The intrapreneur is an employee which is usually assigned to innovative projects that can impact the company’s future success. As such, the intrapreneur is an employee that acts like an entrepreneur within the organisation. While the intrapreneur has access to the resources of the organisation she does not bear the risks connected to it.
What is the difference between entrepreneurs and intrapreneurs?
Entrepreneurship is the process of designing, launching, and managing a new business. The individual, or entrepreneur, assumes most of the associated risks but will also reap the most rewards if the business is successful.
Intrapreneurship involves an employee developing new ideas or products within an existing company. Intrapreneurs can formulate new ideas or products without the associated risks of entrepreneurship.
The role of both entrepreneurs and intrapreneurs is to uncover new opportunities and then devise a strategy to profit from them. Both roles also require that individuals be adaptable, innovative, persistent, resilient, and effective leaders.
The primary difference is in risk-taking and ownership. Where the Intrapreneur does not own the company and does not take the financial risks associated with the project. The entrepreneur does.
That makes the entrepreneur more conservative and risk-avoidant.
And the intrapreneur is more risk-prone and, in theory, willing to take bolder steps that can make processes within organizations obsolete. Thus, looking at innovations that can impact the whole organization.
As we saw, the main difference between entrepreneurs and intrapreneurs is the level of risk that each assumes. Entrepreneurs start companies from scratch and take on extreme levels of risk to increase their individual wealth.
Since intrapreneurs operate within existing organizations, they can leverage their resources, networks, and expertise to take more calculated risks.
These individuals may pursue the same transformative ideas as entrepreneurs, but they may also be involved in incremental innovation projects and not be rewarded as handsomely if the idea pays off.
Other key differences between entrepreneur sand intrapreneurs
Goal-setting
Entrepreneurs have the freedom to set their own vision for the company, while the objectives of an intrapreneur are influenced by their employer and its senior leaders. That is, they are less autonomous.
Safety net
When an entrepreneur has a few months of lackluster sales, it may mean financial disaster. The potential ramifications for an intrapreneur as never as severe – particularly in mature organizations that can absorb failures and the associated negative financial impact.
Access to perks
While intrapreneurs may not enjoy the same freedoms or financial compensation as entrepreneurs, they are nevertheless valuable to their respective companies. Based on this, intrapreneurs can command attractive salaries and perks.
Time constraints
In theory, an entrepreneur can operate as long as funds allow. Intrapreneurs often work under time and resource constraints stipulated by the employer.
How does Intrapreneurship work?
Intrapreneurs get assigned to special projects that are extremely innovative.
That is also why they are usually given the freedom to pursue them, which means the intrapreneur is extremely independent within the organization.
Therefore, intrapreneurs can access resources from the organization, thus organizing and working with those resources on innovative projects.
At the same time, the financial risks associated with the project stay with the organization.
Good, in theory, what in practice?
While the concept of intrapreneurship is compelling, and perhaps many companies have leveraged it to keep innovating.
Google is one of the companies that took advantage of intrapreneurs to build wildly successful products. As Brin and Page highlighted back in 2004:
“We encourage our employees, in addition to their regular projects, to spend 20% of their time working on what they think will most benefit Google…This empowers them to be more creative and innovative. Many of our significant advances have happened in this manner.”
From this 20% project allocation, where employees could pursue the projects they felt compelled about, products like Google News, Gmail, and AdSense were built.
Other intrapreneurship examples
Here are just a few examples of intrapreneurship in modern companies.
Google’s Gmail
The development of Gmail is one of the finest examples of intrapreneurship at work. The service was created by Paul Buchheit who joined Google as its twenty-third employee in 1999.
Buchheit had previously worked on a web-based email platform and search engine, but the idea of replicating this combination within Google’s email service was met with internal resistance.
Indeed, some executives were worried that the company was extending itself too far beyond its core search product.
However, co-founders Sergey Brin and Larry Page ultimately supported the project, with Buchheit using Google’s 20% time policy for personal projects to develop the Gmail platform.
History will show that when Gmail was released in April 2004, it grew rapidly to displace Hotmail and Yahoo Mail as the provider of choice. Gmail would also influence the development of Google AdSense in later years.
McDonald’s
It may surprise some to learn that the famous Happy Meal started as somewhat of a gimmick when it was first slated in 1977.
The idea for the meal is credited to Dick Brams, former regional ad manager for the St. Louis, Missouri area.
Brams pitched the idea to senior management after witnessing that competitor Burger Chef was selling children’s meal boxes that also came with a toy.
While many believed it would never catch on, the Happy Meal became popular with McDonald’s franchise owners who desired a product that would streamline the chaotic process of ordering food for kids.
Brams is often credited as the “Father of the Happy Meal” in official McDonald’s communications, but depending on who you ask, the idea for the meal is also attributed to fellow employee Yolanda Fernandez.
She founded the first McDonald’s restaurant in Guatemala in 1974 and would add toys purchased from a local market to children’s meals.
In the late 1980s, however, a forward-thinking Sony engineer known as Ken Kutaragi was watching his daughter play with a Nintendo gaming console and was amazed at its potential.
Kutaragi invited his superiors to seriously consider developing a gaming console but was ultimately rebuffed.
Undeterred, the engineer surreptitiously took on a role with Nintendo to help them develop the Nintendo Entertainment System (NES).
When Sony found out, executives at the company were infuriated and their instinct was to fire Kutaragi on the spot.
In the end, Kutaragi was saved by CEO Norio Ohga who believed his idea had merit and funded a partnership with Nintendo to develop the Super Famicom (known in the West as the Super Nintendo).
Sony would eventually develop the PlayStation and, after its release in December 1994, became the first computer entertainment platform to sell over 100 million units.
Kutaragi was promoted to CEO of a new division called Sony Interactive Entertainment where he oversaw the development of the PlayStation 2 and PlayStation 3.
Successful intrapreneurs
Successful entrepreneurs and indeed entrepreneurship culture is widely celebrated in the media and elsewhere. Successful intrapreneurs and their contributions to business, by comparison, are much less well known.
Here are some that stand out:
Ken Kutaragi
Whilst an employee of Sony, Kutaragi envisioned a future where electronic games were commonplace.
He ultimately convinced company leaders to create a new division where he lead the development of the Sony PlayStation.
Paul Buchheit
The 23rd employee of Google was responsible for developing Gmail in 2001 and also prompted the product that would later become AdSense.
John Lasseter
This animator was sacked from Disney because of his belief that the company should enter computer animation.
Lasseter then joined Lucasfilm where he was part of a team that pioneered CGI animation.
Once the graphics arm of Lucasfilm was sold to Apple, he oversaw the development of Pixar’s most successful films.
Key takeaways
Entrepreneurship is the process of designing, launching, and managing a new business from scratch. Intrapreneurship involves an employee developing new ideas or products within an existing company.
The qualities and indeed roles of entrepreneurs and intrapreneurs are rather similar, but one of the primary differences is the level of associated risks and the extent to which each can access resources, networks, and expertise.
The other key differences between entrepreneurship and intrapreneurship are the level of autonomy of control, the presence of safety nets and time constraints, and access to perks.
Entrepreneurship is a continuous quest for real-world problem-solving. The success of a business is measured by how well you helped people solve those problems. While entrepreneurs can rely on methodologies, systems, and processes, they also need to know when to revert to instinct and leverage on their experience.
Acquisition Entrepreneurship (AE) starts by buying an existing business instead of starting one from scratch. Therefore, an acquisition entrepreneur masters the process of acquiring existing businesses to shorten the path to success. In short, the acquisition entrepreneur thinks like an investor in the process of buying an existing business and acts as a CEO once the deal has been closed and he needs to run the company to bring it to the next level.
A business designer is a person that helps organizations to find and test a business model that can be tested and iterated so that value can be captured by the organization in the long run. Business design is the discipline, set of tools and processes that help entrepreneurs prototype business models and test them in the marketplace.
Serial entrepreneur and venture capitalist Paul Graham popularized the term “Ramen Profitability.” As he pointed out “Ramen profitable means a startup makes just enough to pay the founders’ living expenses.”
Business experiments help entrepreneurs test their hypotheses. Rather than define the problem by making too many hypotheses, a digital entrepreneur can formulate a few assumptions, design experiments, and check them against the actions of potential customers. Once measured, the impact, the entrepreneur, will be closer to define the problem.
A solopreneur is usually (not always) a digital entrepreneur who leverages automation, work flexibility, and creativity to develop ultra-lean business models. Those can scale over the one-million-dollar revenue mark with a minimum business overhead, no venture capital funds, and mostly bootstrapped. Those solopreneurs start by mastering profitable microniches.
A value proposition is about how you create value for customers. While many entrepreneurial theories draw from customers’ problems and pain points, value can also be created via demand generation, which is about enabling people to identify with your brand, thus generating demand for your products and services.
Business modelinnovation is about increasing the success of an organization with existing products and technologies by crafting a compelling value proposition able to propel a new business model to scale up customers and create a lasting competitive advantage. And it all starts by mastering the key customers.
The innovation loop is a methodology/framework derived from the Bell Labs, which produced innovation at scale throughout the 20th century. They learned how to leverage a hybrid innovationmanagementmodel based on science, invention, engineering, and manufacturing at scale. By leveraging individual genius, creativity, and small/large groups.
Disruptive innovation as a term was first described by Clayton M. Christensen, an American academic and business consultant whom The Economist called “the most influential management thinker of his time.” Disruptive innovation describes the process by which a product or service takes hold at the bottom of a market and eventually displaces established competitors, products, firms, or alliances.
In a business world driven by technology and digitalization, competition is much more fluid, as innovation becomes a bottom-up approach that can come from anywhere. Thus, making it much harder to define the boundaries of existing markets. Therefore, a proper business competition analysis looks at customer, technology, distribution, and financial model overlaps. While at the same time looking at future potential intersections among industries that in the short-term seem unrelated.
Technological modeling is a discipline to provide the basis for companies to sustain innovation, thus developing incremental products. While also looking at breakthrough innovative products that can pave the way for long-term success. In a sort of Barbell Strategy, technological modeling suggests having a two-sided approach, on the one hand, to keep sustaining continuous innovation as a core part of the businessmodel. On the other hand, it places bets on future developments that have the potential to break through and take a leap forward.
Sociologist E.M Rogers developed the Diffusion of Innovation Theory in 1962 with the premise that with enough time, tech products are adopted by wider society as a whole. People adopting those technologies are divided according to their psychologic profiles in five groups: innovators, early adopters, early majority, late majority, and laggards.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
