Entrepreneurs stand out in a crowd. They like being their own boss. They think big, take risks and shrug off failure. When they feel stifled or bored, they either change their environment or leave. But do not let them go. Your organization needs them.
The entrepreneurs on your payroll are the pioneers who spark new enterprises, products, services and processes. They see opportunities that others miss and create value for everyone around them, including customers, employees, shareholders and communities. They are your most important edge in an era of increased global competition.
While some entrepreneurs prefer the freedom of starting their own companies, you have assets in your organization that can entice many to stay. Silicon Valley is famous for its startups, but entrepreneurship is a universal concept with applications in a number of domains. Existing organizations in the commercial, social and public sectors all show results when they invest in the development and retention of entrepreneurs. This rarely happens by accident or without support from the highest levels of management.
As organizations grow larger and stabilize, natural barriers to entrepreneurship emerge. I explore these barriers and offer solutions in my new book, Corporate Entrepreneurship: How to Create a Thriving Entrepreneurial Spirit Throughout Your Company
(McGraw-Hill, Sept. 16, 2011), coauthored with Thunderbird School of Global Management researcher Claudine Kearney, Ph.D.
Corporate entrepreneurship, which also has been called “intrapreneurship” or “corporate venturing,” involves overcoming the inertia, rigidity, rules and bureaucratic roadblocks that entrepreneurs hate. Companies such as Google, Unilever and American Greetings have shown that existing organizations can create work environments that reward innovation and keep entrepreneurs happy. To make this happen, senior managers must address key challenges in three areas: Corporate culture, communication and compensation.Corporate culture
Coming to work needs to be fun for entrepreneurs. They need flexibility to explore ideas, tackle challenges and make mistakes. Sometimes they need to stare out a window or go for a walk.
This is fine if they work for themselves, but corporate paychecks come with bottom line responsibility. Public companies must answer to shareholders, regulators and tax collectors. They must file forms and enforce policies. Freedom must have limits.
The key is compromise. American Greetings in Cleveland, Ohio, showed the right balance when it moved into the online greeting card business in the early 2000s. The company established a subsidiary for its online cards in a separate building on its main campus away from the formal offices.
Instead of a receptionist sitting behind a desk, guests today at AG Interactive find workers dressed in T-shirts working irregular hours, eating pizza and sometimes playing table tennis. The subsidiary operates within the corporate structure but rewards different types of behavior and outputs. As a result, innovation has flourished — along with market share. AG Interactive reported about 3.8 million online paid subscriptions in February 2011.
Managers who invest in this type of corporate culture find they can never return to the old way of doing business. Once their teams experience a model of controlled freedom, they get entrepreneurship in their blood and never want to change back.Communication
Another key to keeping corporate entrepreneurs happy is to communicate the benefits your organization provides.
Entrepreneurs who operate in the corporate structure never will achieve the multimillion-dollar payoffs that come with breakthrough startups such as Facebook, but their chances for success rise dramatically when they tap into the marketing, finance and accounting resources available within your organization.
Corporate entrepreneurs need to understand this. You need them, but they need you.
About 70 percent of North American startups fail within five years when entrepreneurs operate on their own. Corporate ventures also fail, but shareholders carry the bulk of the risk. Paychecks continue coming every two weeks for corporate entrepreneurs regardless of results.
Corporations provide a safety net, structure and platform for experimentation. Managers who communicate this well can persuade many of their superstars to stay.Compensation
Another aspect of communication involves listening to the needs of your best employees when it comes to compensation. Entrepreneurs who pass up the prospect of a lucrative IPO or private equity buyout still need fair pay for the value they create within your organization.
Finding the right package can be tricky. Creative and responsive managers consider economic and noneconomic rewards.
Economic rewards start with base salary but also might include stock options, performance pay and other bonus systems. One benefit might include college tuition assistance for the entrepreneur’s family — something that U.S. companies can structure as a charitable contribution.
On the noneconomic side managers might offer flexible hours, generous vacation time, project autonomy, support of various social initiatives, or even preferred parking in the company lot. Everything depends on the needs of each individual.
People are the most important asset of any organization. This is the hardest thing for competitors to replicate. Managers who take steps to keep their entrepreneurs happy give their organizations an edge. Working together, you can make the world a better place through the innovation that results.Robert D. Hisrich, Ph.D., is the Garvin Professor of Global Entrepreneurship and Director of the Walker Center for Global Entrepreneurship at Thunderbird School of Global Management in Glendale, Arizona. He has authored or coauthored 26 books and more than 350 articles on entrepreneurship.
[This article has been reproduced with permission from Knowledge Network, the online thought leadership platform for Thunderbird School of Global Management https://thunderbird.asu.edu/knowledge-network/]