Is Intrapreneurship the Solution for Unhappy Employees and Behind-the-Times Businesses? Intrapreneurship is an old concept, but it's yet to make its way into many company cultures.

By Frank Theodore Koe

This story appears in the October 2021 issue of Entrepreneur. Subscribe »

Viktor Koen

As you read this, many of the people on your team may be plotting their escape. A recent Gallup poll found that 54 percent of workers are "psychologically unattached to their work and company" — and that makes them very hard to rally to your cause. Across the American economy, those disengaged employees translate into billions of dollars of losses.

Why are they disengaged? Take your pick from a host of explanations. The pandemic inspired many people to reconsider their lives. Meanwhile, millennials are projected to make up 75 percent of the global workforce by 2025, and they have been known for a hyper focus on meaningful work that aligns with their beliefs (which isn't something every job offers). Now Gen Z is entering the workforce and exhibits strong entrepreneurial ambitions; when EY Ripples and JA Worldwide surveyed nearly 6,000 members of Gen Z who participated in JA programs, for example, it found that 53 percent say they aspire to run their own business within a decade.

Related: 3 Reasons Companies Need Intrapreneurship

In short: People want more control. They want to engage in more nonlinear thinking that allows for an expansive and creative way of finding solutions to problems. And if leaders want to engage these inspiring workers, and harness their energy and ideas, they will need to pursue a concept that is decades old — but that still hasn't made its way into many company cultures.

It is intrapreneurship.

The term intrapreneur was coined in 1978 by Libba and Gifford Pinchot, the married founders of the consulting firm Pinchot & Company, and appeared in a white paper they wrote at the time. Today, a more concise definition has been offered by Sir Richard Branson: "An employee who is given freedom and financial support to create new products, services, and systems who does not have to follow the company's usual routines or protocol."

Of course, each company will define "freedom" and "usual routines" for itself, but the overall concept remains the same: Intrapreneurship is a license for employees to think boldly. The importance of this is also near-universal. As companies grapple with how to grow and innovate in rapidly changing industries, they'll find that experimenting and testing new ideas has never been more needed.

Many iconic innovations were inspired by individuals within companies — and not necessarily because they were tasked with the job. For example, the product conglomerate 3M has a policy of "permitted bootlegging," in which employees are encouraged to develop pet projects. Famously, in 1968, a 3M scientist named Spencer Silver accidentally created a reusable adhesive that clings to many surfaces. He spent years promoting it inside 3M until a colleague finally suggested an application: bookmarks. The idea evolved into Post-it Notes. Similar stories led to the creation of Sony's PlayStation, Lockheed Martin's Skunk Works — which developed the SR-71 Blackbird reconnaissance aircraft — W.L. Gore's Elixir guitar strings, and more.

Related: 3 Ways to Spread an 'Intrapreneurial' Spirit Throughout Your Company

But here's where things get tricky. Intrapreneurship cannot simply be about giving employees permission. It must also be about restructuring a company's leadership to take those employees seriously, and a willingness to pivot when an employee discovers something transformative. Consider how the management of the Eastman Kodak Company responded to Steven Sasson, a 24-year-old company research engineer who invented the first digital camera. By not wanting it to interfere with sales in other areas, Kodak placed the company's future in jeopardy by not capitalizing on Sasson's revolutionary development. It was not until 1991 that Kodak finally introduced its version of the digital camera — 16 years after it could have had a huge head start. Kodak was simply not structured to address the development of new products or see where they may lead.

How can a company do better? It begins with structure.

Rather than have a pyramidal business model with layers of bosses, intrapreneurial businesses embrace a "flatter" system. That means, in part, reducing or restructuring middle management to limit the breakdown of communication that often makes employees feel disconnected. But, of course, placing these and other elements into practice is easier said than done.

Change on any level is challenging, and it may be difficult to get buy-in from your entire organization. That's why champions of intrapreneurship often lead with an argument that might be called "the force of circumstances." As a company feels threatened by its competition or changes in its industry, it may be forced to look at things differently — and that company's staff could be a wellspring of new ideas just waiting to be tapped. The consequences of not doing this are steep. Only 52 U.S. companies have remained on the Fortune 500 since 1955 — which is to say that change may be difficult, but becoming irrelevant is worse.

Top management must exhibit an inventive spirit and lead by example, demonstrating trust and flexibility when workers show initiative. Leaders must be willing to tolerate some degree of failure and create a sense that employees share ownership in their work. They must also remember that highly valued employees will leave a company if their work is not recognized. It's not difficult to let an employee know they are important, even in ways that are nonfinancial. Singling out a worker in a company newsletter, for example, can have a positive effect and go a long way toward making a person feel valued. Rewards that encourage relaxation, like spa treatments, can be used to acknowledge productive employees.

Related: How to Spot an Intrapreneur at Your Company: The 5 Essential Traits to Look for

Intrapreneurial companies don't just mine their current staff for ideas — they also proactively hire entrepreneurial people and create a motivating onboarding experience that underscores how the company innovates and rewards its workers by using actual examples from current employees.

None of this will be easy. It's difficult to scale and will constantly butt up against organizational structures and bureaucracy. Additionally, leadership, particularly at large companies, may feel threatened by offering some independence to subordinate workers. But times are rapidly changing. Consider this: Thirty-­four percent of Americans feel underutilized by their employer and 47 percent wished their company would try to understand their skill set better, according to a report by the HR startup Gloat. That's a lot of talented people who might leave for somewhere they're more appreciated — and they will be more than happy to help that next employer beat out their old employer.

The companies that adopt a startup mentality will be rewarded. Leadership now is about creating the conditions for innovation to flourish. Not everyone will start their own company. But we'll all be better when more people are empowered to create, no matter where they are.

Frank Theodore Koe

Professor of Engineering Entrepreneurship, Penn State University

Frank Theodore Koe, Ph.D. is an experienced educator, entrepreneur, intrapreneur and international consultant, currently serving as a Teaching Professor of Engineering Entrepreneurship in the College of Engineering at Penn State University. His work includes serving as associate director of the W.R. Berkley Innovation Labs at the Stern School of Business, New York University; director of the Executive MBA program at New Jersey Institute of Technology; acting dean of the Baker School of Business and Technology at the Fashion Institute of Technology, New York City; director of the Design Center at Philadelphia University and vice president and director of restoration at Scalamandre in New York City where he worked to reproduce fabric furnishings for historic sites such as The Andrew Johnson Suite in the US Department of the Treasury and rooms in The White House during the Clinton administration.

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