Encouraging Employees to Be Intrapreneurs Pays Off

An "intrapreneurship" program, which lets employees act like entrepreneurs by developing new products or services, is an unconventional benefit that can help boost productivity and retention.

Intrapreneurship also offers career development opportunities—something that many employees crave today and that drive decisions about whether to stay with an employer.

The benefits for employees from having an opportunity to engage in entrepreneur-like activities on the job are many. Staffing firm Randstad points to the opportunity to:

• Test entrepreneurship without the related risks and costs, and with access to employer-provided resources.
• Shape the strategic direction of the organization.
• Find motivation and pursue interests.

Employers also benefit, of course, especially if these intrapreneurship efforts lead to new product or service innovations.

The well-known story of the 3M employees who invented Post-it Notes—scientists Sheldon Silver, who developed the unique adhesive, and Art Fry, who devised the idea of using the adhesive on a small square note—is one of the best-known examples of successful intrapreneurship. Silver and Fry were able to use company time to flex their entrepreneurial muscle with company support; the company benefited—and continues to benefit—from the revenue their product brings in.

"3M's Post-it Note story is inspiring but can be misleading," said strategy consultant Andy Binns, co-founder of Boston-based Change Logic. "It encourages us to focus on giving employees time to be creative so that they can come up with new ideas." However, coming up with ideas is the easy part, Binns cautioned.

More Than Just 'Creative Time'

The concept of intrapreneurship goes—or should go—well beyond simply coming up with ideas or simply providing "free time" for employees to "get creative." It also involves establishing processes that can help turn ideas into reality in ways that benefit customers and, ultimately, the company.

"Companies that give 'free' time are more likely to waste money and demoralize employees by having them develop ideas that do not have an opportunity to be implemented," Binns said. "We call this the 'innovation zoo'—lots of people with ideas running around looking for someone to fund them. What's harder is to incubate and scale them into something that has impact."

Moving from a good idea to a marketable product or service involves "testing and learning from lots of trials," including finding out what innovations customers will value, Binns said.

He pointed to the German multinational engineering and technology company Bosch as an example of an organization that "has gotten really good at this." Bosch runs programs for employees to learn how to validate their ideas, Binns said. "After 12 weeks, employees are asked if they think their project should proceed, and 90 percent of them say 'no.' They learn that what they thought was a good idea did not work for customers."

As a result, the 10 percent that do go forward are much more likely to succeed, he added.

A Case in Point

The Escape Game (TEG), a Tennessee-based company with locations across the U.S. that organizes team-building experiences, has worked to create a climate in which employees are free to innovate and be intrapreneurs. The company has also taken steps to ensure that these ideas, when viable, can be turned into marketable products.

"We take a very collaborative approach to product testing and development that includes participation and input across all departments [at the corporate headquarters] as well as the front-line team members in our stores," said Brian Mandel, senior director of operations at TEG.

During the pandemic, he said, employees' creativity had an opportunity to shine. Their ideas "led to the creation of our now-robust digital products," among other ventures, he said.

The key to corporate innovation is having the willingness to disrupt your own business model, said Jay Jayamohan, executive director of the Center for Innovation and Entrepreneurship at Harrisburg University of Science and Technology in Harrisburg, Pa. "Make your firm a serial innovator by building innovation muscles," Jayamohan advised.

He recommends getting some "quick wins [by] running multiple small projects in parallel to ensure the best ideas are progressed rapidly and the bad ones fail early."

Getting There

Companies can move toward establishing a culture of intrapreneurship by adopting a focus on "design thinking," said Jodi Standke, CEO of talent management firm Talon Performance Group in Minneapolis.

Design thinking is an approach to problem-solving that involves exploring a wide range of possible solutions, developing prototypes and repeatedly testing them, and then implementing the finished solutions.

Many organizations, regardless of size, are incorporating design thinking into their executive teams, leadership and business units, Standke said. "They are allowing groups time to run through concepts and then giving individuals time to … move ideas along. For individuals, this often can be rejuvenating, fun and interesting," she explained.

Creative and innovative thinking often occurs when people aren't actually thinking, Standke said.

"Companies that are truly interested in innovation should let this be known, set up regular open communication times and not  penalize employees for 'wrong,' 'bad' or otherwise ideas," she noted.

That's a key point—employees need to trust that their ideas will be met with an open mind rather than criticism or censure, Standke explained.

Reward Successes—and Failures

It's important to recognize and reward successes to honor those employees whose intrapreneurship efforts have been successful. But it's also important to remove any hesitance or fears employees might have about "failing" or looking "stupid" in front of others because of their ideas. This means celebrating all efforts to be innovative and come forward with ideas.

Jayamohan recommends creating an infrastructure where "failing forward" is rewarded. "Innovative ideas are, by definition, fraught with risk and counterintuitiveness," he noted.

A focus on intrapreneurship needs to be a companywide initiative that is supported from the top of the organization on down. "Often, the best ideas come from unlikely sources, and only a cross-departmental culture of creativity will draw those ideas out," Mandel said. This "means top-level executives have to 'preach' this mentality at every opportunity and be willing to invest the time in creating opportunities and spaces for people to bring their ideas and feedback to the surface."

Who Owns Employee Innovations?

It's important for companies to make it crystal clear what will happen with the ideas employees generate and the revenue from the product or service innovations they help to drive.

At TEG, Mandel said, "there is an understanding when people come to work with us that all creative contributions are ultimately the property of TEG, and that is best framed by another core value we have: teamwork."

While companies may want to establish some form of monetary recognition or reward for the individuals and teams that take part in innovation efforts that lead to tangible business results, there is evidence to suggest that this is really not necessary. Instead, what employees value most is formal acknowledgment, social incentives and organizational freedom—benefits that don't have to cost organizations much at all.

Lin Grensing-Pophal, SHRM-SCP, is a Wisconsin-based business journalist with HR consulting experience.