Impact Intrapreneurship.

Why the next step in your corporate portfolio should focus on positive impact, and why it should come from within your organization

Realizing that business is shifting towards making more than profits is nothing new. Principles such as the triple bottom line, corporate social responsibility and green alternatives have been in the headlines of popular and business media for years. But while campaign after campaign in marketing is launched, conference after conference is held, the actual change in our practices has been low for the majority of corporations. Only recently, as the circumstances change further and pressures rise, companies are starting to act. The combination of consumer demand, government regulation and even employee pressure is slowly but surely pushing out the greenwashing-campaigns and pro-forma social responsibility. But now many companies face new issue: We know our old tricks won’t work anymore and we really want to improve. But how?

In this article I want to clear up the most common misconceptions about creating a positive impact with your organization, analyse why money alone wont fix the problem, and lay out a path that is actionable and creates real tangible change for your organization. But first, lets talk about the why:

What’s happening?

Business with the sole objective of short-term financial profit was the backbone of western economy since the industrial revolution. But since the 90’s, the times changed, and more and more businesses incorporated some form of positive impact into their strategy. Under this category falls sustainability, including environmental protection and climate neutrality, as well as social change. Fundamentally conflicting with many businesses short term leadership style, these objectives often require time and commitment in the long run.

As a part of the information age, especially through social media, consumer awareness has risen massively in recent years, while simultaneously wrongdoing and unsustainability can lead to global shitstorms within hours. So, the signs all point towards change: From an image, long term profit and brand point of view, achieving real sustainability and social responsibility are a must for any corporation.

What’s wrong?

There are three main points where most corporations currently fail to make progress in making an impact. All three are the underlying strategies that are employed to forcefully implement positive impact, without deep understanding about the topic and with minimal commitment. The strategies are:

The Top-Down-Order-Approach

This is very common in establishing pro-forma initiatives. However, implementing such measures often is not sustainable, as a strategy because the incentive systems of organizations are not laid out support this. Therefore, employees don’t stand behind these measures, and they are executed with the least amount of care possible. The additional responsibility then is seen as a nuisance and side-lined.

The “Washing” Approach

The term greenwashing is in everybody’s mind when it comes to sustainability approaches. Under this category falls everything that is presented to the outside as a great advance in the “washed” field, but often in reality is just the legally required action or even less. However, any such action must be covered up not only externally, but also internally as it creates the danger of whistle-blowers causing massive brand damage.

The Acquisition Approach

The approach grew very popular during the last 2010’s, when even the largest corporations started to acquire Greentech and social impact companies to add this space to their corporate portfolio. This strategy is first of all very cost intensive, as nowadays most start-up exist by acquisitions exceed traditional valuation methods by far. Furthermore, they are a dangerous gamble: Once a start-up business is acquired their culture will clash with the more traditional ways of working in the acquiring business. Many of the leading brains behind the start-up might even leave, as they see their freedom limited and have no interest to work for larger company, kicking off a brain drain leaving the acquisition without its muscle to cause change. Also, from the perspective of the existing employees, the bought start-up might always be seen as an addon, and not really part of their identity.

All three share that they are designed to keep the effort for the organisation as low as possible, while its possible to classify the matter as a “success” almost immediately to shareholders. However, they also share that they are fundamentally ineffective and do not actually address the problem, nor provide actual long-lasting value to the organization. But there is hope. A fourth approach might just be what most incumbent businesses need to succeed.

A path forward.

The fourth approach is called intrapreneurship. In contrast to entrepreneurship, this a business venture coming from within an existing organization. Harnessing the resources of a corporate environment, such as funding, IP and relative job security in comparison to pure entrepreneurial efforts, intrapreneurship is the ideal concept to base positive impact change efforts on. However, smooth sailing is in no way guaranteed.

Exploring a path to sustained success on such endeavour first of all requires one thing: Commitment.

Commitment beyond a three-month campaign, and beyond instant success. But commitment to taking on issues that the entirety of our society faces and that are among the toughest of humanity. And it requires the leadership of the organisation to acknowledge to shareholders, employees, and themselves that success cannot be guaranteed for a measurable positive impact on the business numbers of years could pass. Only if this level of commitment is given, should such a path be started.

Once an organisation embarks on this path, they will start at a crossroads. Deciding as to what the company needs as a positive impact. Options here are manifold: Social impact in developing countries where a company might operate production facilities, environmental protection, climate-neutrality for the business, as well as many more. Here the path of most resistance is the right one. The options everyone tries to discourage your from, that is most difficult and is the biggest taboo to bring up at meetings. This is the path to make the biggest impact.

Corporate leadership now has the crucial task to: Keep their corporate hands off! Independence from the original company is crucial for the effort to create their own identity and work in different ways. For example, implementing an agile methodology to work. Selecting the right talent from within the organization is key, and here the focus should be on ambition and giving more junior employees a chance to rapidly advance their careers. Mixing existing staff and new hires can also help in creating both attachment to the parent firm as well as bring in fresh spirit.

While corporate should not interfere with intrapreneurial efforts on a day-to-day basis, for general strategic direction a clear vision is key. From the start such a project should have the freedom to think big, and if possible, in the long run compete or even overtake the main business of the firm. If creative freedom is limited from the beginning to an ancillary side project, neither will the effort work out, nut be the people who stand up from the organization to lead something new feel that they are making an impact.

Closing Thoughts.

Overall, intrapreneurship is a win-win situation. It has significantly lower cost associated with it than a full-on acquisition, as well as not only ownership of the intellectual property, but also the capabilities to develop it. Such an effort furthermore attracts high-potential talent that otherwise would have avoided the company. A successful intrapreneurship effort also is seen by the rest of the company as a success of their own, motivating other employees. Lastly the advances made, the innovation created, and the new business models are tailored exactly to the company’s existing assets and capabilities and won’t require as much adjustment as an external acquisition.

Lastly some key insights to smooth out your intrapreneurship project: provide those who step up with a stake in the effort, to motivate them and to create a sense of ownership. Also, while it might be tempting to give your intrapreneurship team a head-start by funding them extraordinarily well, frugal innovation advances are much more effective and can only really happen if funding is not unlimited. On the other hand, access to other parts of your organization is a great tool to be cross functional and make a lot of progress with a small team. And finally, be open with failure. Intrapreneurial efforts are perfect for storytelling via social media, but audiences don’t react well to artificially boosted success stories. So, if something goes wrong, it shows strength to communicate it.

---

References.

Gelfand, M., Gordon, S., Li, C., Choi, V., & Prokopowicz, P. (2018, October 02). One Reason Mergers Fail: The Two Cultures Aren’t Compatible. Harvard Business Review. https://hbr.org/2018/10/one-reason-mergers-fail-the-two-cultures-arent-compatible

Soland, M. (2013). ”Relax... Greentech will solve the problem!”: Socio-psychological models of environmental responsibility denial due to greentech optimism. Zurich Open Repository and Archive. https://www.zora.uzh.ch/id/eprint/84597/1/Thesis_Soland2013.pdf

Navelkar, V. (2021, April 26). The Many Shades of Intrapreneurship. TCS. https://www.tcs.com/blogs/organization-intrapreneurship-business-innovation

Vargas-Halabí, T., Mora-Esquivel, R. and Siles, B. (2017), "Intrapreneurial competencies: development and validation of a measurement scale", European Journal of Management and Business Economics, Vol. 26 No. 1, pp. 86-111. https://doi.org/10.1108/EJMBE-07-2017-006

Markopoulos, E. & Vanharanta, H. (2015). The Company Democracy Model for the Development of Intellectual Human Capitalism for Shared Value. Procedia Manufacturing. 3. 603-610. https://www.sciencedirect.com/science/article/pii/S2351978915002784

Thompson, W. (2016, November 04). 5 Pitfalls to Avoid for Intrapreneurs. Insurance Thought Leadership. https://www.insurancethoughtleadership.com/5-pitfalls-to-avoid-for-intrapreneurs/

Schuh, A. (2020, May 20). Intrapreneurship? It’s a trap! — 8 tips on how to make corporate innovation work. Pioneers. https://pioneers.io/how-to-make-intrapreneurship-work/

Rask, J. (2017, November 20). An intrapreneur's confession - the usual pitfalls of corporate innovation aren’t that hard to get rid off. LinkedIn. https://www.linkedin.com/pulse/intrapreneurs-confession-usual-pitfalls-corporate-innovation-rask/

GGGI. (2020, December). GREEN GROWTH INDEX 2020. GGGI. https://greengrowthindex.gggi.org/wp-content/uploads/2021/01/2020-Green-Growth-Index.pdf

Liu, D. (2021, May 20). Greenwashing and its Implication in Venture Capital. The London Financial. https://www.thelondonfinancial.com/markets/equities/greenwashing-and-its-implication-in-venture-capital