Intrapreneurship vs entrepreneurship | The benefits of each

Dan D’souza

Senior Programme Manager

  Photo by Jud Mackrill on Unsplash

Intrapreneurship vs entrepreneurship

Most articles written about intrapreneurship vs entrepreneurship are from an individual’s perspective. This article is different. I’ll be writing from the perspective of business leaders looking to drive idea creation, problem-solving and innovation within their company. 

First, let’s get some clarity on what intrapreneurship and entrepreneurship mean. In the simplest terms, intrapreneurship is when employees inside a business develop innovative ideas. In contrast, entrepreneurship is when an individual has a new idea and starts their own business. 

Before exploring how these differ, let’s cover the similarities between intrapreneurs and entrepreneurs, such as the skills and characteristics required to be successful;  

Motivated to solve problems

Intrapreneurs and entrepreneurs can’t sit still if they spot a problem or opportunity. They feel compelled to do something. To create or improve. This intrinsic motivation helps drive the other characteristics. 

Adaptability

A fixed mindset is kryptonite to intrapreneurs and entrepreneurs. It manifests as a blind belief in an opinion despite feedback or data to the contrary and is a death sentence for many new ideas. 

Instead, intrapreneurs and entrepreneurs display strong adaptability—they can change or refine ideas based on new information, learnings or in response to changes in the market. It’s just as well as no business is ever “finished”; they constantly need to evolve and adapt. 

Resilience

If you give up at the first hurdle, you aren’t going to get very far, especially when it comes to developing innovations—a process which produces a succession of failures before wins. Anyone working in this area must be able to work through setbacks, learn from them and continue moving forward.

The ability to convince and persuade others

Innovative ideas require resources to get them off the ground, whether that’s technical support from other teams or VC funding for a startup. But most people tend to be risk-averse, especially when it comes to ‘new’ things. To secure resources, both individuals must be capable of selling their idea to gain the support they need. 

How does intrapreneurship and entrepreneurship differ? 

There are more differences than similarities. Here’s how intrapreneurship and entrepreneurship differ: 

Innovation outputs 

Entrepreneurs create solutions to big problems. Their autonomy means they can focus on a gap in any market and produce something radically new, making them a great source of strategic or disruptive innovations. While intrapreneurs can also develop strategic innovations (and vice versa), their work tends to focus on incremental innovations that improve processes or the performance of the core business.  

Risk 

From a corporate perspective, entrepreneurship carries significant financial risk for the startup founder with little to no risk for the corporate collaborator unless they decide to partner. Still, financial risk can be reduced by establishing tried and tested processes to test and validate ideas before making any significant investment. Either way, the benefit of partnering with entrepreneurs or fostering intrapreneurship outweighs the risks. 

Responsibilities

Entrepreneurs are responsible for coming up with the initial idea and are the ultimate decision maker. On top of this, they are responsible for forming and running a new venture, managing staff and all the other trappings of a business owner. 

Intrapreneurs are responsible for using their tacit knowledge to develop ideas that meet the company’s goals and objectives. Depending on their skillset, they might also manage the innovation process and bring ideas to market. If these skills are unavailable, companies can partner with corporate innovation firms to run intrapreneurship programmes and teach internal teams. But ’intrapreneur’ isn’t a job title. So those involved in intrapreneurship have a “main job” with its own demands and responsibilities. 

Companies can ask employees to dedicate a portion of the working week to intrapreneurship. This approach was popularised by Google’s 20% policy which encouraged staff to spend 20% of their time “working on what they think will most benefit Google.” And while it led to the creation of some of the company’s most successful products, such as Gmail, AdSense and Google News, the time can often get hijacked by competing responsibilities making it a somewhat unreliable strategy unless enforced.   

Alternatively, employees can be moved into intrapreneurship programmes for a set period and then return to their “main job” afterwards. This approach ensures employees are dedicated and focused on intrapreneurship without competing demands. 

Ownership  

Entrepreneurs tend to own most, if not all, of the businesses they develop. But commercial partnerships, investments or acquisitions can be used to gain ownership or the rights to use entrepreneur-driven innovations. 

The work produced by intrapreneurs is usually owned in full by the corporation they work for. 

Resources

Most entrepreneurs start with little capital or human resources, having to beg and borrow until their idea shows results. The intrapreneur starts in considerably better circumstances. They have access to a budget, internal resources and an established brand and customer base. 

Why should companies use intrapreneurship and entrepreneurship? 

The magic lies in pursuing intrapreneurship and entrepreneurship to drive innovation, as each offers different benefits. However, each approach thrives under specific conditions and requires different processes. So, you’ll need to design distinct programmes to pursue each.

For example, intrapreneurship can be developed through structured intrapreneurship programmes, competitions or hackathons. Working with external entrepreneurs and their startups requires an accelerator programme or innovation lab to support the process. 

The distinct benefits of intrapreneurship and entrepreneurship help illustrate why employing both approaches leads to greater business outcomes. 

The main benefits of intrapreneurship-focused programmes 

Increase profit

Intrapreneurs focus on making incremental improvements to the existing business. These drive efficiencies in how products or services are produced, helping you drive higher profitability. 

The above is only valid in businesses using a systematic approach to intrapreneurship. Those simply ‘encouraging intrapreneurship’ are unlikely to see results. Likewise, those who fail to use an agile process focusing on lean validation are unlikely to drive profitable results.   

Staying relevant in the face of competitors

If you aren’t constantly improving, you can quickly fall behind your competitors. 

In many industries, brand loyalty is hard-won and easily lost. If customers spot a slightly better alternative and there’s a low barrier to switch, they’ll often swap allegiances. An ongoing intrapreneurship programme delivering constant improvements and innovations can help retain those customers long-term.  

Happier, more productive employees

Research has shown that businesses with highly engaged employees benefit from happier employees and higher levels of productivity, profitability and customer satisfaction. 

A reliable approach to increasing employee engagement is offering employees the freedom, flexibility and ownership to develop their ideas via intrapreneurship. 

The main benefits of entrepreneurship-focused programmes

A low-risk approach for developing disruptive innovations

Entrepreneurship-focused programmes, such as corporate innovation labs, focus on finding the best startups which address big opportunities. The selected startups or scaleups go through due diligence and rounds of real market validation before your business decides on any further partnership. This means the risk involved in developing disruptive innovations is considerably reduced, and it is a faster approach than businesses trying to achieve the same on their own. 

Inspire internal teams 

Innovation labs pair internal employees with external startups to develop their business ideas. This collaboration exposes your team to cutting-edge technologies and an entrepreneurial mindset. Skills they can bring back inside the organisation to help fuel intrapreneurship. 

Increase revenue

Adopting strategic innovations developed by entrepreneurs can open up new markets, business models, products and services, all of which drive additional revenue streams for your business. 

Gain a competitive advantage 

Disruptive innovations can help businesses leapfrog their competitors and provide an advantage which is hard to challenge or replicate. 

Why you should work with L Marks 

If you want to establish an intrapreneurship programme within your organisation, or partner with entrepreneurial startups, check out the information on our service pages or get in touch. 

Advertising intrapreneurship programmes externally can also help you attract the best talent.

30 May 2023