Being Entrepreneurial in a Corporate Environment
At the very basic level entrepreneurs and corporations do not mix. However, the key to being a successful intrepreneur (an internal entrepreneur) is creating value outside of your job description that your company just can’t ignore.
Entrepreneurs in a corporation—it’s a problem. Allow me to illustrate the nature of the problem with a story from my past.
When I worked at Citibank in the 1980s, I was a member of a consulting team specializing in organizational performance. Our clients were Citibank entities around the world, so we spent many months in banks in various countries. Since we were an internal consulting service there was no charge to our clients, which was nice while it lasted. The arrangement changed bit by bit because Citibank was, and is, an aggressive, decentralized profit focused company—they were not fond of freebies. From the bank’s point of view, since we were free they could not be sure we were adding value. (At Citibank, there was only one way to value things—money—even the library was a profit center!) The first step in determining our value was to charge these internal clients for our travel costs. The second step was to charge a modest consulting fee. The logic was that if the Citibank businesses would pay for our service and expenses, then we must be adding value because it was booked as a charge to their business. This would be true even though the money was only moving from column to column within the bank.
While this column jumping may seem silly, it did comfort the bank while simultaneously providing our consulting team with a needed monetary “attaboy.” However, Citibank being Citibank, they wanted more because they liked making money. So they added a third step, which was to offer our services to correspondent banks (the banks that Citibank had to work through in foreign countries where we were not chartered). Now, however, we were to charge consulting fees, cover our costs and turn a profit. Within a few months we were accomplishing all three goals.
And this is where the concept of internal/corporate entrepreneurship or “intrepreneurship” becomes problematic. Our small team had identified a need, built a service, sold that service and made money for Citibank. In essence, we had created a commercial venture in which the profits were given right back to the bank. We had become intrepreneurs. The logic for working in such a commercially altruistic enterprise no longer seemed overwhelming to the team. Within the year we had all left Citibank—several to become actual entrepreneurs, including myself. The primary reason we left was because of the bank’s inability to replicate the risk-reward dynamic of a start-up.
WHY IT’S A PROBLEM
This Citibank arrangement, and by extension, all internal entrepreneurship attempts are problematic because they lack a central attribute that an entrepreneur is seeking: high reward with its unfortunate corollary—high risk. Entrepreneurs go into business for many reasons, but one of them is the substantial financial opportunity. The odds of success in the entrepreneurial space are small while the risks are significant (as Figure 1 clearly demonstrates).
In case your math is slow, that means that 5% are successful after five years and only 1% are succeeding after 10 years. To take on this risk, there has to be a significant reward in sight. And while corporations can reduce the risk through their access to talent and capital, they are unlikely to give commensurate rewards. And that is the basis of the intrepreneurial challenge. There is rarely a “What’s In It For Me” (WIIFM) offered for the innovative effort being asked for. Essentially corporations want to have their cake and eat it too—limited risk, limited reward and high innovation. And, in a way, intrepreneurs want to have it both ways too—low risk and high reward.
CORPORATE’S SOLUTION TO THE PROBLEM
Corporations view intrepreneurship through a different lens than the individual innovator who wants to create value and is not concerned about shaking things up in the process. The corporation, to the contrary, wants to see viable new ideas while not disrupting the organization. After all, organizations are built to be stable, not to jump from idea to idea and product to product. Change is expensive and uncertain. If corporations did not have to change, they probably wouldn’t.
But they do have to change, because we all live in a volatile business world, and change is required for survival. In order to thrive they have to constantly re-invent themselves, and there are countless examples of innovation in corporate America. A rudimentary list can range from Post-It and Gore-Tex of the 1980s; to Gmail, smartphones and “the cloud” in the past decade; and the gamification of data, DIY TV and making sustainability profitable of today. The list is impressive.
The barriers to intrepreneurship and innovation are, as corporations see it, not rewards but time, bureaucracy and culture. They think (and they may be partially right here) that hierarchy, approval processes, managerial control, etc., stifle innovation. The corporation’s solution is to remove bureaucracy and provide access to the right people, so that their staff will be able to become internal entrepreneurs and innovators. They have responded with a number of cute sounding design solutions that are helpful, but they do not create true opportunities for corporate intrepreneurship because they do not provide the rewards that help drive entrepreneurship. These organizational solutions have included:
- Skunk Works: An elite group of people charged with secretively developing innovative products and solutions beyond the touch of the bureaucracy
- Organizational Anarchy: Similar to skunk works but it seems to relish a certain amount of chaos to feed creativity
- Bootlegging: A bottoms up form of teamwork that excludes the elitism of skunk works
- Lattice Structure: Similar to a matrix organization in that it eschews hierarchy and encourages contact between all layers of the organization
The other solution of corporations is to create the time necessary to innovate. They did this at 3M by providing a percentage of paid time for experimentation. Gore-Tex lets employees “earn” free time to innovate by competing for that time against other intrepreneurs1. All these solutions, to varying degrees, owe their provenance to the idea that individuals are not inherently lazy, rather, they are deeply motivated and that corporations only need to enable them to excel.2
THE PERSONAL BRAND SOLUTION
We are left with a situation in which corporations seek to encourage internal entrepreneurship by becoming more flexible, but they still cannot offer significant rewards. While there are many more reasons to be innovative and entrepreneurial than just financial rewards, it remains a significant piece of the motivational puzzle. They can encourage people and provide them with the time, resources and access, but there is still no WIIFM. Like myself in the 1980s, one is being asked to turn the profits over to the employer.
I do not wish this to sound hopeless or to discourage creative and innovative work, for I believe that true entrepreneurial spirit and behavior may be possible a lot closer to home. While it may not lead to extravagant riches, entrepreneurship in a corporation may be more about viewing yourself as a business within a marketplace rather than as an employee.
To follow this metaphor through, you, as a business are seeking important, unsolved problems in the corporation. The concept is that unsolved problems represent market opportunities and your ability to successfully address or solve key corporate problems creates visibility and influence—the more important the problem, the bigger the opportunity. In a sociological sense, you become more valuable so the corporation must offer you more to retain you. The more difficult the problem you fix, the more you are worth.
To pick a hypothetical (and hyperbolic) pharmaceutical profitability issue: What if you were able to increase your company’s patient compliance rate by 50%? The profitability gains would be monumental. And the person who built the solution would be able “write his own ticket.” While this example might be extreme, smaller opportunities with higher odds of success are everywhere. The challenge is to identify problems outside of your normal task list and generate your own time and resources to help solve them. This is best done by asking to take the task on and gaining access to people and resources that might help build a solution. In the end, your personal brand will gain stature not through the work you did in your day-to-day job, but for the work you did outside of your job description. This is the model for personal entrepreneurship in a corporation. It is good for you and it is good for the company.
A C-SUITE EXAMPLE
Going back to Citibank in the ‘80s; I once heard the retired Chairman Walter Wriston give a talk about his career at Citibank. He said that he never held a job at the bank that existed before he was in it, except for Chairman. He explained that he just spent his time looking for problems and then asking if he could go fix them. His entrepreneurship had little to do with corporate skunk works or partitioned free time; it was more about having an entrepreneurial spirit to make his own marketplace in which to succeed. He fixed problems and grew the bank—that was his intrepreneurial brand. He never limited himself to just doing his job description well, instead he found new ways to add value.
1. Rao, Jay, “W.L. Gore – Culture of Innovation,” Babson College, 2012
2. McGregor, Douglas, “The Human Side of Enterprise,” McGraw-Hill, New York, 1960