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Innovation Through Intrapreneuring
by: Gifford Pinchot - 1987
Published in Research Management
March-April 1987, Volume XXX No.2
In-house entrepreneurs, -- those "dreamers who
-- can increase the speed and cost-effectiveness of technology transfer from R&D
to the marketplace.
The economy of the United States is on an innovation treadmill.
Our competitors enjoy cheaper labor, cheaper capital. and more government support
than we. To maintain our competitive position, we need superior technology, more
proprietary products and services, and better processes. As our competitors become
more scientific, and managerially sophisticated, it takes them less and less time
to understand and copy- our innovations. We have to increase our speed and cost-effectiveness
of innovation in our country,- to match our competitors' increasing sophistication
in copying and capitalizing on our technology,.
Most large companies operate stable businesses well. However,
they are not as adept at starting new ones. Most are good at developing a new
business from the idea stage on through research and prototype development. But
they falter at the start-up stage-the stage of commercialization. Inefficient
commercialization by big business has created opportunity for venture capitalists.
The venture capital industry is producing 35 percent return on investment by taking
frustrated R&D people and their rejected ideas out of large companies, and
financing the commercialization of those ideas. That the venture capital community
can make 35 percent ROI on rejected ideas and people should be a constant rebuke
to everyone in the R&D community. Venture Capitalists have found a different
way of managing innovation that gets returns which few of us can equal inside
large organizations.
A Missing Factor In Corporate Innovation
The primary secret of the venture Capitalists' success
is revealed in the way they select ventures for investment. They say: " I
would rather have a class A entrepreneur with a Class B idea than a class A idea
with a Class B entrepreneur." They put their faith in choosing the right
people and then sticking with them, while many corporate managers would feel uncomfortable
with a strategy dependent on trusting the talent, experience, and commitment of
those implementing it. I believe the primary cause for the lower returns of corporate
managers of innovation is their failure to understand the importance of backing
the right people-this is their failure to identify, support, and exploit the "intrapreneurs"
who drive innovation to successful conclusions.
Imagine the organization as a Cell, with R&D producing
new genes. In the cell, there are also the productive capacity of the ribosomes,
which are like factories ready to use the information in those new genes to produce
new products. What's missing in most large organizations is linkage from idea
to operation-by analogy the RNA. In most large organizations there are exciting
new genes-new technologies but no broadly effective system of technology transfer.
What is absent are large numbers of intrapreneurs devoted to turning new technologies
into profitable new businesses, cost reductions, new features, and competitive
advantages. Because we have tended to have scientific standards of excellence
in R&D, we have tended to honor the inventor more than the implementor, more
than the intrapreneur. The result is that we not only reward inventing more than
intrapreneuring, but our management systems are far more supportive of invention
than of commercialization.
The future role of R&D, the size of its budgets and
its degree of autonomy all depend on efficient technology transfer. Older "hand-off
systems" of development which ignore the role of the intrapreneur don't work,
or at best are so slow and expensive they make R&D appear ineffective. Cost-effective
innovation happens when someone becomes the passionate champion of a new idea
and acts with great courage to push it through the system despite the "Not
Invented Here" syndrome, and a11 the other forms of resistance which large
organizations supply it is therefore important for R&D managers to understand
and recognize intrapreneurs who can, when properly managed, greatly increase the
speed and cost effectiveness of technology transfer.
Dreamers Who Do
Intrapreneurs are the "dreamers who do." In
most organizations people are thought to be either dreamers or doers. Both talents
are not generally required in one job. But the trouble with telling the doers
not to bother about their dreams is that they dream anyway. When they are blocked
from implementing dreams of how to help your company they're dreaming dreams of
revenge. A mind is meant to imagine and then act. It is a terrible thing to split
apart the dreamer and the doer.
What we need, then, is to restore the place for vision
in everyone's job. One of my favorite stories is the story, of Nikola Tesla who
invented the three-phase electric motor and a host of other things. It is said
that he would build a model in his mind of a machine, such as a new generator,
and then push it into the background of his consciousness, set it running and
leave it going for weeks while he went about his other business. At the end of
that time he'd pull it back into the foreground of his mind tear it down and check
the bearings for wear. With such detailed imagination, what need is there for
computer-aided design and finite element analysis?
While few of us can match Tesla's talent, imagination
is the most concrete mental skill that people have. It Is more concrete than all
the tools we have for analyzing businesses and a11 the formulas we have for analyzing
stresses. Imagination is simply the ability to see something that doesn't yet
exist as it might be. Unless we have Tesla's clarity of imagination, what we see
may not be as precise as the results we can reach from doing calculations, but
our vision is more concrete and more whole than any formula describing some aspect
of a new design. And without this concrete skill, we do not have innovation.
An intrapreneur's imagination is very different from an
inventor's. Inventors look five or ten years ahead and say, "wouldn't it
be wonderful if such and such." They, imagine how a customer would respond
to their new product, what the technology would be, how the technology could produce
desired features, and all those sorts of things. Good inventors have the customer
in mind, but their vision is usually, incomplete unless they are also intrapreneurs.
They don't imagine in detail how to get from the here and now to that desired
future. An intrapreneur, on the other hand, having seen the Promised Land moves
back to the present and takes on the rather mundane and practical task of turning
the prototype into a marketplace success. This too requires enormous imagination.
Intrapreneurs ask questions such as. "Who would I
need to help me with this? How much would it cost? What things have to happen
first?" and so forth. They may ask "Could we release this technology-
onto the marketplace in product form aimed at such-and-such a customer need? No.
If we did that it would immediately- bite into a very important market of one
of our competitors who has the ability to respond and before we produced our second
generation products there would be a tremendous competitive response. Let's back
up a little bit. 'What if we put it out in this way instead? Well it wouldn't
do quite as well on the first round but I begin to see it would give us a little
more time to develop unbeatable second generation products."
Intrapreneurs have to constant juggle potential implementation
plans. They do this in their imaginations initially. Of course. intrapreneurs
also juggle implementation plans on paper as business plans and drawings, but
much of the initial work is done in the shower, or when driving the car, or any
situation in which one neither feels guilty about not doing something useful nor
can one get to pencil and paper. At such times, we are forced to use our imaginations,
and thus often do our most creative work.
Distinguish Intrapreneurs From Promoters
One of the keys to managing innovation cost-effectively
is to choose the right people to trust. Too often when managers look for intrapreneurs
they choose promoters instead. Promoters are very good at convincing people to
back their ideas, but they lack the ability to follow through. Thus, one of the
keys to managing innovation is to be able to distinguish between intrapreneurs
and promoters.
One of the best ways to separate the intrapreneurs from
the promoters is to see how they handle, and even how they think about, barriers
to their ideas. When analyzing a potential intrapreneur, think of some of the
ways their project might go wrong. Ask them how they might handle such a problem.
Real intrapreneurs will have explored these problems in their imagination. They
will have considered them while driving to work or taking a shower. The real intrapreneur
has thought of three, five, or even ten possible solutions. They may pause for
a moment trying to figure out which of those answers would appeal most to you
because intrapreneurs do have a certain ability to sell, but they are not hearing
the question for the first time. It will be very hard for you to think of a problem
which they haven't considered.
Promoters, on the other hand, respond by saving the problem
you bring up will never occur. They remind you again of how wonderful things will
be ten years from now, of the hundreds of millions of dollars their product will
be making. They will not even talk about the problem because they have no interest
in the barriers along the way, to implementation. They are counting on you to
solve all problems by giving them enough funding. They just want to tell you why
their idea is so much better than anyone else's. They are, in fact so focused
on getting approvals and funding, that they haven't planned how to get the job
done. If you give them money in the name of intrapreneurship, you will not only,
give intrapreneurship a bad name, but you will waste everything you invested.
The most important thing a manager can do when managing innovation is to separate
out the promoters, and invest only in intrapreneurs.
Many people doubt that they want entrepreneurial people
in their organizations. Entrepreneurs, they believe, are driven by greed. They
are high risk-takers, they shoot from the hip, and furthermore, they are dishonest.
Fortunately every one of these myths is false. In fact, entrepreneurs seem to
be driven by a vision which they believe is so important that they are willing
to dedicate their lives to it even when it starts to have trouble. Every new idea
runs into terrible obstacles. People who are driven only, by a desire for money,
or promotion, or status simply do not have the persistence to move a new idea
forward. It is the person with the commitment to carry, through who will move
an idea into a practical reality.
Intrapreneurs and entrepreneurs are not high risk-takers,
as many studies have shown. They like a 50-50 set of odds-not too easy not too
hard. Having chosen a challenging objective, they do everything they can to reduce
the risk.
Intrapreneurs seem to be equal in right brain and left
brain, equally- intuitive and analytic. They make decisions based on intuition
when data or time don't permit analytical solutions. When analysis will work,
they use it.
Intrapreneurs may operate a little differently than other
people. They often have personalities which make them difficult to live with,
but their difficulties stem less from dishonesty than excessive directness. They
often get themselves in trouble by saying exactly what they think because they
don't seem to be good at compromising-strong politics are inherent in the cultures
of very large organizations.
A New Monitor for the FAA
Vision and imagination make up half of "the dreamers
that do." Action is the other half.
Intrapreneurs are often in trouble because they act when
they are supposed to wait. They tend to act beyond the territory of their own
job description and function. This boundary crossing is important. Charles House
at Hewlett-Packard is a perfect example. House developed a new monitor for the
Federal Aviation Administration that turned out to not quite meet the specs. (Failure
is a typical way for stories of innovation to begin.) He responded to the disappointment
by observing that despite not meeting the spot size criteria for this particular
application, the fact that he had a monitor which was half as heavy, used half
the power, and cost half as much meant he should find out what else it could be
used for. He took the idea to the marketing people who asked the division's traditional
customers if they, would like a monitor that was cheaper, but which had a slightly
blurry display.
Nobody, seemed to want it. Being an intrapreneur, as opposed
to just a researcher, House wasn't satisfied with talk. He took out the front
seat of his Volkswagen Bug put the monitor in its place, and visited 40 customers
in three weeks. At each stop he moved the monitor into the prospective customer's
shop, hooked it up to their equipment, and asked whether this thing would do anything
that's useful. By the end of the trip he had found several new, markets. House
succeeded because he took the actions which were necessary for his prototype to
go from technology, to business reality.
There are two important points in this story. One is that
intrapreneurs perform their own market research. If your scientists and engineers
are not allowed to do their own market research, then you have a major barrier
to innovation.
The second point is that generally a new idea is so ugly
only its mother could love it. Consequently, it is unrealistic to think that people
in Marketing will understand a research idea in its early stages well enough to
do valid marketing research. In general. they ask the wrong questions. They are
trying to find out if it is a good idea, which in the early stages is the wrong
question. The right question is: "I know this is a good idea; how am I going
to present it in a way that some class of customers will agree? 'What are the
ways in which this is a good idea? Who really needs it? How do I have to say this
so that they will understand?"
The early stage of market research is searching for the
market, not testing whether or not it is there. It is only after we have found
a group of customers and learned how to talk to them, redesigned the product to
meet their needs, and figured out how to position the product, that we can do
the traditional form of market research which asks, "Will they buy it-is
this a good idea?"
The idea of technically driven research is drifting into
disrepute. We are told that we must first carefully identify, market needs and
then invent what customers already know they want. This is rarely the way fundamental
innovation works because we are not smart enough to invent to order. We are lucky-
to invent anything with fundamentally new and protectable properties, and when
we do so, we must then hunt for the most applicable markets.
To be sure, researchers do pursue what they perceive to
be marketplace needs, but the final applications often turn out to be in some
entirely different market. Scotch Tape was invented to better insulate refrigerated
railroad cars. Radio was invented for point-to-point communication-missing the
broadcast market entirely. Riston circuit board systems begin with a failure to
produce a new photopolymer-based photographic film.
It is important for researchers to know about the marketplace,
but important also to realize that for all of the thousands of unfilled or poorly
filled marketplace needs each of us wishes to invent a proprietary solution for,
we have the ability to invent a few. We know an anti-gravity, device would be
useful and probably well-received by customers. We don't work on it because we
don't know how to begin.
We know that television sets with better reception are
desirable. Most of us don't work on them because we believe others have a competitive
advantage in making them inexpensively.
We left Hewlett-Packard's Charles House doing his own
market research and thus doing somebody else's job, as intrapreneurs often do.
He came home enthusiastic and his boss' boss Dar Howard, believed in him and told
him to go ahead for another year. Unfortunately, a few months later the chairman
visited the laboratory in Colorado. David Packard listened to the marketing people
say that the idea was no good, even after House's research. He also heard a negative
vote from the corporate chief of technology, who was backing a different technology.
At that time, Tektronix, was giving Hewlett-Packard a
hard time in the division's core business, and Packard said that when he came
back to this laboratory next year, he did not want to see this product in the
lab. Dar Howard went back to House and told him he just didn't know what excuse
he could give for going on now. With that remark he left the door open just wide
enough for Chuck to get his foot in. He showed that he felt for Chuck, but ...
House said, "What exactly did Packard say?"
"When I come back to this laboratory next year, I don't want to see this
product in the lab" "Good," Said Chuck, "we'll have it out
of the lab and into manufacturing." And so it was. The monitor was used in
the first manned moon landing and turned out to be a great success.
A few years later, Packard awarded House the Hewlett-Packard
Award for Meritorious Defiance. "For contempt and defiance above and beyond
the call of engineering duty," the certificate read. He made it clear that
at Hewlett-Packard, courage counts more than obedience. Innovation requires this
attitude.
Succeeding at Intrapreneurship
Every new idea will have more than its share of detractors.
There is no doubt that being an intrapreneur is difficult, even in the most tolerant
of companies. So how can people succeed at it?
1. Do anything needed to move your idea forward. If you're
suppose to be in research but the problem is in a manufacturing process, sneak
into the pilot plant and build a new process. If it is a marketing problem, do
your own marketing research. If it means sweeping the floor, sweep the floor.
Do whatever has to be done to move the idea forward. Needless to say, this isn't
always appreciated and so you have to remember that:
2. It is easier to ask for forgiveness than for permission
-If you go around asking, you are going to get answers you don't want, so just
do the things that need to be done and ask later. Managers have to encourage their
people to do this. It may be necessary to remove some layers of management that
complicate and slow down the approval process.
3. Come to work each day willing to be fired. - I began
to understand this more from talking to an old sergeant who had seen a lot of
battle duty. He said, "You know, there is a simple secret to surviving in
battle; you have to go into battle each day knowing you're already dead. If you
are already dead, then you can think clearly and you have a good chance of surviving
the battle."
Intrapreneurs, like soldiers, have to have the courage
to do what's right instead of doing what they know will please the myriad of people
in the hierarchy who are trying to stop them. If they are too cautious, they are
lost. If they are fearful, the smell of fear is a chemical signal to the corporate
immune system, which will move in quickly to smother the "different"
idea.
I find that necessary courage comes from a sure knowledge
that intrapreneurs have-that if their employer were ever foolish enough to fire
them, they could rapidly get a better job. There is no way to have innovation
without courage, and no real courage without self-esteem.
4. Work underground as long as you can. -- Every organization
has a corporate immune system. As soon as a new idea comes up the white blood
cells come in to smother it. I'm not blaming the organization for this. If it
did not have an immune system it would die. But we have to find ways to hide the
right new ideas in order to keep them alive. It is part of every manager's job
to recognize which new ideas should be hidden and which new ideas should be exposed
to the corporate immune system and allowed to die a natural death. Too often it
is the best ideas that are prematurely exposed.
The Intrapreneurial Shortage
I've made an interesting discovery since I wrote Intrapreneuring.
I used to think potential intrapreneurs were commonplace, that they were hard
to find because they were in hiding. But I have found they are more rare in most
large organizations than the 10 percent who are entrepreneurial in the population
at large. There is a scarcity of people who are, brave enough to take on the intrapreneurial
role: therefore, we have to lower the barriers and increase the rewards.
If there are not enough intrapreneurs in your company
you can hire more. There are two ways to go about it: raiding successful intrapreneurs
from other companies, and hiring more intrapreneurial people in entry positions.
Were I running an R&D organization, I would even take
ads saying, "Wanted: Intrapreneurs." One could capitalize on widespread
intrapreneurial frustration and selectively hire a fair number of courageous people
who would move innovation forward. Second, I would focus on hiring potential intrapreneurs
out of school. Here are two hints: One is that candidates' transcripts should
contain both A's and D's. When intrapreneurial people are interested they get
As. When they are not interested, they don't pretend. They are self-driven.
The second hint is that any history of self-employment
predicts intrapreneurial success. The strongest demographic predictor of intrapreneurial
success is having one or more self-employed parents. It is more important than
birth order or any of the other commonly cited predictors. I guess it is a matter
of having an entrepreneurial role model.
It is a particularly good idea to hire farm kids. They
seem to make good intrapreneurs. I guess farm kids grow up with a kind of a can-do
attitude and it never occurs to them that there is anything they aren't supposed
to do. If the hay is on the ground, the bailer is broken and it is going to rain
in six hours, you don't worry that you don't have a degree in bailer mechanics.
Somehow farmers learn to get the job done.
Training Intrapreneurs
Training your people in acquiring intrapreneuring skills
is as important as knowing whom to hire. Though most people imagine that intrapreneurs
are born and not made, we have had good results training intrapreneurs. In our
Intrapreneur Schools we ask for volunteers. This way we are training a select
group of people who are courageous enough to volunteer for an intrapreneurial
role. Training succeeds partly because it gives people permission to use a part
of themselves that their supervisors have been trying to beat out of them for
quite some time. They look around the room and say "My goodness, there are
other people like me in this world and it seems that the corporation is really
serious now about wanting this aspect of me employed." They get a tremendous
rejuvenation and rebirth of vision and drive.
In addition, most intrapreneurs are missing skills for
which training can help. They have some functional abilities which are often technical,
and they've been convinced that they really cannot understand some things like
accounting or marketing. They believe that those blind spots keep them from being
the general manager of a new idea. They do not have to become excellent at all
functions; they just have to understand enough to work easily with others in those
fields. In fact, if the idea is good, success does not require great sophistication
in many disciplines, just a journeyman like job that doesn't overlook the obvious.
Training should be structured to build teams and so the whole team should work
together while training.
Managing Intrapreneurs
Managers must choose intrapreneurs who are persistent,
impatient, who laugh, and who face the barriers. Then they have to be willing
to trust that the intrapreneurs know how to do their jobs and must give them what
they are asking for resources and people to help carry forward their ideas. Since
resources arc not infinite, they may have to take these things away from other
people who are not intrapreneurs.
I know we are living in an age of head-count restrictions.
Too often this means that everything stays the same. Whoever has three people
gets three people next year. Anything new and growing will have too few people
resources, and anything old and over the hill is going to have too many. We have
to be courageous in sweeping out the old and giving the right people the resources
they need to get the job done. The most effective use of a manager's time is in
choosing whom to trust.
One very effective approach is to create heroes so intrapreneurs
have role models within the company. Select a few of the most courageous intrapreneurs
and publish their stories for everyone in the company to read. These stories should
be written honestly, so that all the difficulties and problems faced by the intrapreneurs
are presented so that people can see how barriers were overcome.
Keep R&D Close To The Action
It is important to bring your researchers close to model
shops and pilot plants that allow dirty finger research. R&D people need to
be able to test their ideas themselves-if they can't, they will fall back on more
intellectual forms of research. Obviously, we'll hear more about discretionary.
Time, the so-called 15 percent rules that many companies have. Other useful reward
tools are seed money programs, the creation of cross-functional teams, and other
ways to reduce the bureaucracy.
In conclusion, I issue a challenge to get your people
to display courage, to display integrity and honesty to have a sense of proprietorship's
if the business belonged to them. Help them to make the kind of decisions that
would have to be made if that were true rather than the kinds they have to make
in order to negotiate the turfs of a hostile bureaucracy. Encourage them to go
into action and not wait for permission. Talking about these ideas is not enough.
Between the words of top management and the intrapreneurs who can carry them out
there are layers of management which punish independent thought, courage, impatience,
and blunt honesty This is not something that you can devote a few hours to and
fix. It is probably the most important aspect of your job, more important than
getting the strategy right, because enough attention is being paid to strategy
already.
You cannot have cost-effective innovation unless you hire,
train and encourage intrapreneurs. The future legitimacy of R&D, the success
of America's companies and of her economy depends on you, the R&D community,
to do it right.
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