Intrapreneurship and the Corporate Startup

Introduction

Intrapreneurship within an organization allows employees to behave in the same manner as entrepreneurs. The intrapreneurs possess leadership skills; they are proactive, self-motivated, action-oriented, creative, and innovative. As a result, they can integrate what they have learned in their work environment to establish their businesses, thus playing a pivotal role in the innovation ecosystem. It is a term used to describe community members, stakeholders, and other players who facilitate innovation. Each of them enhances value within the ecosystem by transforming new ideas into reality by promoting accessibility and monetary investment. To understand how an innovation ecosystem operates, one must analyze its various features such as the fundamentals around it, integrating methodologies that include introducing design thinking, lean startup, and agile approaches. Also, multiple steps from strategic challenge to implementation improve the innovation results, the governance model, and the organization’s assessment. These assist entrepreneurs in laying a proper foundation for their businesses and helping them survive by adopting innovative ideas.

Background Review

A close analysis of the business environment reveals the rise and fall of several giant enterprises such as Kodak. Despite the company imagining the future and being aware of the new technology on filmless photography, it failed to capitalize on the creativity and inventiveness. However, some have managed to stay afloat and continue thriving despite many challenges they experience, such as Microsoft. One of the main distinguishing factors is their ability to remain relevant through innovation.¹ To expedite the innovative process, companies must have clear guidelines and an understanding of macro-, meso-, and micro-level trends and challenges because the absence of a definitive and straightforward plan leads to irregular processes that are costly and disorderly.² The leaders should focus on the discovery process to determine the appropriate ventures and execute the strategies to ensure they achieve their targets with significant growth and development.

Fundamentals of an Innovation Ecosystem

The system’s main principles are an innovation thesis, portfolio, dynamic budgeting, innovation framework, practice, and accounting. The innovation thesis is an established action plan that dictates an organization’s future goals and indicates how the introduction of new ideas will affect it.³ Organizations may develop step-by-step approaches to innovation, including the details of technology development, commercialization, and diffusion.⁴ It specifies the type of projects that will obtain frequent funding to ensure no confusion arises during the funding. It also changes with the decline of the market, portraying the importance of adaptation to the innovative process.

The innovation portfolio is created to help a company achieve its objectives by highlighting the types of services and products offered and how they will be inculcated in the implementation plan. One should note that the portfolio should have a mixture of three main types of goods, products, and services falling under the core, adjacent and transformational products categories.⁵ Core products fall under the base principles on which the business is founded. They include the items that catapulted the company into growth and used as a model to improve their nature. Adjacent products create a bridge between the core and the transformational products to bring innovation. They are available in the market with great acceptance by consumers but require improvement. The update depends on a fresh perspective based on the latest demands in the market.⁶ Transformational products differ from the core since they can be altered to create entirely new items. Unique ideas are tabled with a high likelihood of disrupting the market due to the exploration of unchartered areas.

The innovation framework introduces the concepts highlighted in the thesis and the portfolio’s alterations to create a suitable ecosystem. Innovative frameworks allow controlling, evaluating, and monitoring the process of innovation in the various industries.⁷ The business undertakes a rigorous brainstorming exercise where ideas that can propel it to new heights are submitted through creation. The leaders invite intrapreneurs to the session due to their invaluable skills and talents, which contribute to developing the ideas. The plausible ideas are then tested to determine their suitability in the real world through a hypothesis that determines whether it can be transformed into an innovative process, service, or product in the company.⁸ Scaling identifies the appropriate size and funding of the ideas that have been vetted appropriately and successfully.⁹ Renewal entails analyzing the existing services and products to establish how they can be improved or updated in the long-run.

Innovation accounting considers the accountability processes that will be employed to monitor the overall innovative procedure. Aside from reporting and governance, it involves the implementation of the global perspective, which involves considering the international dimension of innovation.¹⁰ Reporting traces the progress of the ideas introduced into the company through the framework. Governance demonstrates the likelihood of the success of the plan and the need for extra financial investment.

The innovation practice establishes a business model for every plan before reaching the scaling process. The proposed ideas go through the creation stage where they are formulated, testing to examine a theory to its full capacity, learning where information from the former stage is scrutinized, and scaling, which determines the profitability and the growth aspect of the new plan.¹¹ It ensures that each idea has a specific and intended procedure to facilitate its implementation.

Integration of Methodologies

Introduction to Design Thinking

Design thinking is based on intuition, logic, systemic reasoning, and imagination to investigate alternative solutions and establish necessary results suitable for the consumer. Therefore, it facilitates human-centered innovation by understanding the prevalent customer needs through collective intelligence to lower innovativeness risk and uncertainty. The approach depends on customer insights and feedback data, which ceases to be mere market research. Various prototypes are developed and tested to ensure that the end product solves an existing need or challenge. Before the final commodity is taken to the market, the process entails the inspiration step, where innovators understand, observe, and conceptualize a viable idea. The ideation stage where they ideate, develop a prototype, test it, and implement the implementation process through which stories on the new products are highlighted, the pilot phase of the end product, and creating the relevant business model.

Lean Startup

This methodology assists organizations in developing appropriate products that will meet the consumer’s desires. It focuses on efficiency through customer segmentation and timely feedback reception, which elevates the company to a higher level.¹² It is contrary to the usual creation and implementation of business plans since it has a model based on a rapidly tested hypothesis. Organizations may make minor iterations to meet target customers’ changing needs, but pivoting or the practice of changing the direction is also common.¹³ The method is used by startups and established companies due to the tremendous benefits relating to problem-solving and guaranteed survival in the market.

The approach promotes a hiring process that recruits proactive individuals and can learn and adapt to various conditions instead of the traditional process that favors qualified and experienced employees. It also focuses on customer churn rate, acquisition cost, how much buzz the product can create, and the lifetime customer value from the financial reports.¹⁴ The method shifts focus from cash-flow statements, balance sheets, and income statements used to determine a company’s profitability after financial analysis.

Agile Methodology

It has several features, such as adaptive planning, cross-collaboration, and self-organization, which creates a process that can respond to changes quickly. It is based on the availability of sufficient structures to ensure a balance without bringing unnecessary challenges or overwhelming the process. The methodology satisfies customers through constant and time-bound deliverables, identifying and capitalizing on frequent market changes, promoting teamwork to avoid the production of identical results and meeting deadlines.¹⁵ Moreover, it focuses on proper communication channels with individual groups of employees on a one-on-one basis and using electronic media to avoid confusion, encourage sustainable development, and continuous efforts to ensure its effectiveness and adjust appropriately to meet its goals.

Some of the barriers experienced by startups while enforcing the agile methodology include the over-dependence on solving all issues. Since most of them have a limited number of employees, they think it can end all the problems. It should only be used for the right reasons, and all the deep-rooted challenges addressed accordingly. The second hindrance is resistance to change because most people are used to a particular routine. Implementing it requires the team members to be flexible and open to new ideas. The final issue is the failure to evaluate the measures of success. The absence of streamlined work due to a low labor force makes it difficult for the organization to account for delayed deliverables and a decrease in consumer complaints.¹⁶ For the success of the agile method, startups have to ensure that it is well executed.

From Strategic Challenge to Implementation; Steps to Improve your Innovation Results

Moving from strategic challenges and implementing the necessary strategies to improve innovation results requires an organization to follow a series of steps. Among them are prioritizing strategic goals, defining the challenge by identifying the objective, the desired outcome, measuring it, knowing the customer and their needs, using iteration sprints, analyzing the impact of the objectives, and determining whether it has been achieved and its extent. ¹⁷ Each step ensures that the company is closer to achieving its goals by successfully improving the innovation results.

Governance Model; Key Elements to Innovate at Speed

To innovate at speed, companies have to ask themselves three fundamental questions: why, what, and how. They need to be innovative based on the volatility, uncertainty, complexity, and ambiguity of the future. It ensures they survive the dynamic market turbulence that has seen companies shut down over the years since they failed to adopt a customer-centric approach instead of a business-centered model. The rate of change is growing tremendously. Thus, organizations need to incorporate technology with their chosen consumer-centered approach, such as online shopping services and physical stores.

There is a distinct difference between creativity, invention, and innovation. Any successful business should be aware of the distinguishing elements hence facilitating their growth and survival. Creativity entails the conversion of imaginative and new plans into reality. Invention is the essential act of creating new concepts, while innovation is the transformation of the ideas for widespread utilization or commercial success.¹⁸ Invention involves extensive study and development, whereas innovation stems from experimentation and scaling new proposals.¹⁹ Therefore, understanding the innovative process helps businesses establish desirable, feasible, and viable products to satisfy customer needs and expand their activities.

Innovation is mostly dependent on an experimentation culture that promotes the sustainability of the end product. It uses a scientific approach to businesses through ideation, validation, and scaling up.²⁰ Through ideation, trials on problems and their solutions are conducted. Validation affirms the integrity of the results obtained, and scaling up involves experiments on probable revenue streams from the final product after commercialization. Due to the apparent need for innovation, companies must ensure they identify quick and cheap methods to foster regular trials. Organizations such as Google, Facebook, Amazon, and Netflix have established viable processes that ensure they unveil new products, thus their continued growth and development.

Assessing the Organization

Investors use five main areas to assess a startup organization and various financial metrics that indicate the direction in which the company is moving. First, the founding members should be talented, experienced, passionate, and highly adaptable to change. The next aspect is the return on investment, which should not be overestimated. The organization should have a more significant competitive advantage due to its ability to meet customer needs. There are multidimensional assessment schemes that determine the attractiveness of start-ups based on technological maturity, competitiveness, innovators’ scientific reputation, scalability, benefits for customers, and other indicators.²¹ There is no consensus on the most informative indicator of startup growth, but commonly used variables include sales data, employment statistics, and market share.²² All these elements demonstrate the organization’s viability and facilitate the incorporation of new strategies to boost performance.

Discussion

Several aspects determine the success of a startup organization such as adopting design thinking, agile and lean methodologies, incorporating strategies to improve the innovation results, and understanding governance models that boost innovative speed. Combining these particular features in a startup ensures they continually grow and quickly adapt to the changing market dynamics. However, leaders should be aware of the internal characteristics of the company to determine the appropriate measures to incorporate, and how to introduce them.

Conclusion

In conclusion, intrapreneurs play a crucial role in sustaining an innovation ecosystem’s viability due to their role in creating new concepts and ideas that can propel the business to greater levels. Understanding the system’s fundamentals, the different types of methodologies, steps to boost innovation, governance models, and assessing the organization are crucial in comprehending the importance of intrapreneurship in the corporate-startup. All these features determine the potential of the organization in expanding its activities and increasing revenue streams.

References

Adner, R., ‘Match Your Innovation Strategy to Your Innovation Ecosystem’, Harvard Business Review, vol. 84, no. 4, 2006, pp. 111.

Antikainen, M. and Valkokari, K., ‘A Framework for Sustainable Circular Business Model Innovation’, Technology Innovation Management Review, vol. 6, no. 7, 2016, pp. 5-12.

Arora, A., Cohen, W. M., and Walsh, J. P., ‘The Acquisition and Commercialization of Invention in American Manufacturing: Incidence and Impact’, Research Policy, vol. 45, no. 6, 2016, pp. 1113-1128.

Chesbrough, H., ‘Business Model Innovation: It’s Not Just about Technology Anymore’, Strategy & Leadership, vol. 35, no. 6, 2007, pp. 12-17.

Chesbrough, H., ‘Business Model Innovation: Opportunities and Barriers’, Long Range Planning, vol. 43, no. 2-3, 2010, pp. 354-363.

Corrado, C. A. and Hulten, C. R., ‘Innovation Accounting’, in D. W. Jorgenson, J. S. Landefeld, and P. Schreyer (eds.), Measuring Economic Sustainability and Progress, University of Chicago Press, 2014, pp. 595-628.

Davila, A. et al., ‘The Rise and Fall of Startups: Creation and Destruction of Revenue and Jobs by Young Companies’, Australian Journal of Management, vol. 40, no. 1, 2015, pp. 6–35.

Feige, D., ‘Fundamentals of Innovation Policy for Growth and Development’, in N. S. Vonortas, P. C. Rouge, and A. Anwar (eds.), Innovation Policy: A Practical Introduction, New York, NY, Springer, 2015, pp. 5–26.

Festel, G., Wuermseher, M., and Cattaneo, G., ‘Valuation of Early Stage High-Tech Start-Up Companies’, International Journal of Business, vol. 18, no. 3, 2013, pp. 216–231.

Klingebiel, R. and Rammer, C., ‘Resource Allocation Strategy for Innovation Portfolio Management’, Strategic Management Journal, vol. 35, no. 2, 2014, pp. 246–268.

Kusi-Sarpong, S., Gupta, H., and Sarkis, J., ‘A Supply Chain Sustainability Innovation Framework and Evaluation Methodology’, International Journal of Production Research, vol. 57, no. 7, 2019, pp. 1990-2008.

Mansoori, Y., ‘Enacting the Lean Startup Methodology’, International Journal of Entrepreneurial Behavior & Research, vol. 23, no. 5, 2017, pp. 1-28.

Nobel, C., ‘Teaching a’Lean Startup’Strategy’, Harvard Business School Working Knowledge, 2011, pp. 1-2.

Oliva, F. L. and Kotabe, M., ‘Barriers, Practices, Methods and Knowledge Management Tools in Startups’, Journal of Knowledge Management, vol. 23, no. 9, 2019, pp. 1838-1856.

Owen, R. et al., ‘A Framework for Responsible Innovation’, in R. Owen, J. R. Bessant, and M. Heintz (eds.), Responsible Innovation: Managing the Responsible Emergence of Science and Innovation in Society, Hoboken, NJ, Wiley-Blackwell, 2013, pp. 27-50.

Schwarzkopf, C., Fostering Innovation and Entrepreneurship: Entrepreneurial Ecosystem and Entrepreneurial Fundamentals in the USA and Germany, Wiesbaden, Germany, Springer Gabler, 2016.

Silva, D. S. et al., ‘Lean Startup, Agile Methodologies and Customer Development for Business Model Innovation’, International Journal of Entrepreneurial Behavior & Research, vol. 26, no. 4, 2020, pp. 595-628.

Spithoven, A., Vanhaverbeke, W., and Roijakkers, N., ‘Open Innovation Practices in SMEs and Large Enterprises’, Small Business Economics, vol. 41, no. 3, 2013, pp. 537-562.

Stilgoe, J., Owen, R., and Macnaghten, P., ‘Developing a Framework for Responsible Innovation’, Research Policy, vol. 42, no. 9, 2013, pp. 1568-1580.

Traitler, H., Watzke, H. J., and Saguy, I. S., ‘Reinventing R&D in an Open Innovation Ecosystem’, Journal of Food Science, vol. 76, no. 2, 2011, pp. R62-R68.

Tuff, G. and Nagji, G., ‘Managing Your Innovation Portfolio’, Harvard Business Review, 2012.

Yau, A. and Murphy, C., ‘Is a Rigorous Agile Methodology the Best Development Strategy for Small Scale Tech Startups?’, University of Pennsylvania Department of Computer and Information Science, 2013. Web.

Footnotes

1. R. Adner, ‘Match Your Innovation Strategy to Your Innovation Ecosystem’, Harvard Business Review, vol. 84, no. 4, 2006, p. 9. Web.
2. M. Antikainen and K. Valkokari, ‘A Framework for Sustainable Circular Business Model Innovation’, Technology Innovation Management Review, vol. 6, no. 7, 2016, p. 8.
3. C. Schwarzkopf, Fostering Innovation and Entrepreneurship: Entrepreneurial Ecosystem and Entrepreneurial Fundamentals in the USA and Germany, Wiesbaden, Germany, Springer Gabler, 2016, p. 7.
4. D. Feige, ‘Fundamentals of Innovation Policy for Growth and Development’, in N. S. Vonortas, P. C. Rouge, and A. Anwar (eds.), Innovation Policy: A Practical Introduction, New York, NY, Springer, 2015, p. 5.
5. G. Tuff and G. Nagji, ‘Managing Your Innovation Portfolio’, Harvard Business Review, 2012. Web.
6. R. Klingebiel and C. Rammer, ‘Resource Allocation Strategy for Innovation Portfolio Management’, Strategic Management Journal, vol. 35, no. 2, 2014, p. 265.
7. S. Kusi-Sarpong, H. Gupta, and J. Sarkis, ‘A Supply Chain Sustainability Innovation Framework and Evaluation Methodology’, International Journal of Production Research, vol. 57, no. 7, 2019, p. 2001.
8. J. Stilgoe, R. Owen, and P. Macnaghten, ‘Developing a Framework for Responsible Innovation’, Research Policy, vol. 42, no. 9, 2013, p. 1570.
9. R. Owen et al., ‘A Framework for Responsible Innovation’, in R. Owen, J. R. Bessant, and M. Heintz (eds.), Responsible Innovation: Managing the Responsible Emergence of Science and Innovation in Society, Hoboken, NJ, Wiley-Blackwell, 2013, p. 31.
10. C. A. Corrado, and C. R. Hulten, ‘Innovation Accounting’, in D. W. Jorgenson, J. S. Landefeld, and P. Schreyer (eds.), Measuring Economic Sustainability and Progress, University of Chicago Press, 2014, p. 604.
11. A. Spithoven, W. Vanhaverbeke, and N. Roijakkers, ‘Open Innovation Practices in SMEs and Large Enterprises’, Small Business Economics, vol. 41, no. 3, 2013, p. 538.
12. Y. Mansoori, ‘Enacting the Lean Startup Methodology’, International Journal of Entrepreneurial Behavior & Research, vol. 23, no. 5, 2017, p. 7.
13. C. Nobel, ‘Teaching a ‘Lean Startup’ Strategy’, Harvard Business School Working Knowledge, 2011, p. 2.
14. D. S. Silva et al., ‘Lean Startup, Agile Methodologies and Customer Development for Business Model Innovation’, International Journal of Entrepreneurial Behavior & Research, vol. 26, no. 4, 2020, p. 596.
15. A. Yau and C. Murphy, ‘Is a Rigorous Agile Methodology the Best Development Strategy for Small Scale Tech Startups?’, University of Pennsylvania Department of Computer and Information Science, 2013. Web.
16. F. L. Oliva and M. Kotabe, ‘Barriers, Practices, Methods and Knowledge Management Tools in Startups’, Journal of Knowledge Management, vol. 23, no. 9, 2019, p. 1846.
17. H. Chesbrough, ‘Business Model Innovation: It’s Not Just about Technology Anymore’, Strategy & Leadership, vol. 35, no. 6, 2007, p. 13.
18. A. Arora, W. M. Cohen, and J. P. Walsh, ‘The Acquisition and Commercialization of Invention in American Manufacturing: Incidence and Impact’, Research Policy, vol. 45, no. 6, 2016, p. 1113.
19. H. Traitler, H. J. Watzke, and I. S. Saguy, ‘Reinventing R&D in an Open Innovation Ecosystem’, Journal of Food Science, vol. 76, no. 2, 2011, p. R63.
20. H. Chesbrough, ‘Business Model Innovation: Opportunities and Barriers’, Long Range Planning, vol. 43, no. 2-3, 2010, p. 361.
21. G. Festel, M. Wuermseher, and G. Cattaneo, ‘Valuation of Early Stage High-Tech Start-Up Companies’, International Journal of Business, vol. 18, no. 3, 2013, p. 225.
22. A. Davila et al., ‘The Rise and Fall of Startups: Creation and Destruction of Revenue and Jobs by Young Companies’, Australian Journal of Management, vol.40,no. 1, 2015, p. 9.