Inhibitors to Entrepreneurship behavior at large companies (Part I)
Companies realize that they don’t innovate – their employees innovate. Companies are thus earnestly preaching: ‘Innovation is everyone’s job”! While the employees themselves want to become more innovative and entrepreneurial, they face five major structural inhibitors in attempting to do so (that only the most gifted, networked and experienced corporate entrepreneurs can overcome – unfortunately, there aren’t enough of them in most companies to keep up with their ever changing competitive landscape):
- Lack of time (for innovation): Everyone is too busy with the present – Most companies now believe in the notion that innovation can come from anyone and anywhere. However, the harsh reality is that most employees are busy with their present day jobs to spend any significant time thinking about the future. Furthermore, performance reviews are entirely based on completing assigned tasks, solving pressing problems, etc., aka the ‘reaping’ activities in business and do not adequately provide incentive for front line employees to prepare their companies for the future, aka the ‘sewing’ activities in business, i.e. entrepreneurial activities
- Lack of connections: Most people work in silos – Breakthrough opportunities are usually found in the white spaces or future grey spaces of where companies operate and thus require perspectives from different divisional and functional areas in order to be discovered. Even in companies that allow their employees some ‘free thinking time’, it is still hard for them to connect (or even know whom to connect) to other employees in different divisions, functional departments or geographic locations (much less to external constituents that may be needed to identify and build opportunities)
- Lack of (corporate entrepreneurial) skills: Most people lack the context to learn them – Most companies now realize that entrepreneurship is a skill, and like any other skill, it can be taught. Unfortunately, it is a difficult skill, which includes the ability to articulate ideas into fundable projects, connecting to others to close knowledge gaps and gain buy-in, and bootstrapping the early stages of the de-risking process, and like a difficult skill it is best learned by doing. Companies have become eximious at providing classroom-style lectures and workshops on knowledge that can be applied directly to one’s job – but teaching innovation and entrepreneurship in a classroom, or through mentor programs for that matter, can be largely wasted if participants do not have the context in which to apply the lessons learned
- Lack of executive access/visibility (to request resources): Executives don’t want to see thousands of ideas; they want to see actionable plans with breakthrough potential – Executives simply cannot read through thousands or even hundreds of unfiltered ideas, and especially if they are largely unbaked – executives need actionable information, validated by their advisors to do what they do best, i.e. provide direction and make decisions. Thus, a fruitful front-line employee to executive channel to discuss innovative opportunities simply doesn’t exist (and shouldn’t be confused with ‘open-door’ HR policies) – Creative ideas from employees usually don’t make it up to the right executives with decision-making power to attribute the needed funding. And when they do make it, they are rarely presented by the employees themselves and have been largely adulterated by the various managerial rungs that unconsciously remove the breakthrough potential in favor of tried and proven technologies and business models to fit the existing capabilities and markets
- Flawed risk/reward ratio and misconceptions: Companies haven’t addressed the issue from the employees’ perspective (Why should I do this? What happens next?) – Great entrepreneurs are motivated by the potential positive impact that their actions can have on the world, with money as a result of achieving their dream, not the goal in itself. By definition, entrepreneurial minded employees are willing to live with the negative career and personal consequences of pursuing a new venture opportunity largely on their own time (knowing it is highly likely to fail) if they also see that the rewards are commensurate with the risks – for most, the reward is not necessarily a big financial payout, but the notion that their efforts, win or lose, are appreciated, that they have learned something useful, that their proposals will be treated seriously and have a fair chance of actually being implemented, and that they will have opportunities to continue with their brainchild, should a role be available. Most companies simply have not thought through this risk/reward ratio from the employee’s perspective, including preparing for what happens next if employees do start behaving more entrepreneurially, including formal career tracks – interest in innovation will wane if employees do not see the short-term or at least long-term rewards to justify the known risks
These five inhibitors create a dilemma within large companies, for the innovation that is necessary for growth is inhibited by the very nature of the enterprise and its inability to systemically engage self-selected corporate entrepreneurs beyond the few ‘supermen’ and ‘superwomen’ that already exist, but are unlikely to have all the answers in ever changing competitive environments.
In part II of this blog I offer an example of a programatic solution to the above inhibitors – stay tuned.