A Brief History of Intrapreneurship (no, that’s not a typo)
You can be an entrepreneur without leaving your job at a large company. Read on to find out why Apple has encouraged intrapreneurship for decades.
Be sure to Tweet your takeaways at me, @UrszulaSolarz.
“You are either a faceless corporate cog in the machine of a large, soulless organization, or you are fighting the good fight as a free and independent entrepreneur in charge of his own destiny.” (Time Magazine: Here Come the Intrapreneurs)
This is the manner in which most conversations about entrepreneurship begin: the entrepreneurs and their future endeavors are shown in a radiant light, while the corporation appears in a palette of dull blues and greys, unlikely to change. I admit I have adhered to the same stereotypes when considering future careers. I’ve only recently begun to see that I have practically worshiped entrepreneurship and the idea of creating something on my own as a means to make my life here on Earth meaningful and fulfilling. However, once I start a company, employ many people, and establish a reputation, how do I make sure the company survives long enough to impact someone or something? This question is essential for all companies to consider, even at times of seemingly never ending growth. As Tone Marie Wahlstrom, a leading Norwegian technologist, notes in her TED talk, 88 percent of firms on the Fortune 500 list since the 1960s have either been hit by bankruptcy or have undergone mergers. There are multiple frameworks with which to analyze this phenomenon, ranging from the economics of creative destruction to economics of monopolization. To answer my question about survival, I decided to look into the processes that led to development of intrapreneurship, or entrepreneurship within companies, as a formal business practice.
Intrapreneurship occurs when small teams of people split off from the main projects a company is working on to pursue new sources of revenue. There are two main ways they do this. The first is by the team making incremental, but innovative improvements to existing products while the rest of the company works on new merchandise. This helps a company maintain a constant profit on devices they know will sell, while developing new ones to become “future proof.” The second is by organizing a small mix of team members with unique backgrounds to create new products; this is valuable since departments like engineering, designing, and public relations typically work separately. This type of intrapreneur team helps companies overcome the innovator’s dilemma, a situation in which they’ve spent so many resources on one project that they are hesitant about the financial risk of starting new projects. To promote intrapreneurship, companies can organize hackathons, design competitions challenging people to solve a problem within 24 hours, outside work hours. Within work hours, they can offer innovation time, which “offers employees the option to spend some of their time on side projects” and set up sandbox funds from which “companies can allocate money to buy time from other work.” This sets up a more startup-esque environment for people to truly unleash their creativity and lead initiatives according to their own ideas, while still having the financial backing of a large company. These are instances of modern intrapreneurship in action, but the basic idea of utilizing existing resources within organizations to innovate them has been around for much longer.
Before the Agricultural Revolution, people living in tribes all worked towards food collection and production. Some people were always responsible for hunting, some for gathering, and others for cooking. There was a lot of intrapreneurship in such societies because everyone perfected their craft and innovated within their respective duties. For instance, a gatherer could have invented a handy tool to make picking prickly fruit easier or come up with a way to bend over for long periods of time without hurting their back. After the Agricultural Revolution, when fewer people were needed to ensure food for society, there was a lot more independence and entrepreneurship. People opened shops and took up non-food centric professions, like pottery creation or making various styles of gates; “these were the earliest entrepreneurs in human civilization.” As shops grew into companies and got bigger and bigger, the cycle continued and intrapreneurship made a return to ensure the company survived. Thus, intrapreneurship evolved from being the basis of human survival to company survival (a cool research topic for next time: intrapreneurship during the Age of Mercantilism).
While it can never be confirmed when exactly the term intrapreneurship was first used, public consensus suggests it was coined by Gifford Pinchot III, a management consultant from New Haven, Connecticut (my home for the past few months in college), in his 1985 book, Intrapreneuring, or Why You Don’t Have to Leave the Corporation to Become an Entrepreneur. Reactions to his book widely differed amidst corporate business executives. While some excitedly jumped to implementing intrapreneurship in their companies, others like influential management thinker Peter Drucker claimed “intrapreneurship is really just a new name for an old idea.” There were even some like ITT Corporation President Harold Geneen who believed that “entrepreneurism is the very antithesis of large corporations” and couldn’t stomach combining the two. Nevertheless, by 1992, the term intrapreneurship was officially added to the dictionary, and, by 2014, Forbes published an article explaining why intrapreneurs are the most valuable employees a company can have.
Within this macrohistory of intrapreneurship, it is only right to provide a use case of it. This means going into a microhistory of a company and analyzing how it used intrapreneurship to evolve with the times. Apple Inc. is a good place to begin with because many people associate it with being one of the most important technology companies and it is really difficult to imagine an “Apple-free” future.
Apple was started, quite literally, in a garage in 1976 by Steve Wozniak, Steve Jobs, and Ronald Wayme. It offered consumers the Apple I kit during a particularly busy personal computer (PC) market dominated by well-established Microsoft, Commodore Business Machines, and the Tandy Corporation. While they had positive results on their first few PC release after the Apple I kit, things went downhill with the 1980 Local Integrated Software Architecture (LISA). This device was oriented towards businesses rather than consumers. However, it was very expensive ($27,597.19 in 2021 dollars) and its floppy disks were unreliable, so few businesses were inclined to use it over trusted IBM computers. By 1985, the price of LISA had dropped to $9,303.93 in 2021 dollars and only 10,000 units were sold. It had cost Apple 50 million dollars and they were forced to offer customers credit towards other devices before ultimately discontinuing the line.
Jobs, one of the founding members of Apple, managed to save both Apple’s reputation and bank account later that year by introducing the Apple Macintosh. It was “the first personal computer to feature a graphical-user interface controlled by a mouse,” (think point and click, rather than a consumer communicating with the computer via code) making it the easiest PC for consumers to use, and refocusing Apple on consumers rather than businesses. It was a huge hit and reached 1 million users by 1987. Despite the fact that companies do not typically reveal how they come up with ideas and bring them to production, it is known that Steve Jobs and “a handpicked group of twenty Apple Computer engineers detached themselves from the other Apple employees” still focused on business PCs, to work on the Mac. This group, despite having seen LISA fail, believed that its GUI could be a hit, but only in a market Apple was more comfortable in. In a 1985 Newsweek article, Jobs confirmed that the Mac was built thanks to a strong reliance on and belief in intrapreneurship. He defined the practice as “a group of people going, in essence, back to the garage, but in a large company.” Without Jobs’ introduction of intrapreneurship and belief that he could start a new initiative with Apple’s already existing products, Apple likely would have gone bankrupt.
After the Mac project, Apple continued to use intrapreneurship within its company organization. By allowing employees to spend some of their time at work away from their assigned projects (innovation time as defined above), Apple developed the iPod, iTunes, iCloud, and even the iPhone. The company has also dedicatedly updated the iPhone with new features like True Tone flash and portrait lighting camera lenses every year since 2007. In this way, Apple uses the two types of intrapreneurship to prove a company can make a profit developing already-existing products, while also creating new technologies like watches, TV shows, and electric cars.
Historians are in a unique position to use what they know about the processes that created something or someone to predict its or their future evolution. Therefore, after writing the history of intrapreneurship, from analyzing its definition at the microlevel to seeing it in context of various industries and times at the macro level, I am inclined to think that the business strategy will only pick up steam, especially outside the United States. Using the Google Trends tool, it is possible to view a graph of how often the word intrapreneurship has been searched for. There has been only a slight upward trajectory in interest in this word over twelve years, with astonishing small changes after the 2008 financial crisis and the 2020 work at home migration affecting many small and non-digital native businesses. However, changing the geographical range of the search engine reveals that the word has been increasingly Googled in Eastern Africa, especially in Rwanda and Zimbabwe.
No matter the location, intrapreneurship is bound to spread naturally since modern employers organize more collaborative and interdisciplinary teams than ever before. Research also proves employees will be more motivated and productive in workplaces where intrapreneurship is valued, leading to better team dynamics and higher profit margins. ( In The Intrapreneur: Confessions of a Corporate Insurgent, the author reviews a Deloitte survey of the millennial generation; he discovers a correlation between low employee engagement and employees “thinking their business is not doing enough to tackle social and environmental challenges.” These same employees, notedly part of one generation who make up the bulk of the current workforce, “are keen to find roles that give them the opportunity to contribute” to teams searching for solutions to those problems.) At the same time, a challenge intrapreneurship will face is employee competition; after all, as MIT professor Eric von Hippel explains, “if you’re sitting there and you see a guy in the corner working on an automated system that will make your skills obsolete, you’re going to try to cut off his funding.” You should not leave this essay wanting to search for a handbook or how-to guide to know how to safely introduce intrapreneurship into your company. You should, instead, reflect on how you and your teams already function, just like how I have to reflect if perhaps being an intrapreneur is not that bad of an idea after all . . .
Some Extra Thoughts:
- For brevity’s sake, I will not go into the history of Google’s intrapreneurship, but leave you to connect the dots. Why does Google invest into so many side businesses like artificial intelligence and autonomous vehicles when most of its profit comes from advertising? Well, since the future is uncertain, it pays off to have employees thinking about various industries beyond Google Search, even if they cost more money short-term to run, than they do generate.
- In order to remain a top university, Yale has increasingly devoted funding to STEM departments. The goal of this is to expand new majors, hire more STEM faculty/researchers, and invest in an innovation corridor which includes the Yale CEID and Tsai City. Speaking with humanities and social science students, I’ve noticed concern that Yale might be losing some of its identity as a liberal arts college as it prioritized these initiatives. These students believe that although there are a lot of constants in fields like English and history, these departments still have to provide students with opportunities linking their fields to the 21st century. Overcoming obstacles to that is possible using intrapreneurship methods. I would especially keep an eye out for graduates of the Brady-Johnson Program in Grand Strategy. Since the program “encourages understanding of […] challenges, while developing students’ capacity for strategic thinking and effective leadership in a variety of fields,” they would make excellent intrapreneurs.
- From a non-academic point of view, Yale Hospitality excels at implementing the principles of entrepreneurship. Every so often, dining staff are asked to weave foods rooted in their identities into standard dining hall dinners. Sometimes there are even themed weeks based on staff family recipes. In this way, Yale Hospitality is relying on their employees as assets and encouraging new ventures with minimal risk and high chance of success. The result of this is (hopefully) student approval of the tasty food and appreciation, thus making Yale well known as a community oriented brand.
- Can we generalize that entrepreneurship works vertically, while intrapreneurship works horizontally? My attempt at turning this idea into a mathematical chart is below.