In the earlier part of my career, a very bright engineer once asked me why our company keeps buying technology via acquisitions of other companies, which are usually start-ups that just became profitable? Why are we not commercializing the organic R&D work? There are many variables that go into the buy vs. build decision, including time to market, our own presence in said market, the cost of buy vs. build, talent availability, and more. I am often surrounded by people with lots of great inventive ideas. But, is this enough in this day and age to propel us forward to gain market share or establish a foothold in a white space?
Often, we mistakenly equate invention for innovation. American entrepreneur Gifford Pinchot III, eloquently stated in his book Intrapreneuring that “Innovation does not mean invention. Invention is the act of genius in creating a new concept for a potentially useful new device or service. In innovation, that is just the beginning. When the invention is done, the second half of innovation begins: turning the new idea into a business success.”
Often times, the very same people with the inventive new ideas do not seem to have the hunger and drive to see their ideas through enough to create a new business. New projects often drag out for a long time, and there is no sense of dire urgency and realistic understanding of the markets they are trying to serve. I believe this phenomenon becomes more acute as a company grows from an aging start-up into a large enterprise, as innovators often get caught in the corporate bureaucracy. To make matters worse, most public companies’ boards put more focus on the shareholders, which tend to emphasize short-term gain.
Results from a 2018 Harvard Business Review survey of 5000 company board members across the globe indicate that for the majority of boards, innovation ranks fifth after concerns such as attracting and retaining top talent and the regulatory environment. On that front, only 21 percent of them believe technology trends are a major strategic challenge. When asked which areas of their board’s processes were effective, directors responded as follows:
• 70 percent - staying current on the company
• 69 percent - compliance
• 66 percent - financial planning
• 55 percent - risk management
• 42 percent - innovation
Many experts agree that, over the decades, solely focusing on the shareholder has resulted in the demise of what were once America’s largest corporations. According to American Enterprise Institute, just 60 companies from 1955 remained on the Fortune 500 list in 2017, with 88 percent absent as a result of either bankruptcy, merger or falling revenue—all of which suggest they were usurped by more innovative disruptors.
Searching for the Center of the Universe
With the advent of the Internet, social media platforms, and mobile apps, the proliferation of information-sharing coupled with deregulation and a burgeoning global marketplace has given unprecedented power to the consumer of goods, services and solutions, whether that is an individual or a business. And, rightly so. But it is nothing new. The world-renowned management consultant, Peter Drucker underscored the critical importance of focusing on customers and anticipating what they want in his highly acclaimed book, The Practice of Management. Written in 1954, he argued that the very purpose of a business is to create a customer. “It is the customer,” he wrote, “who determines what a business is. For it is the customer, and they alone, who through being willing to pay for a good or for a service, converts economic resources into wealth, things into goods. What the business thinks it produces is not of first importance—especially not to the future of the business and to its success. What the customer thinks he is buying, what he considers ‘value’, is decisive—it determines what a business is, what it produces and whether it will prosper.”
Looking Inward and Building Outward
A term first introduced in a 1976 paper written by Gifford Pinchot III and Elizabeth Pinchot, the word intrapreneurship was used to describe a system that removes the bureaucracy stifling new ideas in a large corporation to enable it to behave like an entrepreneur and a nimble, agile startup. Today, according to Intrapreneur.com—which is powered by Pinchot’s Seattle-based Pinchot & Company—the concept is widely used by Fortune 100 companies as well as many international companies and nonprofits.
A Brief History of Intrapreneurship illustrated by the nonprofit Intrapreneurial Initiative offers an excellent overview and pointed examples, including the invention of the Post-It Note in 1974 by a 3M employee, Art Fry.