Unleashing the Power from Within: How to Foster Intrapreneurship to Advance Innovation in Large Enterprises
Isabel Yang, Chief Technology Officer and Senior Vice President, Advanced Energy
In the earlier part of my career, a very bright engineer once asked me why our company keeps buying technology via acquisitions of other companies, which are usually start-ups that just became profitable? Why are we not commercializing the organic R&D work? There are many variables that go into the buy vs. build decision, including time to market, our own presence in said market, the cost of buy vs. build, talent availability, and more. I am often surrounded by people with lots of great inventive ideas. But, is this enough in this day and age to propel us forward to gain market share or establish a foothold in a white space?
Often, we mistakenly equate invention for innovation. American entrepreneur Gifford Pinchot III, eloquently stated in his book Intrapreneuring that “Innovation does not mean invention. Invention is the act of genius in creating a new concept for a potentially useful new device or service. In innovation, that is just the beginning. When the invention is done, the second half of innovation begins: turning the new idea into a business success.”
Often times, the very same people with the inventive new ideas do not seem to have the hunger and drive to see their ideas through enough to create a new business. New projects often drag out for a long time, and there is no sense of dire urgency and realistic understanding of the markets they are trying to serve. I believe this phenomenon becomes more acute as a company grows from an aging start-up into a large enterprise, as innovators often get caught in the corporate bureaucracy. To make matters worse, most public companies’ boards put more focus on the shareholders, which tend to emphasize short-term gain.
"It is the customer who determines what a business is. For it is the customer, and they alone, who through being willing to pay for a good or for a service, converts economic resources into wealth, things into goods."
Results from a 2018 Harvard Business Review survey of 5000 company board members across the globe indicate that for the majority of boards, innovation ranks fifth after concerns such as attracting and retaining top talent and the regulatory environment. On that front, only 21 percent of them believe technology trends are a major strategic challenge. When asked which areas of their board’s processes were effective, directors responded as follows:
70 percent - staying current on the company
• 69 percent - compliance
• 66 percent - financial planning
• 55 percent - risk management
• 42 percent - innovation
Many experts agree that, over the decades, solely focusing on the shareholder has resulted in the demise of what were once America’s largest corporations. According to American Enterprise Institute, just 60 companies from 1955 remained on the Fortune 500 list in 2017, with 88 percent absent as a result of either bankruptcy, merger or falling revenue—all of which suggest they were usurped by more innovative disruptors.
Searching for the Center of the Universe
With the advent of the Internet, social media platforms, and mobile apps, the proliferation of information-sharing coupled with deregulation and a burgeoning global marketplace has given unprecedented power to the consumer of goods, services and solutions, whether that is an individual or a business. And, rightly so. But it is nothing new. The world-renowned management consultant, Peter Drucker underscored the critical importance of focusing on customers and anticipating what they want in his highly acclaimed book, The Practice of Management. Written in 1954, he argued that the very purpose of a business is to create a customer. “It is the customer,” he wrote, “who determines what a business is. For it is the customer, and they alone, who through being willing to pay for a good or for a service, converts economic resources into wealth, things into goods. What the business thinks it produces is not of first importance—especially not to the future of the business and to its success. What the customer thinks he is buying, what he considers ‘value’, is decisive—it determines what a business is, what it produces and whether it will prosper.”
Looking Inward and Building Outward
A term first introduced in a 1976 paper written by Gifford Pinchot III and Elizabeth Pinchot, the word intrapreneurship was used to describe a system that removes the bureaucracy stifling new ideas in a large corporation to enable it to behave like an entrepreneur and a nimble, agile startup. Today, according to Intrapreneur.com—which is powered by Pinchot’s Seattle-based Pinchot & Company—the concept is widely used by Fortune 100 companies as well as many international companies and non-profits.
A Brief History of Intrapreneurship illustrated by the nonprofit Intrapreneurial Initiative offers an excellent overview and pointed examples, including the invention of the Post-It Note in 1974 by a 3M employee, Art Fry. In 1968, he held on to the idea of an adhesive developed by fellow 3M employee and scientist Spencer Silver, who accidently created a lightweight sticky substance instead of the strong bonding agent necessary for aerospace technology.
There are many more examples of intrapreneurial discoveries in large organizations, from Sony’s PlayStation to Sun Microsystems’ launch of Java programming language in 1995. However, given the challenges of size, rigid structures, hierarchies and processes today, innovation in large organizations, which is often obtained externally through acquisition of startups or emerging companies remains a relatively lower on the priority list.
Creating an Intrapreneurial Environment and Culture
Since Pinchot introduced intrapreneurship into the business vernacular, countless books have been written and keynotes delivered expressing why businesses should embrace intrapreneurship, and how it can be done. Pinchot himself developed his own guidelines, entitling them The Intrapreneur’s Ten Commandments:
1. Come to work each day willing to be fired.
2. Circumvent any orders aimed at stopping your dream.
3. Do any job needed to make your project work, regardless of your job description.
4. Find people to help you.
5. Follow your intuition about the people you choose and work only with the best.
6. Work underground as long as you can--publicity triggers the corporate immune mechanism.
7. Never bet on a race unless you are running in it.
8. Remember it is easier to ask forgiveness than to ask permission.
9. Be true to your goals, but realistic about the ways to achieve them.
10. Honor your sponsors.
As Chief Technology Officer responsible for innovation at Advanced Energy (AE), in order to support those who embodies these intrapreneurial spirits via the commandments, I would add the following to the leadership team’s list:
11. Democratize the ideation process.
We often equate the word diversity to imply differences in gender, ethnicity, and socio-economic status. However, in the area of innovation, diversity of thought is equally important. One way to encourage and democratize ideation is not to assume that only people in leadership positions have the best ideas, and everyone else just follow orders to execute. Another way is to not assume that only the experts’ solutions are the only options. Lastly, the most damaging statement that can be made to a young aspiring innovator is to tell him or her that they are wasting their time. After all, how do we know if we have succeeded if we never failed.
12. Give everyone permission to be bold and risk failure without the fear of penalty.
As a leadership team, one way to give permission to be bold is to make sure we “got their back” when our teams go out on a limp to try new ideas that have not been proven. Make the failures a learning experience as oppose to a finger pointing exercise. Often through the analysis of failure, new and better ideas emerge and teams become stronger. It is imperative that, we as leaders, not squelch the enthusiasm and boldness of those who dared to take the risks.
13. Collaborate with others who share your interest and passion, and who can bring fresh perspective, including people and organizations outside your own company.
The tried and true collaborations pre-commercial is with local academic institutions. Such collaboration is a breeding ground for new innovation bringing together the best combination of real world applications focus of the industry partner, deep theoretical and experimental practices of leading academics, and fresh new talents of the students. AE has established several of these partnerships in our state but also internationally too.
14. Celebrate milestones and successes along the way.
This bullet point should not warrant much explanation other than to say that everyone needs encouragement on the long road of intrapreneurial pursuits.
Playing the Anticipation Game
In the industries which we serve, such as semiconductor manufacturers and industrial coatings among other applications, innovation and customer experience have been the pull we see from customers in the U.S. and abroad. To that end, AE continues to bring highly engineered, precision power conversion, measurement and control solutions to help customers worldwide with their mission-critical applications and processes. Our new facility in Caesarea, Israel underscores that commitment. The new 6,500 square-foot facility includes business offices and a state-of-the-art R&D lab that advances AE’s goal to provide customers in the semiconductor, medical, defense and industrial markets with the most reliable, smart technologies and resources. The inclusion of an on-site services and repair facility will also help to support AE’s regional customers, who increasingly require access to high-quality local service for their power systems and controls.
As AE accelerates our capabilities to power the Fourth Industrial Revolution, we are entering uncharted territory with the introduction of our newest intelligent power solution: PowerInsight by Advanced Energy. Utilizing more than 30 years of know-how and knowledge of power delivery systems in combination with data analytics and machine learning, this solution enables our services customers to improve their total cost of ownership and improve yield in their factories. As we move forward, embedding self-diagnostic, self-calibration and self-learning real-time controls and digital twin into our products and solutions are no longer just R&D work. As we move into the next industrial revolution, it will be essential to anticipate potential customer problems and develop ways to solve them before they occur. More importantly, as history shows, every business must foster an intrapreneurial culture, or risk elimination in a high-stakes game where the rules are always changing.
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