We often find ourselves engaged with members of large organizations on questions of how to be more innovative and entrepreneurial. In virtually every case we hear something like this:
“I have an idea for a new product (or process, system, program, etc.). I’m not dead certain it can be pulled off, but if it could, it can have a significant impact on the business. It’s not within the day-to-day scope of my job and I certainly don’t want to put myself or the company at significant risk, but it would be a shame if I didn’t try to move the idea forward somehow. How do I do this within a pretty traditional organization?”
We have come to call these kinds of managers “entrepreneurs inside” because though they work within an established organizational context, like entrepreneurs, they have ideas that upset the status quo. And like entrepreneurs, these entrepreneurs inside face a substantial set of risks—even though organizations are calling for more creativity, more innovation, and more entrepreneurial behavior from employees.
To help, experts have rushed in with diagnostic tools and organizational methodologies designed to “unlock” these desired behaviors. Jennifer Prosek catalogs a number of these approaches in Army of Entrepreneurs. But we and others see little evidence of substantive change. 85% of the respondents to an Accenture survey reported that “employee ideas are mostly aimed at internal improvements rather than external ones.” In fact the average life of Fortune 500 organizations continues to shrink from 67 years in the 1920s to just 15 years today, according to Professor Richard Foster from Yale University, as do the number of world-changing ideas emerging from them. Our notions of sustainable competitive advantage are truly challenged.
So how can companies get more entrepreneurial behavior from employees, and how can entrepreneurs inside act on their ideas, while minimizing risk to themselves and to their organizations?
To that end, and based on studies of entrepreneurs both inside and out, we have created a set of four simple steps for taking effective entrepreneurial action within an organization (or for managing your entrepreneurs inside).
These steps do, in fact, provide more opportunities for “entrepreneurs inside” to test and start more ideas and, by extension, to increase the likelihood of organization improvement.
First, it all starts with Desire. If you are going to start some sort of improvement effort you must wantto do it. Without personal motivation to take any step into the unknown, no matter how small, there is no possibility for success. Curiosity is sufficient but if it’s “just a good idea” that you don’t personally care about, stop wasting your time and those around you by considering it any further.
Then ask “What am I willing to invest to take the first step?” Successful entrepreneurs generally don’t try to calculate what they will ultimately get from their efforts, and instead ask “What can I afford to lose” if the next step doesn’t turn out as expected. Given the uncertainty inherent in their work this “acceptable loss” frame of reference represents a powerful offset to the traditional notions of “expected return” that stop most efforts before they ever begin.
External entrepreneurs consider money, time, opportunity cost, etc. as the primary categories for consideration alongside the intensity of their desire in determining whether or not to take the first step. It is quite different for entrepreneurs inside where the most significant investment (and risk) criteria they consider is their social standing and relationship capital within the organization. Their peers and their immediate boss become the important gatekeepers to the first step. We find ourselves working with entrepreneurs inside to address these social capital issues in exactly the same way we have advised traditional entrepreneurs to manage their financial risks.
And then “Who can I bring along with me?” External entrepreneurs are constantly making deals for free or low-cost assets and resources. Entrepreneurs inside do likewise but they are also acutely looking for employee partners and supportive bosses (or at least passive ones) as they build a marketplace and political support for their evolving idea. This internal network consists of both emotional and physical support. You want enough to get started given your investment analysis and an orientation toward building as you further your efforts against the idea.
Now it is time to Act. Remain open to what happens and its implications for your next step and then immediately build your next step on what you learned and the result you just achieved. This Act-Learn-Build cycle is the proven and safe recipe for entrepreneurial success. Form the habit of actingyour way into the future with low-cost, low-risk steps using the means you and your network have readily at hand. Over-planning and over-thinking are not nearly as effective. External entrepreneurs are often supported by the discipline of staged venture capital for this work. Entrepreneurs inside instead use their emergent networks to explore their learning and build support for what comes next.
These simple steps have worked for others and for many of the people we’ve worked with inside organizations, and should help you address the question of how to get started.
Len Schlesinger is Baker Foundation Professor of Business Administration at the Harvard Business School where he teaches general management. He was the 12th president of Babson College, the world’s leading educational institution for entrepreneurship. He was formerly Vice Chairman and COO at Limited Brands. He is the co-author of Just Start (Harvard Business Review Press, 2012).
Charlie Kiefer is founder of Innovation Associates whose programs and services in insight, entrepreneurial thinking and learning-based change permanently improve a large organization’s ability to innovate. Len and Charlie have co-authored a number of books and articles on entrepreneurship including Just Start (Harvard Business Review Press, 2012).
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