The Oil Tanker vs. the Speedboat? How Corporate Intrapreneurship Programs can drive Startup behavior

Introduction

In the ever evolving times we live in, innovation is a critical element in the business strategy of established organizations. They understand they need to innovate in order to maintain market share and cope with the continuous introductions of new technologies. BCG’s recent report about the Most Innovative Companies 2023 showed that 79% of companies rank innovation amongst their top three priorities. And rightly so. The death toll of corporations is on the rise. The average lifespan of an S&P 500 company was 61 years in 1958. It's currently much below 20.?

Startups are commonly perceived as agile speedboats that surpass large corporations, often compared to sluggish oil tankers. Startups are often recognized for their capacity to disrupt markets, unencumbered by the complexity and stagnation that frequently affect corporate entities. Succes stories about WhatsApp, AirBNB and Linktree capture the imagination and seem to endorse this assumption.

The objective of this article is to debunk this standard assumption and identify the distinctive benefits that large companies possess in the realm of innovation. Through the strategic utilization of existing resources and the establishment of dedicated pathways for innovation, corporations can effectively bridge the gap between their existing business model and the agility of startups.?

The Startup Advantage

Startups are often praised for their inherent flexibility and freedom from the constraints that commonly affect established corporations. Startups have the advantage of being able to pivot quickly, experiment without fear, and make decisions on the spot due to their lack of existing customer bases, complex processes, hierarchical structures, and rigid approval flows. This allows startups to think freely and respond quickly.

“It’s more fun to be a pirate than to join the navy” - Steve Jobs

The Corporate Strengths

Although startups may have their own benefits, it is essential to acknowledge that corporations possess distinctive organizational advantages that can be utilized for effective innovation. Enterprises generally possess superior financial capabilities, well-established client bases, extensive operational capacities, profound industry knowledge, and a significantly larger group of people working for them. If utilized efficiently, these benefits can help the company innovate and establish a strong basis for successful innovation.?

"Of the top 10 sources of innovation, employees are the only resource that you can control and access that your competitors cannot. Employees are the one asset you have that can actually be a sustainable competitive advantage." - Kaihan Krippendorff

Calibrating the compass

The primary obstacle faced by corporations is effectively leveraging their current resources to drive innovation, all while upholding the current business operations. Business as usual is always more urgent, more recognizable and showing more short-term wins. That’s why innovation is often forgotten about; especially when done through one-off events that don’t create lasting change.

True change requires an embedded, perpetual approach enabling employees as intrapreneurs and create startup-like teams within the company. Think of it as the nautical high speed areas where you can sail quickly with your speedboat, keeping the waterways for other boats (like oil tankers) calm, safe and according to standards.

The teams manning the speedboats should be able to act autonomous and independently from the oil tanker. And although courses should be aligned, the speedboats should be allowed to make any twists and turns as they deem necessary.?

At the same time, there should be a harbor in sight to dock the speedboats back into the corporate vessel. Yes, innovation hinges on the journey, but you need to start with the destination in mind to claim the outcomes.

“Man cannot discover new oceans unless he has the courage to lose sight of the shore.” - Andre Gide

Navigating the Innovation Challenge

Corporate innovation needs a standard, dedicated pathway that allows the innovation team to efficiently manage and control the innovation initiatives while allowing corporate innovators to develop their ideas freely. To promote this convergence, the innovation program must include the development of innovation capabilities among employees, allowing them to experiment autonomously within this set framework.?

They need the tools and capacities to help them grow and validate their ideas. And that takes more than a single offsite training session. Innovating is not like bookkeeping, where rules and regulations may be followed. Experience, practice, and reflection are required for innovation. Then, the new intrapreneurs must be trusted to apply this over an extended length of time while continuing to do their day-to-day work. Only by incorporating this new behavior into their current way of working can you develop long-term learnings and a permanent shift in your company culture.?

This corporate incubator route needs to be formulated to enable the exploration and development of new ideas, without being restricted by conventional bureaucratic frameworks and decision-making procedures. Without separation day to day operations will simply wash away any good intentions of the young intrapreneurs. This also means that middle management needs to be on board. You can promise they can use 10% of their time, but without a supporting line manager things will go back to status quo before you know it.

Hence, it is imperative that this framework serves as a protective shield, safeguarding the intrapreneurial employee teams from corporate apprehension, job insecurity, and other hindrances that may impede innovation. This cultivates an atmosphere that promotes risk-taking, encourages experimentation, facilitates transparent communication, and safeguards against the obstacles commonly associated with conventional corporate frameworks.

Failing to establish a sustained effort towards capability creation and psychological safety may impede the realization of its ripple effect and the development of a corporate culture of innovation across the company.?

“The leader’s job isn’t to have all the ideas. It’s to make sure all the ideas are heard and that the best one wins.” - Chris Hawker

Managing a fleet of speedboats

Once you have created a separate intrapreneurial route, and provided groups of people with the skills and tools to innovate independently, it’s time to scale up. Don’t manage a single innovation, but a portfolio of potential innovations. See it as a fleet of multiple speedboats, each with their own enabled crew. Each with their own equipment, or gear, if you will, tailored to the company’s specific needs and ambitions.?

By having multiple speedboats out and a proper radar to keep track, you build a portfolio that allows you to spread the risk over many opportunities. Start with many small boats (and teams), and ramp up when they’ve proven their value. Stop fueling the ones that didn’t. Bring the few remaining back on board of the oil tanker when completely validated and the integration with the existing company is clear for everybody involved.

This ability to manage a portfolio of innovations, stop persuing the ones that don’t get traction and increase investments for the ones that do, is something only large corporations can do. The startup isn’t going to sink the only boat they have and might continue reluctantly. The corporate with hundreds of speedboats out, can easily continue when a few get stranded.?

“Virgin could never have grown into the group of more than 200 companies it is now, were it not for a steady stream of intrapreneurs who looked for and developed opportunities.” - Richard Branson

Bridging the Gap

Although separation is a crucial step, it is equally important to establish and maintain connections between the innovation efforts and the existing core business. This will ensure that the course of the intrapreneurs aligns with the corporate compass, facilitate efficient decision-making, optimize resource allocation, and enable effective progress tracking.?

The (teams of) intrapreneurs work autonomous to experiment and pivot their concept during time-boxed periods that culminate in pitch events where they report on their milestones and (try to) get support for the next cycle of testing and development, or realization. That should be funded from a dedicated innovation fund with decision makers from the central organization. See it as an accelerator program supported by corporate venture capital.

This methodological approach to validate ideas and reduce uncertainty, allows business leaders to increase their investments step by step and bridge the gap between the agile innovation ecosystem and the more rigid business practices. Gradually increasing investments based on validation allows for a smooth scaling of verified concepts into the corporate environment for execution. And, it serves as a preventive measure against allocating investments towards seemingly promising ideas that aren't living up to expectations.

Keeping connection with the main vessel and regularly checking in also supports preserving and building upon existing resources and expertise. According to Geoffrey A. Moore's book 'Zone to Win', intrapreneurial teams, referred to as Independent Operating Units (IOUs), should possess distinct capabilities while leveraging the shared services of the corporate organization such as HR and Administration.?

By putting in place deliberate resource allocation, efficient governance, tailored enablement programs, and clearly defined innovation processes, corporations can create a framework where the benefits of both agile startups and established enterprises can come together.

Innovation facilitated by intrapreneurs enhances organizational growth, making it critical for organizations to promote and foster intrapreneurial behavior among their employees and managers. - Rivera, M. (2017). Leveraging innovation and intrapreneurship as a source for organizational growth. International Journal of Innovation Science.

Conclusion

The concept that startups possess inherently superior innovation capabilities compared to corporations is an oversimplification. Corporations can overcome this set of challenges by embracing their distinctive strengths, utilizing the internal and external resources at their disposal, and strategically creating new avenues for innovation.?

The crucial aspect is to employ and build upon the unique capabilities and assets that are already there. Most striking are their people that should be allowed and enabled to act as intrapreneurs. Give them a speed boat and embed a separate route for innovation into your organization. By doing so, corporations can transform themselves into innovation tankers, keeping even the most agile startups at bay.

And if everything fails, the corporate can always choose the path of acquisition ??