business strategy

Will corporate intrapreneurs put entrepreneurs out of a job?

Speaker Seminar Corporate Business Meeting Concept

Originally published on June 5, 2016 as a Guest Column in The Globe and Mail: http://www.theglobeandmail.com/report-on-business/small-business/startups/will-corporate-intrapreneurs-put-entrepreneurs-out-of-a-job/article30202880/

There’s nothing more faddish than some of the terms used when devising corporate strategy, and now, for better or worse, “intrapreneurship” is back.

Born in the late 1970s, when sudden market shifts first started to demonstrate that the average corporate entity isn’t actually good at adapting to change, intrapreneurship is a movement that believes big businesses should grow and innovate the way entrepreneurs do. The first wave of intrapreneurship never really took off, probably for two reasons: a) because innovation is hard, and b) because most big corporate leaders didn’t truly believe they could learn anything from small businesses.

But now intrapreneurship is hot again. Unlike the 1980s, the impact of entrepreneurial disruption is all around us: in the urban uproars over Uber, the fuss around fintech, and Detroit’s growing attention to Elon Musk and his electric cars. CEOs have to respect small business now, because visionary, nimble entrepreneurs are kicking them in the assets.

Check any business magazine today, and you’ll see evidence of this shift. The business models everyone is copying are those of Etsy, Zappos, Airbnb, Warby Parker and other creative, mission-based innovators. No one wants to be the McDonald’s of their industry (low quality, cheapest) any more. Not even McDonald’s.

What caused this comeback? “The potential of intrapreneurship is greater than ever,” says Hans Balmaekers, program and partnership chief with the Netherlands-based Intrapreneurship Conference. “The business landscape has changed. Consumers are more choosey today, and startups are better able to meet that demand. Intrapreneurship is an opportunity to do more experiments, faster and cheaper.”

Mr. Balmaekers says intrapreneurship borrows the best qualities of savvy startups: a bias for change, openness to learning and collaborating, a commitment to customer feedback, and tolerance for risk.

This month the Intrapreneurship Conference will hold its first two Canadian events – in Waterloo, Ont., on June 14, and Montreal on June 16. (In the interests of full disclosure, I have been invited to speak at the Montreal conference.)

Most intrapreneurship programs are still small-scale. They tend to be championed by just one senior executive in an organization, and confined to one group that’s specially empowered to test new ideas and fail fast. Mr. Balmaekers says it will take most early adopters years to extend that kind of thinking throughout their organizations.

Intrapreneurship starts with humility, which in big firms is rarely a core competence. “At our conferences, no one hides behind their business cards,” says Mr. Balmaeker. “It’s not about competing and showing off, but collaborating and learning together.”

When I first heard about the Intrapreneurship Conference, I must admit I wavered for a moment. Is intrapreneurship actually good for entrepreneurs? Do we really want market-dominating, resource-rich corporations taking our best stuff: our entrepreneurial hunger for disruption, our ability to turn on a dime, our commitment to constantly surprise and delight our customers? When our only advantage is agility, do we really want corporations to learn how to dance?

In the end, I concluded, the answer is yes. Of course we want smarter, savvier corporates making waves in their marketplaces. Small business won’t just benefit from the competition; we will all gain from faster-moving and more risk-tolerant markets.

Here’s why:

Entrepreneurs exist to spot gaps and seize opportunities. As bigger organizations embrace change and disruption, they will naturally become more open to doing deals with fearless, creative, small businesses. If big companies start attracting and empowering more innovative executives, they give us more willing prospects to pitch to and partner with. Having people at the top of big businesses who actually have budgets for new ideas, projects and processes will be a huge opportunity for visionary entrepreneurs.

Many ideas never get to market because of lack of funding. Creating more intrapreneurial organizations doesn’t just generate more prospects for small business, but also more potential strategic partners and investors. Many brilliant but cash-constrained entrepreneurs would gladly swap ownership of an idea for stock options (or employment) in innovative large company, if it means seeing their vision realized.

“Build to sell” is the mantra of many entrepreneurs. The more that large companies understand and appreciate the value that smaller independents bring to their markets, the more they will be open to buying early-stage ventures.

Innovation is increasingly being recognized as a key differentiator, economic driver and source of job creation. If bigger businesses become better at innovation, they will create a more robust and competitive Canadian economy – which is good for every business, small or large.

Entrepreneurs should do everything they can to help their more corporate-minded colleagues adopt the culture of intrapreneurship. It may take years, and many setbacks. Corporate CEOs tend to be risk-averse, status-conscious, and in office for a very short time. They’ll need all the help they can get.

Ken Tencer is chief executive officer of design-driven strategy firm Spyder Works Inc. and the co-author of two books on innovation, including the bestseller Cause a Disturbance. Follow him on Twitter at @90per centRule.

 

 

 

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A good crisis can make for great opportunities

Originally published on September 4, 2015 as a Guest Column in The Globe and Mail: http://www.theglobeandmail.com/report-on-business/small-business/sb-managing/a-good-crisis-can-make-for-great-opportunities/article26204036/

A few weeks ago, I went to Brazil to speak to a large group of manufacturers on the perpetually-topical subject of innovation in a time of crisis. The forum, held by FIERGS (Federation of Industries of Rio Grande do Sul), addressed the well-known struggles of the Brazilian economy. Unfortunately, those same issues are now being faced by the Canadian economy.

With the recent announcement that Canada is in a “technical” recession, these two resource-driven economies are slowing to a crawl. The good news? For me, there’s never been a better time for businesses to embrace innovation. And the best way to succeed in this perpetually challenging area is to look at innovation through the lens of crisis – or turnaround – management.

Innovation has always thrived in hard times. Desperation forces people to question the status quo. In good times, people may be less inclined to rock the boat, but when investors and customers are bolting for the doors, you have no choice. That’s probably why some of the world’s great companies were founded during recession – businesses such as General Electric, IBM, Disney, Microsoft and Adobe.

One of the world’s most successful innovators, Apple, wasn’t founded during a recession. But the same principle applies. When Steve Jobs returned to take the reins in 1997, Apple was facing crisis: too many products, too little focus, not enough revenue. What saved the day? Steve Jobs shaved Apple’s product lines by 70 per cent. Even the best companies can become bloated and undisciplined during the good years and forget the core competencies that made them great.

To stay true to your strategic core, you could do worse than look to the process of strategic turnarounds. Once a company has accepted that it has lost its way, a successful turnaround requires an extraordinary commitment to self-analysis, questioning, reflection and day-to-day change. The same turnaround tools can be adapted to meet the enormous market pressures all businesses face today.

The main reason many companies fail is lack of focus. They start off doing one thing well, and then get attracted to – or distracted by – other opportunities. Some may be successful, others not. But all of them distract the business owners and leaders from what they set out to do. And all too often these shiny new opportunities are well removed from the business’s original roots. That means there is little synergy with established operations, and way too much to learn – about new products, suppliers, distribution channels, markets and customers. It’s falling into this pit of guesswork and improvisation that leads most companies to call in the turnaround experts.

It takes courage to admit that your company needs to reverse course. But successful turnarounds require everyone involved to face the brutal truth.

The best turnarounds usually begin with a strategic review that asks: What are our strengths? What do we do best? Where are we losing money? What operations are most profitable? Where can we grow? Successful change also requires that you reconsider some of the specific actions that got you into trouble. Stop doing the same old things; one definition of insanity is doing the same things and expecting different results.

Here are some of the key elements of a successful turnaround:

  • You need the right people on the journey. A winning turnaround starts with shedding employees who aren’t contributing sufficient value, or lack passion for their job. Once you get rid of the complainers and the complacent, your company has a better chance to bounce back.
  • You need a “change champion” to manage the turnaround – someone who owes nothing to the old, failed ways of doing things, and is prepared to listen carefully, consider many new ideas, and take direct action. His or her objective must be to stop the bleeding and get the company moving in the right direction. This is usually a hard job for the original owner/manager to do. Regardless of who takes charge, they require a formal process. As outlined in my book, The 90% Rule, that means knowing where your organization came from, knowing what it’s best at, and finding more ways to create value for more customers.
  • Focus is key. Trimming marginal operations is imperative – as Steve Jobs knew when he cancelled 70 per cent of Apple’s product lines in order to focus on only the best and biggest opportunities. In crisis, protect the core. Pull the plug on non-core activities.
  • Review prices and margins. Many companies are afraid to raise prices or set minimum margins for fear of losing customers, but it’s the best way to figure out who your best customers really are, and to clear out the unprofitable ones. Every penny of these exercises goes directly to the bottom line. No surprise, then, that the companies I have seen do this all wish they had done it sooner.
  • Refocus on the customer: What do your customers want and need? What are their biggest pain points, and how can you relieve them? Get out and talk to the customers. (It’s a shame so many companies wait till they’re in trouble to do this.) Once you have identified new ideas, opportunities and solutions, let the customers know the new directions your company is taking – and how they contributed to its success.
  • Keep employees well informed of the company’s plans and decisions. In the absence of facts, fear breeds confusion and negativity. Keep everyone informed, involved, and marching forward.
  • Paint a clear picture of what you’re trying to do and the process you are following. Share this vision with all your all stakeholders (customers, employees, suppliers, investors, bankers, etc.). You want everyone to know that there is a better future ahead, and that their sacrifice, hard work and faith will not be in vain. Make sure to offer a specific reward at the end, whether it’s increased job security, bonuses, profit-sharing, and/or a blowout party to end all parties.

Diamonds can only be created under great pressure. Whether your company needs a major rethink or you are simply looking for new opportunities for growth, crisis thinking can create the new opportunities you and your team are looking for.

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Does The Wizard of Oz hold the secret to your business success?

Originally published on June 5, 2015 as a Guest Column in The Globe and Mail: http://www.theglobeandmail.com/report-on-business/small-business/sb-growth/day-to-day/does-the-wizard-of-oz-hold-the-secret-to-your-business-success/article24775942/

My son popped in the other day and told me that he had signed up for his first ‘group’ at university: The Graduating Class of 2020.

Impressive,” I said, “since you just received your acceptance yesterday.” He then reminded me of my own words over the years: “You’ve got to have a goal.”

Any parent reading this will recognize what a monumental moment this was for me. Not that my son was off to university, but that he had actually remembered one thing that I had said to him during his first 18 years! Actually, he went on to tell me his sub-goals. Having joined a co-op program that offers opportunities for international placements, he has mapped out the places where he hopes to visit for both work and study terms during each year of his program.

How many of you have a five-year vision for your business that includes not only strategic goals but also sub-goals – those small steps that will lead you to where you want to go?

I can honestly say that at my company, we have such a plan. As our horizon spans the next five years, I call it our 2020 Vision. But it’s not a perfect, sealed document preserved under glass for people to marvel at for the next five years.

Quite the opposite: It’s a working document, clearly and succinctly articulated on a whiteboard in plain sight. It includes the over-arching vision for the company, and highlights our five key strategic pillars which range from the high level (the refinement of corporate vision and values) to the pragmatic (revisiting the eight steps that we follow to acquire and delight customers), as well as the purely practical (upgrading our technology infrastructure).

Running an emerging boutique-sized organization, I can fully empathize with the pain you may feel when you hear the phrase ‘strategic plan.’ Sure, planning requires work. But it doesn’t have to be overwhelming. And it doesn’t have to be a static, hold-your ground plan. There will be many unpredictable elements that affect your businesses in the next week or month, let alone five years. So, your plan needs to be flexible.

This is why I break the strategy process into planning and discovery. To (over)simplify, think of it as six steps:

1. Engage in a free-flowing discussion with your senior team about your organization’s five-year goals.

2. Identify and articulate your company’s strategic pillars (exploring five top-level areas of focus is a common outcome).

3. On a board, summarize those five (or so) pillars, each in about 100 words. Have bullet-point steps under each heading, along with anticipated delivery dates and the name of the person charged with getting these things done.

4. The person-in-charge should put together a top-level plan for his or her project. Again, this doesn’t have to get cumbersome. A couple of pages can usually summarize the project’s goals, objectives, milestones, timelines, resources and desired outcomes.

5. Meet monthly with each of the project leaders – individually and as a group – to monitor progress and see where you or the full team can help out if a project starts to flounder.

6. Allow for changes, refinements and updates. How? Read on about the second element of our planning process, which we call Discovery.

Discovery acknowledges from the get-go that things are going to change. And that your organization, team and plan have to be elastic.

John Cardoso, the founder of Spyder Works, likens this part of the process to the epic journey that takes place in the 1939 film, “The Wizard of Oz.” Pushing your organization in a long-term strategic direction is akin to the film’s storyline of Dorothy embarking on an epic journey towards a defined goal: going home. During the journey, team members join her and eventually learn a lot about themselves, their potential, and their ability to cope with problems along the way.

Working together, thinking beyond tomorrow morning, galvanizes us as business teams. Learning to recognize, adapt and adopt to changes around us makes us hardy travelers and formidable competitors.

Dorothy’s journey in the movie also reminds us that we must rediscover and embrace the sense of wonder and curiosity that most of us gave up in grade school. Encourage ongoing questioning and refinements to surface organically as new evidence and opportunities arise.

This is why we double-back and add in the sixth step to the process.

6. Allow for changes, refinements and updates. To encourage creative input, I place Post-it notes and a pen beside our strategy board so that anyone can add their future-forward ideas (be they high-level or project-specific). This may sound like a minor part of the process, but it isn’t. It reminds the team that these (and all) projects are not static, but fluid. They are not perfect plans, but opportunities we have shared that we think about regularly and build on continuously.

Throughout your strategic journey, you will encounter unforeseen situations and daunting challenges, (e.g., competitors, social change, new technologies), just as Dorothy did. But the strength they gained in travelling together helped Dorothy and her unlikely leadership team discover the tools and talents they needed to reach their strategic goal. For Team Dorothy, those tools and talents included perseverance, intelligence, empathy and courage – probably the same characteristics you want to see in your own teams.

What colour is your company’s yellow brick road? Where is it going to take you? Plans can change, yes. But that is no excuse for not making them. You never know when your business will encounter lions or tigers or bears – but with a plan, you’ll see them coming a lot sooner.

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