The intrapreneurship index was presented to the EU in mid-2021. Designed to determine your level of intrapreneurship and how to improve.
The definition of intrapreneurship
In 1985 Pinchot introduced the term intrapreneurship: “Intrapreneurs are dreamers who do. Those who take responsibility for creating an innovation of any kind within an organisation”.
For the first time, entrepreneurship and intrapreneurship were separated as different types of activities
The current definition is widely accepted: Intrapreneurship is a system that allows an employee to act like an entrepreneur within a company or other organisation.
Three terms are central in this definition:
- System: there is a structure
- Allow: there are specific rules
- Entrepreneurship: there is entrepreneurial behaviour, but is it operated form ownership
Intrapreneurship is a lot more than innovation or the promotion of an idea box. Intrapreneurship is a deliberate strategy to grow through innovation AND the commercialisation of new business opportunities.
More specially, our definition of intrapreneurship is: The ability of an organisation to generate disruptive innovation and the capability to create new product-market combinations.
Three aspects are central to this definition:
- Disruptive innovation: The fourth quadrant in the Ansoff matrix: New products in new markets (diversification)
- Disruptive innovation and not incremental innovation (quadrants 2 en 3).
- Ability: The capacity to execute
The different levels of intrapreneurship and the ability to execute are measurable
In 2021 we develop the intrapreneurship index (i-index). A method to establish the level of intrapreneurship in an organisation. The index uses six dimensions in an organisation:
- Formal versus informal
- Structured versus unstructured
- Strategic versus operational
- Internal versus external focussed
- Emphasis on culture versus emphasis on structure
- Who is responsible for intrapreneurship in the organisation?
We decided to classify four levels.
The four levels
|1. Informal Intrapreneurship||Informal
Emphasis on culture
The CEO is in charge, top-down approach
There is no focus on innovation
|2. Incremental intrapreneurship||Semi-formalised
There is a structure
Emphasis on culture change
The CEO is taking charge
A strong focus on incremental innovation
|3. Intrapreneurship as a company function||Formalised
Internal en external scouting
Emphasis on establishing structure and culture
The management team is in charge
A strong focus on innovation
|4. Strategic intrapreneurship||Formalised
Part of the strategy
Both internal and external focus
Culture en structure are codified
Autonomy of employees
A strong focus on new PMCs with disruptive innovation
The four levels could be described as follows:
Level 1: The organisation has no capacity to arrive at disruptive innovations in a structured way.
Level 2: Incremental intrapreneurship. The organisation has started working on innovations in a structured manner. The focus is internal and aims to achieve improvements within the current portfolio. Disruptive innovations find no breeding ground. The CEO is in charge of the process but has little involvement. The approach is top-down, and work is being done to improve the culture in the organisation.
Level 3: Intrapreneurship as a function. The organisation has a structure and supporting processes. Scouting takes place both within and outside the organisation. An innovation manager has been appointed. The total management takes the lead in achieving the objectives. There is an intrapreneurship culture within the organisation, and work is being done on formalising the culture
Level 4: Strategic Intrapreneurship. The organisation works systematically and structured on disruptive innovations in the PMC. The strategy is aimed at continuous innovation. Intrapreneurship is a fully-fledged part of the strategy, including an intrapreneurship manager the MT level. It forms a structural agenda topic at the meeting of the MT and Executive Board. In the organisation, there is a bottom-up process. Employees are rewarded for innovative behaviour, and management facilitates the process.
How to determine the level?
Organisations at various levels are classified using a closed questionnaire, which consists of 20 closed questions. The questionnaire is included in the appendix. The score determines the level of Intrapreneurship.
A test among more than 100 SMEs (conducted in 2021) gave the following conclusions:
- The classification gives a good idea of the degree of intrapreneurship in the organisations
- More than 80% of SMEs end up at the first level: there is no capacity to achieve disruptive innovation.
- More than 95% are located at levels 1 and 2, and only 5% of the SME organizations have a structure to achieve innovations.
The Index was presented to the EU in mid-2021.
In addition to determining the level of an organisation, it is important to look at the development of an organisation. In other words, how do you get from one level to a higher level?
For each level, a set of instruments is categorised which are applicable at that particular level and help an organisation to reach a higher level. To assist in this process, a toolbox consisting of more than 60 instruments has been compiled.
The use of these instruments partly leads to an organisation building up an increasing ability to achieve a disruptive innovation and ending up at a higher level of the index.
Here is the overview of the instruments:
A common mistake in intrapreneurship processes is to apply the wrong instruments in an organisation. Certain instruments have little added value for organizations that have been involved in intrapreneurship for some time. Or intrapreneurship instruments more appropriate to a higher level are used in start-up organizations
It is important to use the right set of instruments at the right level.
The index, therefore, consists of:
- A questionnaire that provides a baseline measurement and determines the starting level of the organization
- A classification at a certain level
- A toolbox with tools to reach a higher level
Top-down or bottom-up?
There is a debate among experts about whether innovation benefits from a top-down or a bottom-up approach. Does management take the lead? Or should it start from the shop floor?
Structure versus culture
Parallel to this is the discussion of whether innovation benefits from a strict structure or more from a culture that gives employees room to innovate.
Rules versus autonomy
The model of the index provides a good insight into the processes that lead to a more innovative company. It depends on the level of the organisation and what is required to achieve greater innovation capacity.
At level 1, the organisation benefits most from a top-down approach. The management, and certainly the CEO, lead the process, sets an example and actively initiates innovation processes. Top-down, employees are challenged to come up with ideas and innovations.
At level 2, the structure is central. Processes are put in place. An innovation structure is established. Employees receive guidelines within which they can work on innovations.
Level 3 is about bottom-up. An innovation panel will be set up, consisting of employees from all layers of the organisation. Management controls remotely. An innovation manager will be appointed, and the structure will give employees room to participate in innovation processes.
Level 4 is about culture. The innovation culture is the foundation of the organisation. The strategy revolves around realising disruptive innovations.
The first steps
For an organisation that wants to actively work on Intrapreneurship, but has little experience with it, the following first steps could be considered:
1. Installing an idea box
2. The CEO’s monthly reward for the best ideas from this box
3. Giving workshops in which the innovation process is central
4. Actively scouting for disruptive innovations (both internally and externally)
5. Appointing an innovation manager
The i-index has been developed by an international team of specialists in the field of innovation, entrepreneurship and intrapreneurship. For more information, see https://intrapreneurial-index.com.