Sunday, June 12, 2005

Intrapreneurship in Hi-Tech Firms

Several hi-tech companies shifted to decentralized structure in order to create entrepreneurship profit centers within its premises to motivate employees to innovate. These companies believe in the importance of entrepreneurial learning curve in order to revive its strategic business units and improve the competencies of the firm in the cutthroat knowledge-based industry. This will also improve the firm’s value-added chain and help the firm respond faster to macro environmental changes.

Change Agents
Companies intrapreneurial programs relies heavily on change agent programs that host talented employees who have a different vision and can propose short-term projects that enhance the core competencies of the company. Strategic business units that provide training and initial investments for these projects are highly rewarded by the headquarters. In addition, the change agent programs allow the intrapreneurs to acquire business skills and to visit successful entrepreneurship companies such as Microsoft, Intel and Silicon Graphics.

Intrapreneurship is not just fashionable but a major component of corporate life and major ingredients of growth. Yahoo Flicker represents a major example of the importance of intrapreneurship in established companies. Having lost the competition with Google, Yahoo gained some of its market share by reshaping its business logic according to the suggestion of a fellow employee who was acquired with the Flicker project. This idea would be applied now to the whole Yahoo directory and it is expected that its revenues from the web directory service to improve by 35% at least in the coming year (According to Business 2.0-December 2005).

Large organizations corporate culture does not welcome entrepreneurial spirits usually unless it introduces disciplined reporting and enhanced communication means. Most large firms are afraid of allowing innovations within the employees’ body because the risk of the firm would increase because of the entrepreneurship atmosphere and this might deteriorate the profitability and share price. In addition, a manager would loose his promotion chances if he proposed a project and the project fails. In addition, entrepreneurial thrust can destroy loyalty within the firm because the manager believing in his project would try to push for his project instead of applying the firm strategy.

However, companies still recognize the importance of intrapreneurial spirits and several large companies such as Google, IBM, and Yahoo still rewards successful entrepreneurs within their staff. Other companies face difficulties identifying successful projects or motivating talented employees and they loose high level of chances to compete in the modern global economy.