November 22, 2005

Review of Chapter Sixteen: Four Practices of Innovative Organizations

In their textbook Strategic Entrepreneurial Growth, Donald Kuratko and Harold Welsch argue that corporate entrepreneurship – in whatever form it takes – has become a bedrock in modern management. Whether to inspire new products and processes to avoid market stagnation or to retain innovative employees, organizational entrepreneurship – that is, “intrapreneurship” – can have big payoffs to firms committed to the idea in both theory and practice (think 3M).

But “[i]f an organization’s atmosphere does not support innovative efforts,” Kuratko and Welsch warn, “then intrapreneuring (in any form) will probably not occur.” Despite the best wishes of many corporate managers, entrepreneurial workers do not bloom from static work flows and routine tasks. For Kuratko and Welsch, the elements of a corporate intrapreneurship strategy include four major ideas:
1. Developing the vision: Management must define and share, with employee input, the vision of innovation they wish to inspire.
2. Encouraging Innovation: To facilitate entrepreneurial thinking, organizations must tolerate failure, support champions, ensure management support, keep divisions small, and share the rewards for successful ideas.
3. Forming Venture Teams: Teams charged with creating radical new innovations are organized, supported, and given substantial organizational leverage in their tasks.
4. Structuring for an Intrapreneurial Climate: Organizations must nurture information-sharing activities, open resources to employee use, and encourage risk-taking activity.

From a social entrepreneur’s standpoint, David Bornstein details four similar practices that he identifies in innovative organizations” Using anecdotes from his case studies throughout How to Change the World, Bornstein argues managers must implement the following four practices to stimulate organizational entrepreneurship:
1. Institutionalize Listening: The best, most constructive input for both social and traditional entrepreneurs is from the people they serve and their employees. Childline in India, for example, has been subject to repeated changes because of new advice and recommendations. Consequently, there must be an organizationally-defined way for a business to listen.
2. Pay Attention to the Exceptional: Unexpected successes need to be investigated by the intrapreneurial firm to uncover insights that lead to organizational innovation. Part of this practice, as the success of the Grameen Bank shows, is challenging norms and expectations.
3. Design Real Solutions for Real People: Will people use my service or product? How often will they use it and at what cost? Whose consent will I need to develop this organization? What legal or political obstacles must I address? How can I encourage employee and customer feedback to stimulate new ideas or improvements? These are the questions stirring in the organizational mind of an innovative business.
4. Focus on the Human Qualities: Oftentimes, the most innovative, creative intrapreneurs are not those with the highest ACT scores or the most degrees next to their names. Organizations must concentrate on the undefinables – that is, ethics, flexibility, empathy, etc. There are no numerical measures for these qualities.

Without question, there is no single answer to how to inspire intrapreneurship in social or traditional businesses. But both Bornstein and Strategic Entrepreneurial Growth address the keys to corporate entrepreneurship: Escape static, routine structures and processes; foster a culture that encourages customer and employee participation in business processes; and never fear – moreover, know when to – change.

at November 22, 2005 2:01 AM