How to measure the potential of an intrapreneurial project
By Julie Durban - 13 July 2020
At a time when entrepreneurship is king and startup collaborations are growing, it may seem a bit old-fashioned to innovate internally, within a large group. However, large corporations do not necessarily rhyme with worn-out methods.
In fact, intrapreneurship is making a comeback, as seen by the multiple programmes and projects launched by JC Decaux, Siemens, Ferrovial and others. Air France, for instance, saw the birth of Smooss from its intrapreneurship program, an ingenious startup which predicts and manages overbooked flights.
Intrapreneurs are an important source of corporate innovation since, as Steve Jobs conceived it, they’re the ones who will think outside the box while staying inside the box. The benefits are multiple: the parent company reinforces its competitive advantages; while the intrapreneur benefits from more resources than an independent entrepreneur, as provided by the holding company.
However, it can be difficult to decide whether these projects have the potential to take off or whether the parent company should put an end to them. The parent group might also see a fit in terms of value proposition but not in terms of the project’s business model or structuring – making it a question of “how to develop the idea” rather than “should it be developed”.
Early Metrics has evaluated many intrapreneurial projects. Here are some tips from our experience and methodology on how to assess the potential of an intrapreneurial venture.
Growth potential indicators for young ventures
Whether it is an entrepreneurial project or an intrapreneurial one, some essential criteria need to be met to ensure a young company’s survival and growth. In Early Metrics’ methodology, these are divided into three pillars of assessment:
The project leader(s)
Unlike startup founders, intrapreneurs are not always “born entrepreneurs”. Accustomed to strict processes, they can sometimes lack this startup mindset known to be as fast as it is flexible. Moreover, the complementary nature of the managers, a key factor in the success of startups, may be lacking in a project initiated by people from the same department.
Indeed, in supporting several corporate clients, we observed first-hand the importance of the project-team fit in building strong intrapreneurship. An audit of the management team could enable the parent group to know if they need to add other profiles to the intrapreneurial project before investing or launching the commercialisation.
Finally, the availability of project leaders should not be neglected. Do they have enough time to devote to it or are they too busy in their current position? And since they are still employees of the parent company, do they have enough of a financial incentive to pour their energy into the project?
The project itself
In order not to miss the opportunity of an intrapreneurial project, it is necessary to understand its business concretisation potential. This involves assessing its innovative character (which will allow it to exist outside the parent company), its technical roadmap (and the ability to execute it) as well as the administrative structure of the project. In fact, these criteria are important for all startups alike (intra or not).
Factors that are particularly relevant for intrapreneurship include the ability and willingness of the group to support and fund the project as well as to test the solutions abroad within its foreign subsidiaries. The startup team’s ability to find mentors and leverage their network within the mothership can make a big difference in the project’s performance too.
The potential market
Since no project can exist without a market, market analysis is the cornerstone of any business. Even more so for intrapreneurship, the projects carried out within a company must be of interest to the parent company and enable it to open up its activity to new markets. This is the case, for example, for Insurtech projects within banks. In addition to being useful, the intrapreneurship project must be more attractive than what already exists on the market.
To increase its chances of growth and survival, the startup should also have access to a market that goes beyond the parent company. We have observed that intrapreneurship program leaders are increasingly attentive to the market potential of their startups, collecting feedback from external potential clients to estimate the value and output of the projects.
Relationship between the intrapreneurs and the group
What is special about an intrapreneurship is that it brings project leaders into dialogue with a large group. Their suitability can, therefore, be embodied in several ways: the sharing of common values, compatibility with other group entities, the business impact for the group and the level of dependence between the intrapreneurs and the parent company. It is then legitimate to ask whether intrapreneurs make the best use of the company’s resources, for example by using its media and market relations, by accessing business mentoring with group executives, etc.
Secondly, the issue of dependency will prove to be key. Is the venture able to generate income on the market and thus survive as a standalone company? A strong dependency and a weak business model could lead it to need too much funding. This inevitably raises the question of how much financial support the parent company is able to allocate to the venture, and for how long.
Finally, to give life to the project, the intrapreneurs will have to face the group’s will to implement the innovation brought. Without internal adhesion, the project will struggle to be deployed and therefore will not come to fruition.
Alignment of the intrapreneurship venture with the group’s needs
It, therefore, goes without saying that the parent company and the intrapreneurial project must share the same ambitions and vision. Indeed, project leaders must offer value propositions and business models that will have a positive impact on the group.
To achieve this, the group must not only aim to increase its revenues but must also create a climate where employees can be creative and feel driven by their company’s aspirations. The idea is to be able to be entrepreneurial without having to leave the group. So the potential for success of an intrapreneurial project will be correlated to its complementarity with the group’s core business and with the environment created by the group. Finding the right alignment of culture with the parent company means knowing how to move from a culture that says “This is how we’ve always done it”, to one capable of saying “This is how we’re ready to do it”.
Finally, the likelihood of implementation within the group, in addition to being dependent on all of the above, will depend on the technical capabilities and infrastructure of the group made available to the project owners. For example, the adoption of an AI solution could be in line with a group’s needs but if the group’s data infrastructure is fragmented and non-standardised, its implementation will be difficult.
In short, the potential for completion and growth of an intrapreneurial project rests as much on the parent group as on the project leaders. Third-party players in the ecosystem, such as Early Metrics, can help companies to foster successful intrapreneurial projects. Indeed, it is not surprising that in order to assess the fit with the parent company and the potential value of the venture, some groups need an external view (independent and objective) that may or may not corroborate an analysis made internally. This is all the more important since the project owner and the assessors are collaborators.