn’t hostile to intrapreneurship. Creativity can flourish with limitations and boundaries. Tighter funding early in the process (during testing and exploration) can also be helpful for this reason.
And intrapreneurs can create opportunities for other intrapreneurs. You can do this while you’re working on your own concept, by sharing knowledge and experience. You can also do this as you’ve gotten farther along in your journey, and after you’ve successfully commercialized a product or service, by mentoring one-on-one or with groups, such as with an internal accelerator. For example, Ericsson ONE has a team that looks at ideas and provides mentoring. An intrapreneur could also start an internal accelerator similar to ONE.
Engineers have a unique perspective because they often see problems within the organization that need to be solved. The engineer has an important perspective on the technical needs of a given venture, and what is and isn't feasible.
One simple way for engineers to be more intrapreneurial is to meet with people outside your engineering team. Ask someone in sales or marketing what their biggest constraint is. Or see what the front-line employees say customers complain about. Look for people who obsess over making the customer experience better, who have a good sense of the pain points, and who like to brainstorm. Building a network outside of engineering is an easy change to make.
As you collect pain points, start to think about the size of the problem. How many people would like a solution to this problem? If we were able to solve the problem, what would the benefit be to the customer (who might be an internal stakeholder)?
In the beginning go for quantity of ideas. Later on you can prioritize which solutions make the most sense given the resources at hand.
Engineers can try participating in hackathons to compete over challenges and meet other intrapreneurial and inventive people within the organization. This is an investment of time with no expectation that a certain result has to be achieved.
Engineers can also adopt a mantra of “iteration wins” and make simple prototypes to test with a small number of users. The key is to keep your eye open for problems that need to be solved and identify ways to solve the problems.
Intrapreneurs have to work with internal stakeholders in order to get funding. This is a different process than seeking outside funding. Ideally, an intrapreneur could directly access the necessary seed funding in the organization without much corporate oversight and review. If this isn’t in place, you can look for some quick wins with rapid experimentation and testing to make your case.
Here are some techniques for securing internal funding:
1) Try to get a copy of the strategic plan that highlights what will be done in the short, medium, and long term. If you're working for a publicly traded company, look at the 10K and other publicly available filings. Study the analyst calls—look at the types of questions the street is asking your leadership. Connect the value proposition and the results you expect to have to the organization's overarching strategy.
2) After that, get to know people in strategy, operations, and finance. From the strategy and operations folks, you'll want to get a sense of annual planning, big bets the company is making, and how these decisions are being made.
For the finance folks, you'll want to understand the pro forma or ROI, or some other methodology that is used to determine if something is worth investing in. Try to get both finance and strategy / operations to share what the biggest intrapreneurial successes have been, as well as the biggest failures.
Look for the patterns. Anchor your messaging to what has been successful before. Make sure you understand the intermediate milestones you'll have to hit.
3) Identify intrapreneurial leaders within the company. There are usually pockets that are successfully launching new things. Be open-minded as to where these leaders reside. They might be housed in product and engineering, in operations, and even legal. Your goal is to identify intrapreneurs who have already been successful in the organization.
4) Find an executive sponsor who can give you air coverage and champion your initiative internally. In some cases you'll want to stay in "stealth" mode once you’ve received internal funding.
Intrapreneurs frequently use the lean startup method, which includes prototyping quickly, testing with users, and iterating. This speeds up development cycles and increases the likelihood that the product will meet a real user need.
The role of managers and leadership
Building a culture that truly supports, stewards, and encourages risk-taking intrapreneurial ventures doesn’t happen overnight. Support and commitment from upper management is a major factor in building an intrapreneurial culture, and fosters a greater number of entrepreneurial ventures. Managers are also crucial for building an intrapreneurial culture.
How managers can contribute to an intrapreneur-friendly culture
- Recognize intrapreneurs and encourage them
- Reward risk-taking in new ventures and give intrapreneurs the freedom to experiment
- Have a tolerance for failure and mistakes, and consider them learning opportunities to further refine a venture or apply to a new concept
- Manage intrapreneurs in a different way, with more flexibility and autonomy, letting them operate outside of traditional processes
- Stay flexible with leadership best practices and be willing to go a completely different way to guide and support intrapreneurs
- Hold idea-generation sessions, makeathons, designathons, and hackathons (with or without coding) for employees
- Help intrapreneurs form project teams
How executives can build an intrapreneur-friendly culture:
- Create top-down influence that supports and encourages intrapreneurial innovation, removes barriers and restrictions, and makes it possible for innovations to be created outside the corporation’s strategic plan
- Incentivize managers for supporting new ventures and include innovation as a key performance measure. If managers are afraid of jeopardizing their jobs or bonuses, have no latitude over their budget, and are rewarded solely for adding headcount, it makes it difficult for intrapreneurship to flourish.
- Create innovation centers or internal incubators that give intrapreneurs the freedom to develop new initiatives on work time
- Remove the taboo of failure and mistakes: Emphasize this in internal communications and let managers use incentives and rewards for risk-taking
- Prioritize organizational flexibility with new ventures, including faster corporate decision-making and more efficient paths to funding and resources
- Earmark seed funding along with long-term funding for intrapreneurial ventures, make the funds directly accessible, and empower managers to approve funds with minimal review
- Make it possible for people to be paid differently. Intrapreneurs are sometimes given some form of equity in their new ventures, or paid bonuses.
- Consider giving intrapreneurs a space where they can operate separately from the traditional corporate process
- Release resources outside of the normal rigid processes
- Show how the organization prioritizes innovation and and entrepreneurial mindset in the mission, vision, and values of the company, as well as job descriptions for hiring
- See to it that the process for supporting intrapreneurs is instituted in policies and organizational structures to ensure continued innovation and new ventures after you leave
In addition to devoting resources, establishing processes, and fostering employee commitment, organizations that focus on an intrapreneurial culture often integrate this messaging into every facet of work.
Recruitment and hiring is an important facet of building an intrapreneurial culture. Mentioning risk-taking, co-creation and collaboration, learning, and shared knowledge in job postings and during the interview process will signal that you support and encourage intrapreneurship.
For example, Ericsson’s careers page states that “we’re always on the lookout for people who have the passion and capability to develop, adapt, and drive new technologies, ideas, and concepts.”
Messaging like the above encourages an intrapreneurial culture by telling prospective intrapreneurs that they’re welcome at the organization.
Internal accelerators and shared innovation centers
Ericsson has an initiative called Ericsson ONE, which is an unusual example of an internal initiative that is explicitly for intrapreneurs and intrapreneurial development, as well as entrepreneurs. They describe it as “an accelerator helping internal entrepreneurs and innovators test and scale their ideas into Ericsson’s next growth bets.”
The ONE process goes like this: “Anyone from within Ericsson is welcome to submit an idea, at any time. These ideas are reviewed by the team and the most promising ones move forward to the next stage. The intrapreneur – and their extended team – then go through a step-by-step process which involves rapidly creating, testing and validating their prototypes, building a minimum viable product, and if everything goes to plan, developing it into a fully-fledged, independently operating business unit within Ericsson’s portfolio.”
Ericsson also talks about intrapreneurial funding and support, stating that there’s a direct path to funding: “We offer serious investment in both people and product or service – giving people a very real opportunity to create highly successful ventures.”
ONE supports intrapreneurs with coaching: “Our diverse team of experts provide hands-on coaching, support and advice every step of the way.” And intrapreneurs can easily access the resources they need: “Our intrapreneurs are provided with everything they need to successfully launch a new venture and scale it quickly.”
They talk about rapid prototyping, MVPs, and commercializing products: “The intrapreneur – and his or her extended team – then go through a step-by-step process which involves rapidly creating, testing and validating their prototypes, building a minimum viable product, and if everything goes well, developing it into a fully fledged, accelerator unit within Ericsson's portfolio. As they progress through the stages, intrapreneurs need to pitch to various stakeholders to secure further investment.”
Ericsson ONE is a great example of an innovative corporation that truly supports intrapreneurs. Any company who wants to ramp up their efforts to become an intrapreneurial culture should look at Ericsson ONE.
Gore Innovation Center
W.L. Gore is known for their culture of innovation and their non-hierarchical, “lattice” communications structure. They describe the company as a “uniquely inventive, technology-driven enterprise focused on discovery and product innovation.” The Gore Innovation Center, opened in 2017, offers a collaborative lab space where engineers and scientists work with external partners and hold hackathons and makeathons. This is included because Gore employees have access to the lab and don’t seem required to work with external partners. Gore’s innovation center supports intrapreneurs. If it were open only to external startups or other partners, it would not be a part of an intrapreneurial culture.
Balancing can be tricky, if you’re not in an organization that sets aside flex time, or if you’re stealthily experimenting and testing before showing your work to managers. You can leverage lunch, coffee, and happy hour time to build diverse networks and start informally sharing knowledge and experience with colleagues in different departments.
Pursue the intrapreneurial ideas that are high-impact to the organization and also energy-giving to you. Weave intrapreneurial activities into your lower energy times (perhaps mid-afternoon). You'll find switching to something not related to your core job will let you rest. Then when you come back to your core job after an intrapreneurial break, you'll be able to make more progress.
If you’re in a leadership role, leverage the power of a high-performing team. Perhaps you have a standing ideation time or big idea brainstorming in a standing meeting. Maybe you take everyone to an innovation hub at a local university to keep your team connected to the latest and greatest research.
The primary challenge is how to navigate a corporation that may have rigid and ossified rules and processes in place, with little support for innovation. Overcoming internal resistance and inertia can burn a lot of energy.
Test and validate your concept on your own, if necessary. Try to get a result you can use to make a case to leadership for further exploration and testing. Anchor your results to the organization’s overarching goals and objectives, to show that you understand how your intrapreneurial efforts align with the company.
Pitch your business plan or MVP or a combination of that to leadership to get some initial funding. Focus on a quick win, and go from there.
If there’s no path in place for accessing seed funding, find a champion who can help you access some funding and resources. Let your manager and leadership know how they can make it easier for intrapreneurs to start new ventures, and make sure to tell them how it could benefit the company. Intrapreneurs should expect to be persistent and determined in pursuing funding and resources for their venture.
Another challenge is the importance of pitching your initiative to stakeholders you want support from. Intrapreneurs can become more comfortable and confident with practice.
An intrapreneurial project team may need their own separate and off-limits space. This was the case for the Macintosh team at Apple, among others. Operating in a separate space could be a crucial survival mechanism for an intrepreneurial team to operate independently from the organization.
1) Have a mission. What are you trying to do? What is the vision your group has on how the world or company can be different? As a leader you'll want to make sure everyone on the team knows what this is and can repeat it back. Simpler is better.
2) Find the doers. There's a saying that there are talkers, critics, and doers in the world. And that there aren't many doers. For your intrapreneurial project team, you'll definitely want doers. Talkers will take too much time. Critics will shoot down ideas too early. At some point you will want to run your ideas by the critics to get feedback and to have your ideas pressure-tested. Just don't do this too early.
3) Get a diverse group of doers. This will increase the friction as you will have different perspectives coming together. It will also help you get the most innovative ideas. If you persist and move through the friction in a healthy way, you’ll get better answers.
4) Set some clear goals. It can be as simple as ‘within two months, determine how big the market is and if our company has the right capabilities to capture the market.’
Sometimes, project teams come together based on what someone already knows about a colleague. With Gore’s Elixir Strings, an engineer named Dave Myers thought of using a coating on guitar strings to improve their comfort and durability. Since he wasn’t a guitarist, he brought in an engineer colleague, Chuck Hebestreit, who Myers knew played guitar. They continued experimenting until another colleague, John Spencer—who had developed a line of dental floss called Glide—joined their team. It wasn’t long until they had a viable product and took their stings to market with the company.
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