A quick lesson about the importance of being agile.
The inter-relationships between creativity, innovation and entrepreneurship are already well documented. With organisations operating in such highly competitive environments, creative thinking has become a crucial way to differentiate in a crowded marketplace.
Whether that manifests itself as the next big idea or as an improvement to an existing process, it almost always starts with creative thinking.
It is well documented that in order for an organisation to embrace creative thinking, management must tolerate failure. The old adage of ‘fail small and succeed big’ has never been more true when it comes to the application of creative thinking within organisations.
Welcoming creative thinking within organisations also requires a degree of agility. A few short years ago, I was asked to keynote a musical gala at Adelaide Town Hall. Prior to going on stage, it was brought to my attention that there were slight issues with the schedule as the next artist was caught in traffic and running late. This is how I helped the emcee get everything back on track before I delivered the keynote speech!
Welcome to the Part Four of a series of musings on entrepreneurship.
Do social entrepreneurs create change?
In last month’s blog post of The Martin Haese Report where we discussed Disruption, I described the ways that big companies such as Gillette, Michael Hill Jewellers and Nike have used social causes to disrupt their customer base and target Millennial consumers.
However, it should be noted that Millennials are not the only socially conscious generation and many large companies have been supporting worthwhile causes for decades.
Some of this support has been overt as in the case of Ronald McDonald House and the Westpac Rescue Helicopter in Australia and some of it slips quietly under the radar like Bunning’s support for school gardens as well as community clubs and other causes through their regular sausage sizzles.
What has changed though, is that conscious consumerism, the idea that organisations have a soul and care about something beyond their bottom line, has been elevated up the list of things that customers consider when making their purchasing decisions.
When organisations use social causes as part of their marketing toolkit, we might see ‘buycotts’ and boycotts at the extremities but for the most part, consumers tend toward the responsible centre and an organisation's support for social causes has become a contributing factor to purchasing decisions rather than a deal maker or breaker.
Having said that, any organisation that adopts a social cause or even a charity as part of their strategy must do so in an authentic way and become genuine champions for that cause.
The public are, quite rightly, unforgiving of lip service and publicly hostile to hypocrisy.
Most people associate the term ‘entrepreneur’ with the world of start-ups, business or commerce, but if we go back to the first blog in this series, Are entrepreneurs born or made? I offered that entrepreneurialism is a mindset or modus operandi and entrepreneurs are people who;
1. Create and/or recognise opportunities
2. Assume the responsibility for the risk involved in new ventures, and
3. Have the managerial skills to gather and deploy the required resources
While these skill sets are particularly well suited to the business world, each is also transferable beyond.
I would argue that social entrepreneurs require another skill, the gift of persuasion, because while entrepreneurs can promise a financial return on investment, social entrepreneurs often deliver less measurable outcomes.
Social entrepreneurs come in all shapes and sizes, from NGOs, micro finance, social enterprises, community groups and non-profits through to regular businesses that put social issues at the centre of their offer. In fact, the sector even has a name, as its often referred to as the ‘for purpose sector’.
Oxfam Christmas Catalogue
Non-Government Organisations are some of the most visible socially entrepreneurial organisations and include global names like the Red Cross, Oxfam, Medicine Sans Frontieres, Sea Shepherd, Amnesty International and Greenpeace.
Just like any entrepreneur, each of these organisations has a driving purpose or ‘big idea’ that defines their organisation and their every action.
With regard to NGOs, some might argue that the first item on my list of entrepreneurial attributes, ‘Creates and/or recognises opportunities’ might read ‘recognises existing threats or problems’, but it largely depends on how you define ‘opportunities.’ Personally, I have always been inclined to think of opportunities and threats as two sides of the same coin.
For example, Oxfam’s goal might be to end world poverty which, at first glance, seems like a problem to be solved. However, one of the ways they have gone about this, is by recognising the opportunity to empower small producers in the third world and providing access to western households (via Oxfam shops and a wholesale arm) for their products.
When I was the Lord Mayor of Adelaide, I had the pleasure of meeting Professor Muhammad Yunus who shared with me his extraordinary story of social entrepreneurship. He signed a copy of his latest book, ‘A World of Three Zeros’ for me. I have read it twice.
Professor Yunus - Grameen Bank
Professor Yunus began working on what would become Grameen Bank in 1976 in the wake of a devastating famine that struck Bangladesh in 1974. The idea was simple, a community development bank that could make small, low interest loans to impoverished families without collateral.
His first loan of $27 (USD) was seed funding for a group of 42 families to make products for sale.
Professor Yunus expanded this micro finance concept to villages near the University of Chittagong and gained the support of the national, Bangladesh Bank.
In 1983, Professor Yunus’ project was granted the status of an independent bank by the Bangladesh government and despite setbacks from natural disasters, it has grown to 2,600 branches, approximately 9.08 million borrowers and an estimated 97% of the borrowers are women.
Professor Yunus was awarded the Nobel peace prize in 2006. He has written several best-selling books including one called ‘Building Social Business’. I recommend that you read it to further your knowledge on this topic.
The success of Grameen Bank has inspired and paved the way for similar social enterprises such as Kiva.
Where Grameen Bank raised funds from donor agencies, the Bangladesh central bank and later by selling bonds, organisations like Kiva raise money through crowdfunding.
Kiva has lent $1.3 billion to 3.3 million entrepreneurs in 78 countries.
Not for profits
While the term ‘not for profit’ can, for legal and taxation reasons, define various types of organisations, I am using it here to describe charities and social enterprises.
Every charity has been set up for a specific purpose, be it restoring eye sight for children (Sight for All), alleviating poverty (St Vincent de Paul), or funding nurses for breast cancer sufferers (McGrath Foundation) however, the most successful charities use entrepreneurial skills and traits to serve their purpose.
Dr. Peter Pratje - The Orang-utan Project
For many not for profits, fundraising is an important part of their activities, but it is not always their sole reason for being. Countless organisations need ourdonations to continue operating, but their goal is behavioural change.
The Orang-utan Project does all of the things you might expect of a not for profit dedicated to saving Orang-utans. They call for donations, take bequests and operate tours, provide sanctuary and prepare orang-utans for release into the wild, but all of this is somewhat insignificant to their actual purpose which is to raise consumer awareness of the destructive nature of palm oil production - the very reason they need to do all of those other things.
It is estimated that 300 football fields of South East Asian rainforest are bulldozed every hour to make way for palm oil plantations – just allow that to sink in for a second.
The resource being gathered and deployed here is not anything as simple as finance or materials, but something much more elusive – the consumer’s conscience.
Given the sheer magnitude of food and consumables that contain palm oil, this is a big issue.
For profit, social enterprises
The Bread and Butter Project - Tania
For profit, social enterprisesoften begin as a philanthropic gesture but quickly discover, almost as a bi product, that their purpose and products are profitable
Such was the case with the Bread and Butter Project when Paul Allam convinced his business partner at the Bourke Street Bakery to help him set up Australia’s first social enterprise bakery.
The Bread and Butter Project is a successful, artisanal, wholesale bakery that trains and provides paths to employment for some of Sydney’s most marginalised and underprivileged citizens.
The Bread and Butter Project is able to boast that every one of their graduate bakers, since their launch in 2013, is sustainably employed.
When your product has a social conscience
I recently listened to an audiobook called “The Magic of Tiny Business: You Don't Have to Go Big to Make a Great Living’ by Sharon Rowe.
Don’t let the title fool you, there was nothing ‘tiny’ about Sharon’s business, she is the CEO and founder of Eco Bags - the original, reusable shopping bags.
Sharon, a young mother was working at a training company when she founded Eco Bags in 1989. It was a response to two things - the sheer waste of single use shopping bags and her desire to live life and run a business without compromising her lifestyle or the things she believed in.
Her ‘market research’ involved walking the streets of New York and taking note of compliments she received for shopping with reusable string bags.
In her book, she describes how she started by selling reusable Eco Bag shopping bags from a stall at New York’s Earth day celebrations in 1990 and her success there led to more markets before becoming a wholesaler.
In 2007, reusable shopping bags became subject to the ‘Oprah effect’ when Oprah Winfrey presented Eco Bags to her audience during that year’s Earth Day episode.
This publicity led to a swift uptake in reusable bags and ultimately bans of single use plastic bags in some states and territories with Eco Bags riding the wave and reporting $16 million USD in annual sales. Coincidently, South Australia, the place that I live in, is also a leader in container deposit legislation and is progressively banning the use of single use plastics for certain applications.
The ‘tiny’ in the title of her book does not refer to the size of her business but her approach and despite running a global company, she still makes time in her work schedule to swim every day.
At a local level, I enthusiastically mention GOGO Events, an Adelaide based social enterprise that creates and manages magnificent events.
So, what’s the big difference?
GOGO events, founded by Sarah Gun, is an internationally award-winning enterprise that employs marginalised people and provides them with a meaningful path to sustainable and purposeful employment in the hospitality sector.
All of their events, big or small, corporate or community, create a positive social and environmental legacy.
Social entrepreneurs and the sharing economy
While organisations such as Airbnb and Uber are often cited as examples of how the sharing economy works, neither of them is, in the strictest sense, a part of the share economy - they are both service model businesses.
Airbnb hosts rent their properties to guests while passengers pay Uber for their driver to take them somewhere.
Better examples include Share Waste - an organisation that connects people with excess green waste to people who can convert that green waste into compost or Grow Free an organisation that enables a network of home vegetable gardeners to share excess produce through small carts with other gardeners and the public.
While Share Waste doesn’t say how many contributors they have, their members are well supported online with interactive maps and a smartphone app to connect people while Grow Free has in excess of 170 members carts in its Australian network with a few more springing up in New Zealand and the United States.
5 steps to introduce a socially conscious purpose to your company or brand
Be authentic and select a cause or charity that you and your organisation can genuinely get behind, then make a long term and consistent commitment.
Ensure that the cause is a good fit with your organisation’s values and target market. This extends to making sure that the products you sell are consistent or at the very least, not counterproductive or potentially hypocritical. I’m thinking, in particular, of a large chain of liquor stores in Australia who recently supported Dry July. I am also thinking of recent adverts from the world’s largest cola brand extolling their environmental credentials and hi-lighting their recycling efforts.
Involve the entire organisation. I know of at least one large company that takes gold coin donations for their casual days. The money is collected and donated to a charity or cause that every employee voted on at the start of the year. Other companies have recruited their customers, giving them an opportunity to decide on which charities they support through a percentage of their purchase.
Understand that supporting a cause is part of your company’s marketing plan then immediately forget it and work generously towardssupporting the cause. The general public can easily distinguish between genuine support and when you are just looking for a pat on the back.
Extend your support beyond simply fundraising. Photos of the CEO handing over a novelty size cheque look fantastic on social media but their impact is limited. In my experience, it is better to be involved in many smaller and perhaps more meaningful projects throughout the year than a photo op at the end. That doesn’t mean you can’t promote your involvement, but reliable word of mouth and social media shares are much more valuable and effective than full page newspaper ads.
Social entrepreneurship is evolving and continuing to redefine itself. It is also growing. Cities such as Berlin are fast becoming global hubs for social entrepreneurs. There is also a strong relationship between a city’s start-up scene and the number of social ventures within it.
While there are a number of similarities shared between commercial entrepreneurs and social entrepreneurs, there is one essential difference to consider - social entrepreneurs have the propensity to solve the problems that governments, small business and corporates can’t or won’t … and that makes them increasingly influential within communities.
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With kind regards,
Martin Haese MBA
Next blog post: Part Five – Hope for the best and prepare for the worst. What happens when things don’t go to plan?
Welcome to the Part Three of a series of musings on Entrepreneurship.
What is disruption?
Welcome to the Martin Haese Report. If you have already read my previous posts about entrepreneurs and intrapreneurs, you will have noticed that one word has influenced both - disruption.
For the last decade or so, the word ‘disruption’ has usually been preceded by the word ‘digital’ and many businesses have gone down the path of building their digital footprint with websites, online stores, blogs and dedicated social media teams.
These platforms are all valuable tools for businesses and even the humble corner shop should, at the very least, consider updating their details with Google. However, each of these digital tools are just that - tools.
I closed out my last post in this series with the statement:
“For many years, the biggest threat to most businesses was competitors with cheaper prices - a relatively easy problem to counter, but over the last decade or so it has been competitors with better ideas.”
Disruption happens when a new idea is enabled by technology.
I cut my teeth in the retail sector and retail has a long history of disruption. From the first chain stores of the Hudson Bay Company in the 1670’s through to mass production made possible by the first industrial revolution, disruption in the retail sector has been ever-present.
Southdale Centre, opened in 1956, was the world's first shopping mall. Designed by Victor Gruen, the shopping mall significantly disrupted the retail sector.
The advent of the department store in the mid-19th century, vending machines and mail order in the 1880’s and supermarkets, big box stores, credit cards and suburban shopping centres in the mid-19th century were each significant developments resulting in various levels of disruption. This has all happened in an industry that the pundits first pronounced dead in the 1880s when the Sears catalogue was produced.
In the last quarter century, we have seen a sharp acceleration in the pace of new technology and with it, an explosion of new ideas.
Suddenly, anyone with a computer can open a shop and take orders from around the world, but it will be new and better ideas that determine which ones will be successful or not.
In my last post I talked briefly about the epic disruption caused by the widespread use of the iPhone and I used it as an example of how it upended the photographic industry in a very short period.
By enabling access to the internet, smart phones became increasingly indispensable and adding a camera meant that our way of thinking about photographs was always going to change.
Smart phone technology didn’t happen in isolation - it required big leaps forward in both internet connectivity and wireless technology, but it has disrupted and destroyed many industries and created many new ones.
Happy 40th birthday - Sony Walkman
The Sony Walkman turned 40 on the 1st of July this year and it is important because this unassuming little box changed many lives.
The Sony Walkman turned 40 this year, forever changing the way we listen to music.
The recorded music industry emerged as a disruptor to the sheet music printers at the beginning of the 20th century. Phonograph records had been available since the 1880’s but back then, new technology took a little longer to catch on.
Recorded music enabled broadcast radio in the 1920s which brought music to the masses and with it came an explosion of artists, record producers, sound engineers, recording studios and companies, record player manufacturers and record stores.
Many industries emerged from that first idea and the music industry grew apace.
Video killed the radio star … or not?
Video Killed the Radio Star by the Buggles was released in 1979 and the song predicted the demise of records and cassette tapes. It was, unsurprisingly, the first video aired on MTV in 1981.
Coincidentally, the beginning of the disruption of the music industry began in the same year with the release of the Sony Walkman - it was the triumph of an extraordinary idea over an otherwise good one.
The Buggles predicted that the future of music would be visual, in the same year that the Sony Walkman was released.
Up until that point, music wasn’t very portable - at least not in the way it is today.Radios, record players and cassette decks were getting smaller, but most people still listened to recorded music in their cars or more commonly in their homes.
Music videos seemed like the next big thing, a logical next step forward. However, music videos weren’t revolutionary as adding visuals didn’t radically change the way people listened to music, only their visual appreciation of it.
The revolutionary development or ‘better idea’ was in fact allowing people to listen to their favourite music anywhere and at any time and the industry continued to grow.
So, where did it all go wrong?
Even better ideas.
Advances in technology led to digitised music in the form of the compact disc and later digitised music files, stored on your device or on the cloud - streamed, downloaded and endlessly shared.
By making the physical product redundant, the music industry has saved billions of dollars but that in turn has led to the demise of many jobs in the associated industries that supported it.
Some argue that it has also affected the quality of new music - when people paid for records, we had David Bowie - now we’ve got Chris Brown.
Global disruption is usually easy to identify but what of the small-scale disruption going on around us every day?
Talking to business owners, I have noticed that many are doing it tough while others seem to be doing better, and this is most apparent in the food and beverage industry.
In the last few years we have seen the emergence of a new kind of business owner, one who is both entrepreneurial and curatorial.
This new retailer has observed a niche in the market and has created and ruthlessly curated their business to that fill that niche.
A tale of two cafes
Not that long ago, successful cafes were much larger and had seats for 80+ people.
They sold coffee and served a tried and tested menu of focaccia, bruschetta, pizza, pasta, cakes and ice cream - something for everyone.
Patrons would find a table, then go to the counter to order their food, shuffle across to another counter to order their drinks and come back with a table number and wait for their food.
This format worked well for a long time but lately that format has been challenged by a new type of cafe.
A new cafe format has emerged to cater to a new generation of patrons
For starters these new cafes are harder to find. They pop up in the least expected places. They don’t always want or need a mainstreet shopfront and they don’t need to pay inner-city rents because there are plenty of customers and very little competition in otherwise under-serviced suburbs.
These new cafes are a lot smaller and less likely to be fitted out by a commercial shopfitter - they often have mismatched chairs and tables and the smaller size means they are quieter and more intimate.
Most of these cafes offer a wide selection of vegan and gluten free options because they know that an estimated 12% of Millennials identify as vegetarian or vegan and the percentage of Generation Z is likely to be even higher.
Don’t be surprised if your cup and saucer or knife and fork don’t match - it’s almost as if they’re saying, “who cares about the utensils - we’re all about the food.”
The lessons for traditional retail
If food and beverage operators are finding niches and exploiting them, why aren’t other sectors of the retail industry?
There is an orthodoxy that every retail business should be heavily data driven like the Fast Moving Consumer Goods (FMCG) sector - an orthodoxy that involves no human curation and puts them into direct competition with the likes of Amazon.
I recently read this from Seth Godin in a blog post about curation:
“Amazon is good at selling everything, but they’re terrible at selling a thing … The platforms (Amazon et al) are built on the idea that the audience plus the algorithm do all the deciding. No curation, no real promotion, simply the system, grinding away. This inevitably leads to pandering, a race to the bottom.”
He goes on to say that, in the past:
“Curators and their curation led to promotion and attention. There was a cost to picking junk, and a benefit to earning trust.”
and it is this trust that builds customer loyalty much more effectively than a rewards card or complicated points scheme.
It is also entirely possible that many retailers have failed to change with the generational shift in the market. In some cases, the business practices that made them successful and endeared them to the Baby Boomers and Generation X are now their biggest liability with Millennials and Generation Z.
Disrupting your own customer base.
What do Nike, Michael Hill Jewellers and Gillette have in common?
Until recently, they all had a younger target demographic but an older client base - the customers that made them successful were becoming their liability.
When you think of Nike, Nike wants you to think of young, lean and strong sporty types, but their loyal customer base is often the exact opposite.
Michael Hill was just another jeweller selling expensive baubles to Baby Boomers using the imagery of Generation X.
Gillette is a heritage brand and part of the global Gillette/Schick duopoly for razors, both are under increasing pressure from subscription razor models (another ‘better’ idea)
Millennials are just as rebellious as every preceding generation and wearing the same brand shoes as your dad or the same ruby earrings as your grandmother was never going to wash with them.
Faced with this reality, those companies made concerted efforts to win Millennial customers by deliberately letting go of some of their existing customers.
Colin Kaepernick, Quarterback for the San Francisco 49ers, began protesting his country’s treatment of minorities in 2016 by kneeling during the national anthem and he continued to do so at every game throughout the 2017 season.
Many Americans were incensed and Kaepernick was heavily criticised.
Under increasing pressure, Kaepernick opted out of his contact to become a free agent but was not picked up by another team.
While standing up (or kneeling) for what he believes in did not align with any of the other NFL teams brand values, another brand thought Kaepernick was a perfect fit.
In September 2018, Nike launched a campaign to celebrate the 30th anniversary of their “Just Do It” tag line.
Nike chose Colin Kaepernick to disrupt their customer base
The campaign featured Serena Williams, skateboarder Lacey Baker and others but it was the inclusion of Colin Kaepernick that ‘inspired’ some Nike wearers to make YouTube videos of themselves threatening to boycott the brand and burning their Nike branded T-shirts and socks.
It would be easy to think Nike misjudged public sentiment, but I would argue that Nike doesn’t make mistakes like that. It was instead a calculated attempt to distance themselves from people they didn’t want to wear their brand in order to attract people they do want wearing their brand.
The campaign resonated with Millennials and Generation Z and Nike sales and shares soared in the direct aftermath.
Michael Hill Jewellers
Support for marriage equality has been high in western democracies for at least the past decade but especially amongst younger people and inter-racial marriages barely rate a mention.
But still, there was controversy and like many other things that older generations get ‘worked up’ over, most Millennials simply couldn’t understand what the fuss was about.
This sentiment was fertile ground for marketers tasked with differentiating their client from their competitors and in 2015, Michael Hill Jewellers released their stunningly beautiful ‘we’re for love’ campaign.
This two-minute-long advert marked a departure from hackneyed jewellery advertising with their unrealistic portrayal of glamorous women on the arms of handsome men or sparkly product shots.
This ad shows product but if you blink you will miss it - the focus here was on real people and real love, no matter what form that takes.
I remember bumping into a jeweller after this ad was released and it came up in conversation. He was shocked that they chose ‘such ugly models’ by which I assumed he meant ordinary people.
This ad signaled to younger people (by far and away the largest target market for wedding and engagement rings) that Michael Hill was the destination of choice.
There’s nothing trendy about razor blades - at least not since the heyday of Punk Rock in the 1970s and it’s difficult to instill brand loyalty in what amounts to a grudge purchase.
Until recently, the razor blade duopoly had little competition but the subscription models have chipped away at the younger market (older users generally don’t buy their own blades) by removing the hassle of having to remember to buy them, then lining up at a special counter and having to ask for them because they aren’t kept on the shop shelves.
Earlier this year, Gillette set out to win Millennial hearts and minds with an advert squarely aimed at toxic masculinity with the ad riffs on Gillette’s tagline asking, “is this the best a man can get?”
The ad caused an immediate backlash from some consumers and again, angry customers posted videos of themselves binning Gillette products on YouTube.
But for many, the ad tapped into the horrific revelations exposed by the #metoo movement and shone a light on other aspects of society that are all too often tolerated or excused.
Here was a big corporate calling out bad behaviour, no matter the cost of doing so.
It is difficult to gauge the impact on sales, Gillette reported that sales were down 3% on the previous year but without access to historical sales data, we don’t know if 3% down on last year is an improvement in their long-term sales trajectory.
We do also know that Gillette management reported post campaign sales were in line with pre campaign sales suggesting that Gillette gained as many customers as they lost.
5 ways to become a disruptor.
1. Embrace disruption
When speaking to business owners about disruption, they invariably see it as something they must counter rather than something they should be actively encouraging.
I can guarantee you that your competitors who are growing and thriving, those ‘challenger businesses,’ have a very different view of disruption - they see it as an opportunity. It often helps to cast your mind back to where it all started and think about how you would open your business today, knowing all that you know now.
I recently read about a senior executive who displayed a large framed poster in front of his desk that simply read ‘THINK’.
His reasoning was that we all spend far too much time working in the business rather than working on the business and the poster was a constant reminder to stop occasionally and think about the bigger picture.
When I owned my retail business, I consciously set aside most Fridays to work ‘on’ my business and not ‘in’ it. I credit this discipline as being one of the key reasons why the business was able to achieve size and scale faster than many others.
I often break the process into smaller pieces, concentrate on one aspect of the business and depending on the situation put myself in the customer or employees’ shoes before looking for pain points and opportunities.
Every now and again, someone will ask me for business advice. If it’s an industry I’m unfamiliar with, I will often ask what their competitors are doing and I’m frequently shocked by how many people say they don’t know.
Getting out and about to see what the market is doing is one of the most important things you can do - If you don’t, you’re running your business in an echo chamber.
4. Educate yourself
You’re already reading my blog so that’s a great start but also consider booking yourself into an industry conference or trade show, take a short course in social media marketing or read books or listen to a business podcast.
I am a voracious reader and often come across books, biographies, journals and articles that I sense you would benefit from. To provide you with even greater value, I will soon share some of these with you in future posts on the Martin Haese Network.
You have the entire sum of recorded human knowledge at your fingertips - use your time wisely.
5. Ask for help
Nobody expects you to have all the answers, so ask for help.
Your first step is to ask your employees (see The Talent Within: Entrepreneurial Employees) but failing that, customers, colleagues, close friends and family each have different perspectives and they all want to see you succeed.
Thank you for subscribing to my blog.
If you haven't already joined my network, you can sign up here for free and please don't hesitate to recommend my blog to any of your friends, family or colleagues who share our common interests.
With kind regards,
Martin Haese MBA
Next blog post:
Part Four - Social Entrepreneurs - can the world’s problems be fixed by entrepreneurs?
Welcome to Part Two of a series of musings on entrepreneurship.
The talent within: The 'entrepreneurial employee'
Intrapreneurs, innovators and so much more …
Intrapreneurs are employees who search for opportunities and exploit them through innovation using the resources of the organisation they work for.
The term intrapreneur was first coined in the late 1970’s by an American author, inventor and entrepreneur, Gilford Pinchot III.
Pinchot defined the term as ‘employees and leaders of large firms who bring to the organisation the traits of entrepreneurs.’
The concept of intrapreneurs is older than many think and an often-cited example is Lockheed Martin during WW2 when Kelly Johnson was tasked with developing what became the XP-80 jet fighter for the US Army.
The Lockheed Martin XP 80 fighter jet
Johnson recruited a small team which later became known as Skunkworks.
Given the escalation of the war effort, increased manufacturing output and subsequent lack of space, Skunkworks quite literally worked from a rented circus tent.
However inconvenient, being located outside of the corporate bureaucracy meant that Johnson was also able to work outside of its rules, traditions and hierarchies.
Johnson developed 14 rules and practices for intrapreneurship at Skunkworks and you can read them here
Skunkworks designed and delivered the XP-80 in only 143 days - a full week before the delivery deadline.
Post War Intrapreneurs
During the post war years, many organisations actively encouraged intrapreneurial ecosystems and subsequent new products and innovations made companies such as 3M, Xerox, HP (Hewlett Packard) household names. However, other companies hosted significant internal R&D programs but could not make the leap of faith that their intrapreneurs asked of them.
‘Talent hits a target no-one else can hit.
Genius hits a target no-one else can see’.
Steve Jobs presented the Apple iPhone to the public on the 29th June 2007 proving Arthur Schopenhauer right and every high school math’s teacher who ever uttered the phrase, ‘you won’t always have a calculator withyou’ wrong.
Twelve years on from that first smart phone, we are rarely further than arm’s length away from having the entire sum of all recorded human knowledge at our fingertips.
The impact of the iPhone on businesses and society in general cannot be understated.
It not only changed the way we communicate but also the way we listen to music, how we meet partners, how we shop, socialise, keep fit, take notes and stay on time.
The list of products, and in some cases, industries made redundant by the iPhone and subsequent technologies and ideas enabled by it, is staggering.
Disruption on an epic scale
While the iPhone changed the way we take photos and what we do with them, it might surprise you to learn that it wasn’t Nikon, Canon or Sony that developed the first handheld digital camera, it was Kodak and they did it way back in 1975.
Kodak is often used as the worst example of how to create intrapreneurial ecosystems and it still stands today as a cautionary tale for any business.
It was Kodak who had been at the forefront of new technologies including dry plates to film and black and white to colour who ran a large R&D department and employed a 25-year-old engineer named Steve Sasson.
When Sasson developed the digital camera for Kodak it was a little different to what we think of today.
His camera weighed 3.6kg and took 23 seconds to store a black and white 0.01-megapixel photo onto a cassette tape.
The cassette tape held 30 images and to put that into perspective, think of how many selfies you have on your phone today.
The world's first digital camera
Most unfortunately for Sasson, Kodak’s executives were not as forward thinking as the young engineer. They saw, what seemed to them, an obvious threat to their 90% market share of film sales rather than a revolutionary new technology that could change society.
Kodak could not envisage a world without prints, photo frames and albums and certainly not one with Facebook, Instagram, WhatsApp, Snapchat and Tinder.
Kodak allowed Sasson to continue his work and retained the intellectual property, but they forbade him from going public with it.
The result was that Kodak filed for bankruptcy in 2012 while just two years later it was estimated that people took and uploaded 1.8 billion photographs per day or around 657 billion per year
In 2018, we collectively took an estimated 1 trillion photographs and only very few of them were taken using film and even fewer were printed.
Kodak got disrupted.
The late Twentieth Century
The eighties and early nineties were a bleak time for intrapreneurs.
A shift in corporate culture meant that many organisations became more risk averse and demanded a stricter adherence to top down management systems.
This was wonderfully parodied in the 1986 Michael Keaton movie ‘Gung Ho’ (released as Working Class Man in Australia). In the following scene, the new Japanese owners of a Pennsylvania car manufacturing plant insist that the local American workers perform morning calisthenics.
It’s curious to note that the top down, Japanese ‘salaryman’ culture that was the subject of ‘Working Class Man’ was, at the same time, laying the foundations for a multi-billion-dollar console gaming industry through companies like Nintendo and Sony.
However, at that time, these companies were the outliers and most CEO’s were turning their attention to increasing efficiencies, minimising risk and cutting costs.
Reducing input rather than increasing output is still sadly the established orthodoxy in some larger organisations.
No company, organisation or individual has ever become truly successful by reducing their capacity.
Enter the Millennials
Many Western leaders have been told, or are telling themselves, that we live in an ageing society. However, this statement ignores the impact that young people with higher disposable incomes have on the consumer economy.
Millennials are now the largest generation born in decades. They have seen advances in technology that have upended industries and broken oligopolies - just ask a Millennial when they last paid for music and they will almost certainly say a live concert.
Millennials also grew up during the global financial crisis and felt the effects of austerity measures introduced in its wake, leading many to question if there wasn’t a better way.
This is a generation that has known nothing but disruption, most accept it as normal, adapt and exploit it, so is it any surprise that they bring that same appetite for change to their workplace? And, is it any surprise that progressive organisations are recognising the value of their ideas?
I would argue that businesses that are embracing, encouraging and creating an intrapraneurial ecosystem for this new generation of employees and catering to a new generation of customers, are not the ones complaining about a downturn in sales.
That is not to say that all Millennials are intrapreneurs or that all intrapreneurs are Millennials. I certainly don’t think that other generations lack intrapreneurial spirit but Baby Boomers and Gen X’ers have lived and worked through the economic rationalism of past few decades and may be less inclined to put their heads above the parapet.
In my experience, intrapreneurs come in all shapes and sizes, they exist in every organisation and they can be enabled.
When you consider that the chief difference between an entrepreneur and an intrapreneur is their employment status it should be easy to spot an intrapreneur within your organisation. They should be the ones displaying those entrepreneurial traits I covered in ‘Who and what is an Entrepreneur' right?
I would argue that unless you create an intrapreneurial environment, most of your entrepreneurs will remain hidden and under-utilised - an incredibly useful resource left untapped. However, if you create the right environment, intrapreneurs will readily identify themselves.
10 things you can do to create an intrapreneurial culture.
1. Hire more intrapreneurs
Sounds simple doesn’t it?
Some creatives like to work in isolation (although they might credit a ‘Muse’) but creativity in business is more often a result of collaboration and inspiration and employing more intrapreneurs means more opportunities for both.
Have a look at your organisation’s last few job advertisements - do they start with a long list of duties and responsibilities followed by required formal qualifications?
If you want to attract cookie cutter candidates advertise a list of cookie cutter job descriptions, but if you want to attract intrapreneurs you will need to post more thoughtful job advertisements.
Try reversing the job description and matching the potential candidate’s strengths to the organisation’s needs. Eg;
‘the successful candidate will use the full Microsoft toolbox to engineer new solutions to old problems’
… sounds a lot more attractive to a potential intrapreneur than:
‘must be competent in Outlook, Word and Power Point, and proficient in Excel’
Remember that intrapreneurs are looking for a challenge, so appeal to their aspirations and intellect rather than their experience - try asking what they can do rather than what they have done:
‘we’re looking for someone who can take our customer service to the next level’
is better than:
‘must have 5 years’ experience in B2B sales'
2. Encourage employees to think of themselves as partners in the business
There are many reasons why intrapreneurs don’t become entrepreneurs and it is often personal financial circumstances. While it would be easy and uncharitable to define intrapreneurs as people with great ideas who don’t want to risk their own money, that definition ignores the experience, loyalty and entrepreneurial instinct that intrapreneurs bring to an organisation.
It could also be that while entrepreneurs are often driven by individualism, intrapreneurs are driven by collaboration.
If you want to develop an intrapreneurial culture, people need to feel as though they have a stake in the organisation and I think it goes without saying that this starts with trusting all employees, from the cleaner through to the Vice President. Nine times out of ten they will know how to innovate within their own area of expertise, but they must feel as though they are heard and trusted to make decisions as part of the solution.
The best way I have found to build trust is by being open and transparent with all employees by sharing relevant and important information.
I have seen company CEOs and senior executives try to hide the company’s financial position from their employees in a misguided attempt to calm fears about job losses. If you’ve ever been an employee, you will know why this is misguided.
Ask for feedback, but more importantly ask for recommendations. You would be surprised how rarely this happens, especially in large companies and rarely in organisations with a top down management culture.
Great ideas (and solutions to problems) often come from unlikely sources.
3. Enable people and encourage ownership
General George S Patton famously said;
“Never tell people how to do things. Tell them what to do and they will surprise you.”
Ownership of a project or role is one of the most important drivers of intrapreneurial behaviour. When you allow people to own their work, what you are really doing is giving permission for them to make that work the very best that they are capable of delivering.
Taking away the back stop, or reducing an employee’s reliance on it, means that the individual assumes responsibility for their successes and failures and both of these things are key to creating an intrapreneurial environment. In my experience, this is one of the hardest things for anyone to put into practice, but it is the main difference between being a leader and manager.
4. Provide opportunities for people to speak
This seems like an obvious thing to do, so it is surprising how few large organisations have a multi directional system of communication - even more surprising when you consider how many new ways of communicating there are. In the old days there might have been a suggestion box allowing at least bottom/up communication, but technology has made the suggestion box largely obsolete.
I will write further on the concept of a Social Enterprise Network (SEN) but for now, they are basically a social media styled intranet or a private Facebook page for all employees - allowing people to actively engage with other areas and levels of an organisation or within specific groups.
Of course, there are other ways to communicate, but make sure that if you have an ‘open door’ policy that your door is open. Quashing ideas and recommendations before they have been discussed and explored will lead to fewer ideas and recommendations.
5. Provide time, space and resources
In my last Blog post, I discussed entrepreneurs. If we look back at the definition of an entrepreneur, it’s someone who;
1. Creates and/or recognises opportunities
2. Assumes the responsibility for the risk involved in new ventures, and
3. Has the managerial skills to gather and deploy the required resources
It should be obvious, yet far too many managers of intrapreneurs stumble at this hurdle.
While entrepreneurs are able to gather and deploy the required resources, intrapreneurs are not as likely to have the authority to redirect resources such as staff and capital and likely to have less control of their own workload and time. This is an area where leaders can have an enormous impact in creating an intrapreneurial culture by simply making available the required tools.
6. Don’t try to design by committee
I spent many years in the fashion industry building a national retail chain. In the retail industry, there is a graph used to reveal the sales arc of products and it is often used by fashion buyers to determine product lifecycle and when to look for the next big thing.
The graph is called the ‘Rogers Adoption Curve’ or the ‘Diffusion Process’ and it was originally applied to agriculture and home economics. It has since been most commonly used to describe the adoption of new technology, but the principle can be applied to almost any new product or idea.
I present it here because intrapreneurs sit squarely in the 2.5% of the sample area designated 'innovators'
The Rogers Adoption Curve - Diffusion Process
If you submit a new innovation to a committee of ten people, the best that you can hope for is that two of them (innovators and early adopters) will get it straight away and see the potential, three will understand part of it and the other five will be completely baffled.
The danger of ‘design by committee’ is when the majority are able to veto the minority but an even worse situation occurs when the majority aren’t able to veto so they compromise instead.
This sees a new idea stripped of innovation until it resembles an old and easily recognisable idea, then it will be held up as progress and proof that the committee system works.
I think you can guess how this impacts an intrapreneurial culture.
7. Cross functionality
Silos are the scourge of modern organisations.
Department A and B sometimes collaborate with C (usually because they have to) while department X, Y and Z have only limited contact with other departments.
While working on a previous project, a colleague described a large company who wanted to improve the organisation’s digital footprint - particularly setting up an online store.
A committee was formed with representatives from each department.
The chair of the committee was the General Manager of Human Resources while the Project Manager was a relatively junior from Marketing with little or no authority (either personal or official) to work across departments.
The project quickly descended into chaos as each representative was afforded an equal say in all aspects of the project including areas they had no experience or knowledge of.
In the end, the organisation built a portal with an online store added as an after-thought, resulting in a giant opportunity missed.
My colleague maintains that it could have been worse - they could have handed the entire project to the IT department and ended up with a website that no-one could use.
That is not to say that silos cannot be broken down to enable collaboration because a great idea or innovation in one area might have disastrous effects in another, but by the same coin, other perspectives can also add significant improvements to the original.
In my experience, the best way to smash silos is not with a sledgehammer but with a smaller group that shares a common problem or goal who is afforded the authority to work across all departments and pay scales.
8. Mistakes, I’ve made a few.
I don’t entirely subscribe to the mantra of ‘fail fast and fail often’ because it implies that failure is part of the original goal.
Failure is, by definition, the opposite of success and everyone should want intrapreneurs to succeed - especially the intrapreneurs themselves.
Instead, a better word is ‘mistake’ … mistakes happen and we correct them.
9. Collaboration or competition?
An intrapreneur is likely to respond well to both.
Collaboration is required for teams to work individually or across departments to draw upon collective knowledge and experience, but competition is just as important.
Healthy competition ensures that benchmarks are not only reached but reset.
10. What’s in it for me?
Recognise and celebrate the wins along the way. I have yet to meet anyone who doesn’t respond to recognition of their contribution.
Recognition amongst peers, raises, bonuses, promotions and even a share in the profits are all examples of rewards but not the only ones and they may not be the most effective in all circumstances.
Rewards for intrapreneurs should not only reflect what they have achieved but also how they would like to be rewarded.
Think of it this way, they have spent the last few days/weeks/months pouring their energy into understanding the problem and delivering a successful outcome. They’ve sweated the big and the small stuff, knowing that their reputation and status are on the line. At the end of it a pay rise might be welcome, but it could also seem impersonal to someone who has invested more than was asked of them.
If you are asking people to go above and beyond, be prepared to go there too - find out what motivates them and if you still don’t know, ask.
What’s in it for you?
When organisations create an intrapreneurial environment, where people are given a genuine opportunity to think, create and transform, employees become more enthusiastic and engaged which in turn leads to productivity increases. It’s then easier to attract and retain valuable people and skill sets.
Yet, there is another compelling reason why it's important to embrace greater entrepreneurial thinking with your organisation - disruption.
I will cover disruption in my next Blog post but for now - disruption is the single biggest threat to every business.
For many years, the biggest threat to most businesses was competitors with cheaper prices - a relatively easy problem to counter, but over the last decade or so it has been competitors with better ideas.
Disrupting your own business (before someone does it for you) by attracting, retaining and enabling intrapreneurs might be your best option to survive and thrive.
Welcome to Part One of a series of musings on entrepreneurship.
Who and what is an entrepreneur?
Definition and history of the term ‘entrepreneur’
The Oxford English dictionary defines an entrepreneur as:
Entrepreneur. Noun. 1. A person who sets up a business, taking on financial risks in the hope of profit.
… and this is certainly what most people think of when they first consider an entrepreneur. However, the word is much older than you might think and its meaning has changed and continues to evolve over time.
‘Entrepreneur’ is borrowed from the French and is derived from the word ‘entreprendre’ which means ‘to undertake’, itself a translation from the German word ‘unternehmen’ - also meaning to undertake. The British, in their no-nonsense way, used the term ‘adventurer’.
What we do know about being an entrepreneur is that it requires both thought and action.
In the 16th century, the first French entrepreneurs were military men, ‘undertaking’ the building of roads and bridges for military purposes. Yet entrepreneurs existed before then and perhaps the most famous historical entrepreneur was Marco Polo, the Venetian born merchant and explorer who travelled extensively (and very profitably) throughout the near and far east.
Marco Polo at the court of Kublai Khan
It wasn’t until the 18th century, with the start of the first industrial revolution that the term began to be more closely associated with business and commerce.
In 1755, Irish born Parisian, Richard Cantillon penned an essay ‘Essai sur la Nature du Commerce en Général’ or ‘Essay on the Nature of Trade in General’ where he defined the term entrepreneur as ‘a rational decision maker who assumed the risk and provided management for the organisation.’
While contemporaries such as Adam Smith assumed that entrepreneurs were simply capitalists, Cantillon’s definition is more nuanced as it emphasised the role of the entrepreneur in assuming the risk and dealing with uncertainty, distinguishing them from the person or organisation who provided the resources.
Perhaps more importantly, Cantillon’s definition did not limit the term’s usage to commerce and this is especially important in the 21st century with the emergence of intrapreneurs as well as social, political, and environmental entrepreneurs.
I recall with amusement someone referring to me as a ‘Mayorpreneur’ when I was Lord Mayor of Adelaide between 2014 – 2018. Let’s leave that judgement to posterity.
In the 21st century, the term entrepreneur better describes a mindset or modus operandi and more succinctly describes someone who, regardless of their endeavour;
1. Creates and/or recognises opportunities
2. Assumes the responsibility for the risk involved in new ventures, and
3. Has the managerial skills to gather and deploy the required resources
Most of us would be able to name several, famous entrepreneurs and many would have an opinion on the reason for their success, but Hollywood and the MSM have a bit to answer for as more often than not, famous entrepreneurs are famous precisely because they are the exception to the rule.
One of the enduring stereotypes is that entrepreneurs are inventors and social misfits and you need look no further than Hollywood’s less than flattering portrayal of Mark Zuckerberg in ‘The Social Network’ or worse still, the focus on Howard Hughes’ obsessive compulsive disorder in ‘The Aviator’.
More recently, in 2018, the world’s media focused on the space journey of Elon Musk’s Tesla Roadster while the launch of SpaceX’s Falcon Heavy rocket which put it there, was reported almost as an after-thought.
Elon Musk's Tesla Roadster was the test payload for SpaceX's Falcon heavy rocket launch.
Spaceman, sitting in his Tesla listening to David Bowie, with the words ‘Don’t Panic’ inscribed on the glove box (a nod to The Hitchhiker’s Guide to the Galaxy) was certainly not an accident and some might argue that the launch of the Falcon Heavy rocket would have gone largely unnoticed by the 24 hour news cycle if not for its unusual payload.
You can track Spaceman's extraordinary journey here.
Later that year, footage of Elon Musk smoking marijuana resulted in a drop in the value of Tesla shares and consumed the media for months.
My point is that the world is becoming increasingly fascinated by entrepreneurs, even if we do not entirely understand them.
Quirky entrepreneurs are newsworthy and successful entrepreneurs know how to get attention.
Invention vs Innovation
Another myth is that entrepreneurs are always inventors. Sometimes they are but often they are not - or at least not in the way that most people may interpret that term.
Entrepreneurs are always innovative, but not necessarily inventors. Perhaps a better way to describe entrepreneurs is ‘creative problem solvers’.
Take for example Eli Whitney (1765-1825) who was responsible for one of the industrial revolution’s most important inventions, the cotton gin.
In the late 18th century, while travelling to South Carolina, Whitney met the widowed Catherine Greene who invited him to visit her plantation in Georgia. As Mrs. Greene’s guest, Whitney constructed some clever labour saving devices for the household which led his host to introduce Whitney to a group of businessmen who were looking for a way to increase the efficiency of cotton production, specifically a way to separate the seeds from the lint which was, at that time, done by hand.
With limited knowledge of the industry, product or production but a talent for innovation, Whitney invented his cotton gin which enabled a person to process up to 25 kilograms of cotton per day compared to the less than half a kilo when done by hand.
Eli Whitney's cotton gin (engine) transformed the United States economy and changed world history.
Backed by Mrs Greene and other investors, Whitney formed a partnership with Mrs Greene’s plantation manager with the intention of charging cotton growers two fifths of the value for cleaning their crop. Resentment at the price and business model, the simplicity of the design and primitive patent protection laws in 18th century America meant that the design was quickly copied but the cotton industry and national economy were significantly transformed.
As the plaintiff in multiple lawsuits for patent infringement, Whitney did not get rich from his invention, however lessons were learnt, and Whitney was later credited with the development of interchangeable parts in musket manufacturing. It should be noted that standardisation and interchangeable parts was not a new idea - humans have been using the concept since Roman times but Whitney was one of the first to adapt the idea to a commercial scale in the manufacture of arms for the military.
Entrepreneurs can and do experience failure, however while Whitney may have failed to monetise the cotton gin for personal gain, his intellectual property was one of the most important developments of the first industrial revolution. It transformed the cotton industry and the national and global economies.
Many entrepreneurs are business owners but not all business owners are entrepreneurs.
Most business owners have some of the traits of entrepreneurs. Identifying opportunity is one of the fundamentals of any business plan and business owners certainly assume financial risk in the operation of their business, but their business goals and personal ambition tend to be more modest.
Take for example a successful book shop owner, buying and selling the latest airport novels or even second-hand books from a bricks and mortar store. This model has served humanity well throughout history and there is nothing fundamentally wrong with earning a living through self-employment - until a disruptor enters the market.
Enter Jeff Bezos who has been many things in his lifetime, including a successful bookseller but selling books (or indeed any other product) wasn’t Jeff Bezos only goal when he founded Cadabra Inc in the mid-nineties.
Cadabra Inc was, from the outset, a logistics company and every logistics company needs something to move around - in the early days it was books, but it soon became every consumer good you can think of.
Cadabra Inc was renamed Amazon when Jeff Bezos’ lawyer pointed out that the reference (to magic - as in Abracadabra) was too obscure.
Are entrepreneurs born or made?
One of the enduring myths about entrepreneurs is that entrepreneurs are born that way.
The nature vs nurture argument is as old as time and if we introduce that old English translation of entrepreneur as adventurer we might well ask ‘are children born adventurous or is it learned behaviour?’
Nature vs nurture - are children born adventurous?
In my experience, entrepreneurs are undoubtedly a product of their environment and there are common traits which support this view.
For example, most entrepreneurs are likely to have role models - a family member or peer who has already blazed a trail - or they have had exposure to an entrepreneurial environment.
Entrepreneurs are also likely to have had experience with product development, distribution, marketing and in other areas such as general management. They also embrace technology as an enabler of change.
Entrepreneurs are likely to have had 8-10 years of experience working in their chosen field - long enough to have learned not only the ropes but also long enough to have observed its flaws and to have spotted opportunities. They have almost certainly been there long enough to have asked ‘why do we do things that way?’ and been told ‘because we have always done it that way’ (aka, one of the most dangerous phrases in business).
Entrepreneurs ask lots of questions; of themselves, of others and of the future.
I have certainly had the good fortune of surrounding myself with entrepreneurs for many years and they come from all walks-of-life. However, without fail, I find their characters to be restless,searching and inquisitive and I almost always find them to also be inherently creative. They see opportunities ‘between the gaps’ and do not think in a linear manner.
Entrepreneurs also drive change. They are a catalyst for change in business and within society. In my observations, they are partly driven by leaving a legacy of change.
Another trait I have noticed and I mention this without wanting to further hackneyed stereotypes, entrepreneurs share a mild (but healthy) sense of paranoia or perhaps heightened sensitivity and I have often wondered if this is linked to a different or even greater level of emotional intelligence.
I have also concluded that while entrepreneurs invest in their own ventures and those of others, they have a very different skill set from an investor, angel or venture capitalist. This then begs the question if entrepreneurs do it for the money? Personally, I’m not so sure that financial return is the primary motivating force. While everyone in business (entrepreneur or otherwise) seek a return for their efforts, entrepreneurs are driven by something more; something deeper. While some adventurers climb mountains, entrepreneurs satisfy their deep-seated quest for adventure by building great enterprises.
“Having founded, built and sold successful enterprises myself, I have not as yet concluded whether I was an entrepreneur, a business owner or I just have entrepreneurial tendencies, or whether it is entirely situational.”
Nonetheless, I have concluded that I am fascinated by entrepreneurship. I have met entrepreneurs all over the world, co-founded the Entrepreneurs’ Organization in my hometown of Adelaide Australia, attended global conferences and read several hundred books on the topic. I have just re-read a book by Tom Butler-Bowdon called ’50 Prosperity Classics’ which is a precis of many books on the topics of wealth creation and abundance.
Now imagine if businesses, both large and small, were able to identify and harness that entrepreneurial mindset instead of sometimes creating an environment that pushes them away to potentially create new competition.
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With kind regards,
Martin Haese MBA
Next blog post:
Part Two - Intrapreneurs - who they are and how to develop and grow them?