The following a blog post (part two of two) is from Greg Phipps, our managing director of investment here at Innovacorp.
Sustaining the start-up mentality.
It’s one thing to embrace a corporate evolution (or revolution) that leads to the creation of a start-up culture, overcoming the initial “clash of cultures” that sometimes initiates some conflict. It’s another thing to sustain that culture long enough to realize and leverage the benefits. I can offer a few suggestions on approaches a large corporation might adopt to ensure the new ethos endures.
Create a role or department to drive innovation and entrepreneurial behavior.
Some people believe that a mandate for everyone in a company to think and act like an entrepreneur must start at the top. I’m not certain that’s necessarily the best starting point. Although there absolutely has to be a senior-level embrace of the concept, the action plan can be defined and initiated at a much lower level in the org structure and driven both up and down from there. In any event, the shift in culture has to start somewhere and, like ink dripped into a glass of water, it will permeate throughout the entire organization. Here’s a suggestion: Establish a new role, with a direct reporting line to the CEO, and define it as Chief Innovation Officer. The mandate for the role is self-explanatory.
"Intrapreneurship" can be defined as bringing an entrepreneurial approach to a team, a department or an entire company. It’s founded on a premise of celebrating new ideas, solutions, business models and products, and treating internal projects like a start-up.
There are easy and practical ways to initiate intrapreneurship in a large corporation. Create an internal “ideas” incubator to get new products or services off the ground in a non-traditional and non-linear way. Launch an internal “pitch” competition to uncover ideas that are of strategic benefit to the company, and like venture capitalists – fund the best of them. If this approach becomes a catalyst to more efficient service delivery and/or incents the development of new products or services, it’s a win-win for the company. Consider spinning the venture out if corporate priorities, resources or culture just can’t support it at the moment, and then make the intrapreneurs your latest suppliers. Create an opportunity for employees to share their ideas for innovative solutions, and you can rightfully declare your company as being entrepreneurial.
Make an entrepreneurial mindset a new filter for hiring and promotion.
This recommendation is likely to raise the hackles of managers used to more… um, traditional, hierarchical, promotional practices. That said, I stand by my assertion that injecting any large corporation with former entrepreneurs, venture capital professionals and others with actual start-up experience, is the best way to kick-start a sustainable culture that emulates an entrepreneurial start-up.
Think and act like an owner.
If you want to motivate employees to think and act like an owner, and all the positive performance outcomes inherent to that approach, you’ve got to make them owners. Almost every start-up with whom I’ve worked has embraced the concept of distribution of shares or share options to employees as an effective instrument for attraction, retention and motivation. Corporations of any size can adopt a similar approach with relative ease and benefit from the positive impact at any stage in their evolution.
Create a corporate venture capital (CVC) division.
Innovation, greater efficiencies, new products, synergistic solutions and top talent can be found in external sources too, and an entrepreneurial corporation can access all of that through the development of a corporate investment initiative. Twelve-hundred of the Forbes Global 2000 companies have corporate venture departments. Carving out 1-5 per cent of revenue to allocate to finding and funding strategically beneficial companies and technologies can pay dividends well beyond the monetary ROI. External corporate investments can become a source of innovation and non-organic growth for the company, through revenue consolidation, potential downstream investment realization (sale to a third-party), or through the subsequent acquisition of the company and its underlying assets.