Jobs required the agility of a start-up, so he created a company within the company. He put together a Mac development team, housed them in a separate building with a pirate flag on the roof and told them to tear up the rulebook. Then, once his team of entrepreneurs had come up with the goods, he harnessed the size of Apple to spark a computing revolution.
Searching for agility
In the last five years, I’ve noticed a big change in what companies are asking us for in Executive Education. It used to be about skills – boosting a company’s performance by boosting the input of its key talent. Today, we’re talking more and more about the capabilities of the company as a whole – and one capability above all: agility.
How, like Apple, can a company be both big and fast? How can senior executives spot threats and opportunities sooner and respond more quickly? How can they have the mindset of entrepreneurs when they are in charge of organisations so many times larger than a start-up?
The answer involves exploding the decades-old paradigm of the ‘all-knowing’ leader. Traditionally managers make decisions and staff act on them. It’s the managers who have the authority, the responsibility and the rewards.
However, the world today is just too complex and companies are too big for managers, senior executives and CEOs to know everything about everything. They shouldn’t be solely responsible for knowing what’s over the horizon or for deciding on the best response to every new threat or opportunity. Instead they need to admit ‘I don’t know what I don’t know’ and make more use of the company’s internal resources. They need to become what I call ‘intrapreneurial’.
Harnessing internal resources
Being intrapreneurial is about pushing authority down, flattening the hierarchy and saying to everybody in the company that what they bring to work is as powerful and as important as what the CEO brings. Take the example of Toyota, as originally illustrated by London Business School (LBS) Professor Gary Hamel in The Future of Management. For many years General Motors knew that its Japanese rival was putting out cars at a faster rate and with fewer errors, but they couldn’t figure out how. They returned to the problem again and again – and Toyota even allowed them to visit their factories – but for decades they simply couldn’t pinpoint a reason.
Finally it clicked. The senior management at Toyota had devolved responsibility for its production line to the experts – the people actually working on the factory floor. They were the ones best placed to spot a problem in the manufacturing process or a way to improve it. And they were the ones given the authority to bring the whole production line to a halt.
At General Motors such a potentially expensive decision could only be taken by an executive far removed from the factory floor via a series of complicated processes and protocols. What Toyota was doing was so alien to the General Motors team that they couldn’t even identify it. But for decades the agility of the Japanese giant’s decision-making had given it a real competitive advantage.
Putting it into practice
For the past five years the Executive Education team at London Business School has increasingly been working with companies to make them more intrapreneurial. We start with the idea of purpose rather than financial performance. We had one company come to us recently with a proud 140-year history and one of the first things we did was to ask what its purpose was. It quickly became apparent that long-held assumptions about the company were no longer relevant, and we challenged them to create a new purpose for the next 50 years.
The next step is to rewrite one’s business plan to match the refreshed purpose. Rewriting a business plan is something that entrepreneurs do all the time and there’s no reason why bigger companies can’t do the same. In fact, it’s often just a question of mindset; many companies tell us that what seemed like impassable blocks on innovation can turn out to self-invented obstacles.
Aligning jobs, teams and functions to be more intrapreneurial can mean a number of things. Often it’s about creating small teams with the authority to shape and execute individual projects – just like Steve Jobs did. This kind of responsibility and accountability is exactly what the Generation Y employees in many companies want, and it means that the company as a whole can benefit from the agility and entrepreneurial spirit of its smaller teams.
Being intrapreneurial also means opening up channels of communication so that knowledge is constantly shared throughout the company. Leaders need to be encouraged to canvass opinion from everyone – even from those who have just joined their workforce. What are they seeing? What do they think should be the company’s next move or product? With today’s communications and media, this kind of information gathering and sharing can be achieved on a much larger scale, so that decisions can be made through a process of open-sourcing. Some of the companies we work with, for example, make great use of the ‘Future of Work Jam’ technology developed by LBS Professor Lynda Gratton.
Another way to be intrapreneurial is via the inorganic path. This means finding start-ups that can help the larger parent deal with issues more quickly and effectively. It also means allowing those start-ups to continue acting like start-ups even after they have been acquired. Then, when their agility leads them to valuable insights or opportunities, the parent can quickly and profitably scale those up, as LBS Professor Costas Markides has described in his book Fast Second. It’s something that companies like Cisco and Google do very well.
Being intrapreneurial involves the type of culture change that bigger companies often struggle with, but the results can be transformational, marrying agility to size and making the most of one’s wider resources. It provides a competitive advantage that can last for years to come. It’s time to join the rise of the intrapreneur.