What is intrapreneurship?

Employees who use their breakthrough ideas not to strike out on their own, but to develop them for the benefit of the company or organization they work for-that’s intrapreneurship. Good intrapreneurship programs foster a spirit of innovation within a company or organization. In doing so, they not only contribute to competitiveness in a rapidly changing world of work, but ultimately increase customer value. We show the benefits of intrapreneurship for companies and organizations and the different forms of “intrapreneurship”.

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Intrapreneurship – what exactly is it?

Let’s start with a definition: intrapreneurship is a neologism derived from the two English terms “intra corporate” (within a company) and “entrepreneurship” (entrepreneurship). In contrast to entrepreneurship, intrapreneurship refers to the creation of entrepreneurial activitieswithin an existing company or organization by employees. The term was coined by American entrepreneur Gifford Pinchot III and his wife Elizabeth.

Pinchot and Pinchot published a paper entitled “Intra-Corporate Entrepreneurship” in 1978, which introduced the concept of intrapreneurship to a wider audience for the first time. Seven years later, they followed up with the book Intrapreneuring: Why You Don’t Have to Leave the Corporation to Become an Entrepreneur.

Intrapreneur versus entrepreneur

The decisive difference between entrepreneurship and intrapreneurship is often said to be the founding: while entrepreneurs leave the company or organization to become founders of their own companies or start-ups, intrapreneurs usually remain in employment but act like entrepreneurs. This means that they develop their ideas with a great deal of initiative and personal commitment, while still having access to the resources and networks of the existing company.

While this definition of entrepreneurship vs. intrapreneurship is not incorrect, it does not fully capture the rich diversity of the two types of entrepreneurship. Instead of distinguishing between entrepreneurs and intrapreneurs based on whether or not they have successfully founded a company, we now see the commonalities between the two paths. Both entrepreneurs and intrapreneurs

find new ways to reach the top of an (often) saturated market.
test new marketing opportunities.
open up new markets through innovative ideas.
test new manufacturing possibilities.
take advantage of technical innovations.
create new economic structures and business strategies.

What are the advantages of intrapreneurship?

The advantages of intrapreneurship are obvious for employees. Although intrapreneurship also requires a high degree of initiative and risk-taking, so that new ideas can be implemented and successful business models developed, intrapreneurs “share” both the risk and the responsibility with the company or organization they work for. At the same time, they benefit from the financial and human resources of the established company or organization.

For companies and organizations, intrapreneurship programs are an important part of innovation management or a developing culture of innovation.

By giving their employees the opportunity to implement their visions within existing structures, they not only promote innovation throughout the company, but also strengthen intrinsic motivation. Overall, intrapreneurship that is successfully anchored in the corporate culture offers the following advantages:

Sales and profits: Successful intrapreneurship can open up new markets and lead to the establishment of subsidiaries.
Employee retention: Employees who are offered a platform for their creativity and entrepreneurial spirit often remain loyal to their company/organization for a very long time.
Trend management: Employees who think and act entrepreneurially automatically pursue and recognize trends that could be of interest to the company/organization.
Cost reduction: When innovative products or profitable new business strategies are developed internally, companies and organizations save costs for externally developed innovation impulses.
Effectiveness: When innovative offerings are developed internally, the value of (service) offerings for customers also increases. Increased effectiveness is an important motivator for promoting intrapreneurship, especially in the public sector and in a social profit context.

Well-known examples of intrapreneurship

A well-known example of intrapreneurship is the Macintosh team founded by Steve Jobs in the 1980s, which developed the first microcomputer with a graphical user interface. Today, we see a lively entrepreneurial spirit and highly successful intrapreneurship programs in the technology sector, just as we do in industry. Well-known examples of companies that specifically promote the innovative spirit of their employees include the Fraunhofer Society and Deutsche Bahn.

Fraunhofer Venture offers employees of the Fraunhofer Society support and financing programs to develop their own innovative technologies and products. Deutsche Bahn uses the DB Intrapreneurs intrapreneurship program to meet the challenges of digital transformation with strategic and structural innovations from within.

How do companies promote intrapreneurship?

A corporate or organizational culture in which entrepreneurial spirit prevails and intrapreneurship is lived does not emerge overnight. First and foremost, what is needed is a positive culture of error. In order for employees to contribute their ideas, develop their visions, and demonstrate their leadership qualities, they need support within the company or organization. Mistakes should be viewed as part of the process and progress. It is also important that every level of the hierarchy recognizes and supports the entrepreneurial actions of its employees.

In addition to the right mindset, resources also play an important role in successful intrapreneurship. In order to challenge and encourage employees, companies and organizations should provide the following resources:

Innovation requires a budget: On the path to an innovative product or a new business model, money is sometimes burned. Companies and organizations should be aware of this and factor this aspect into their budget planning.
Material resources: In product development in particular, innovation comes about through trial and error. For this to work, employees need access to the appropriate materials and/or techniques.
Know-how: In many cases, it is necessary to upskill employees in order to deepen their methodological knowledge and/or train their entrepreneurial skills. Upskilling is an essential component of good intrapreneurship programs.

The best way to promote intrapreneurship is through expert-led programs that not only impart knowledge and upskill participants, but also deliver strategically relevant results at the end of the collaboration.

Entrepreneurial spirit loves agility

Entrepreneurial thinking and action flourish above all where employees are allowed to develop and are empowered to take responsibility. This is why intrapreneurship loves agile structures. Agile transformation describes the path from rigid structures, top-down management, and strict departmental boundaries to flat hierarchies, self-reliant teams, and flexible processes. Agile companies and organizations rely on an open communication and feedback culture and promote the personal development and advancement of their employees, as this is in the interest of the company/organization.

Such structures also provide an ideal environment for a culture of innovation and entrepreneurial activity to flourish.

While companies and organizations focused on intrapreneurship encourage their employees to work independently and take risks, agile structures ensure short decision-making paths and flexible course corrections. Flat hierarchies ensure that new ideas are heard regardless of position and can be quickly discussed in small teams and further developed as needed.

Intrapreneurship & New Work

The flat hierarchies and rapid responsiveness in agile companies promote innovation and create an intrapreneur-friendly environment. The same applies to the New Work approach, which describes a new understanding of work and leadership in the face of digital change and a globalized world of work. Similar to the OKR (Objectives and Key Results goal management framework, the New Work concept breaks down professional boundaries and creates a culture of “together instead of alone.”

The most important aspect of this approach is its focus on employees. By replacing strict hierarchies and top-down management with intrinsic motivation, space is created for self-fulfillment within the company or organization and, ultimately, a new understanding of management and leadership. The increasing “blending” of work and private life (work-life blending) in the new work setting, the emergence of new forms of work, and the integration of new technologies into everyday working life offer ideal conditions for flourishing entrepreneurship within companies.

In our blog article What is New Work? Concept and challenges, you can read in detail what makes the New Work approach so attractive for companies and organizations.

Types of intrapreneurship

When we talk about “types” of intrapreneurship, we primarily mean: How do ideas arise, what are they focused on, and how is intrapreneurship organized (structurally)?

One concept that has been very successful in the industrial sector, for example, is startup collaboration. Here, the intrapreneurship team of an established company joins forces with a startup to develop ideas and implement innovations. While the startup brings new perspectives and the hands-on mentality necessary for innovation, the established company contributes the necessary (financial and/or human) resources.

Intrapreneurship can also take several forms within a company or organization. The two most common are the participatory-reactive and participatory-proactive forms. In participatory-reactive intrapreneurship, ideas developed by employees are submitted to top management for further decision-making. In the participatory-proactive form, ideas emerge only through close interaction between employees and management.

Sometimes, successful intrapreneurship programs also give rise to so-called corporate ventures. Here, the company/organization founds its own company or a start-up together with the intrapreneurship team. In this case, we also refer to a “spin-off.” The newly founded company is usually independent and fully responsible for all business activities.

What is public intrapreneurship?

We use the term public intrapreneurship to describe entrepreneurial thinking and behavior among employees in public institutions such as NGOs, government agencies, and non-profit organizations. However, when we talk about “entrepreneurs within companies,” we are usually referring to the private sector.

This is because the private sector, especially the industrial sector, has been promoting and profitably exploiting the innovative power of its own employees for a very long time.

n the public sector, on the other hand, internal entrepreneurship is still in its infancy. And that despite the fact that it offers so much potential!

While intrapreneurship in the private sector produces innovative products or new business models, entrepreneurial spirit in the public sector can offer decisive added value in societal and social contexts. Public intrapreneurs are often at the forefront of creating public services and programs and make a decisive contribution to innovation in the social sector.

Why public intrapreneurship requires expertise

Since public institutions function and are structured differently than private companies, intrapreneurship in the public sector is a particular challenge:

Budget: In public institutions, the question of budget availability often arises.
Long processes: In the public sector, decisions often pass through several hands. It can therefore take longer for projects to be finalized.
Public opinion: Public institutions are more accountable to social and/or political expectations than private companies. For this reason, public intrapreneurship programs require a great deal of tact and sensitivity.

Public Intrapreneurship with Wonderwerk

Wonderwerk Consulting has been successfully supporting change processes and intrapreneurship programs in the public sector for many years. As specialists in the process behind change, we not only have theoretical knowledge of how public institutions can promote internal entrepreneurship within their organizations, but we also awaken entrepreneurial spirit with the help of a structured process. Only when entrepreneurial thinking and action and the development of new ideas are structurally embedded in the everyday life of an organization can intrapreneurship become a game changer in the public sector.

Upskilling and methodological knowledge

Intrapreneurship not only increases the innovation potential in your organization, but also ensures that your most valuable employees remain motivated. That is why we establish structures in our public intrapreneurship programs that enable your employees to unleash their full potential and drive innovation from within. We provide your team with the necessary knowledge (know-how), hone their skills (upskilling), and give them the tools (such as agile methods) they need in the innovation process.

Why Wonderwerk?

Because we select only strategically relevant topics for our programs and ensure that the results are compatible with your organization’s business objectives. We accompany you from the initial analysis through strategic planning to structural implementation and remain at your side until entrepreneurial thinking and action have become the new norm in your organization.