value insights

Large Companies and the Entrepreneurial Spirit- Valutrics

There are several important reasons to foster entrepreneurial thinking in Companies. Entrepreneurs are valuable to a big company as well as to a small one.

Entrepreneurial thinking is not just for small firms . For companies that are already large, the goal is to rediscover the entrepreneurial spirit that built them.  for nurturing and maintaining innovation:
1. Accept uncertainty. Don’t fall into the trap of relying solely on data-driven planning and forecasting. Consider more real-time decision making.
2. Use innovation to reshape business practices. ‘‘Innovation is not just about new products and services,’’ . ‘‘It can also be about business process.’’
3. Deploy human capital strategically. Slow times in the business can be prime time to ask employees to focus on innovative solutions.
4. Adopt an inclusive approach to building a global workforce.
A diverse work group has the advantage of a variety of backgrounds, skills, and viewpoints. This is often the best recipe for innovative thinking.

To support innovation.
A company that does not constantly innovate is dying. A classic example is the General Motors Corporation. GM was once synonymous with the American Dream. It embodied all the things America was proud of: manufacturing prowess, a popular and reliable product, a fair and loyal employer. But it also came to symbolize something else: a company that could not change. If there were good ideas popping around in the ranks of that company—and
Without a way to foster and nurture innovation from within, GM underwent a painful, public decline. It was hard to watch. But it was even harder to accept the fact that it didn’t have to happen. There’s nothing wrong with the business the company is in; we still buy and drive cars. The problem is that GM could not embrace innovation to keep its products in line with changing consumer tastes and the changing economy. As a result, it became an anachronism. If you are a big firm today, you do not want to be like General Motors.

  To keep in touch with your customers.
When did GM start to slide?Many business historians trace the decline to when the company began to lose touch with its customers. Throughout the country, tastes were changing. Brands like Toyota were moving into the consumer consciousness. Issues of affordability, reliability, and energy efficiency began to loom large for buyers. But many analysts say GM didn’t appear to notice. It just kept pumping out more big, gasguzzling roadsters that had long been its mainstay. It was as if the company was blind to changes in the marketplace. An Army of Entrepreneurs does more than just generate good ideas. It becomes the eyes and ears of the company out in the marketplace. In a firm that is old-fashioned and top down, employees may not speak up when they see their employer veering off track.  What do you see out there in the marketplace? In what areas are we as a company succeeding? In what areas are we losing to competitors or to changing client/consumers tastes? Your Army is your connection to what’s going on outside your office. Years ago, focus groups and market research would have been paid to provide feedback. Today, you need information faster and from a wider variety of sources. Empowering your employees to do this work is not just smart, it’s crucial.

To retain top employees.
Successful employees are always thinking. They are rarely satisfied to come in and punch a clock and just follow orders. Often they are the individuals who are coming up with new ideas, new ways to improve the business. Any manager should care deeply about keeping these top performers since they may be crucial and valuable rainmakers. One way to do that is to nurture and reward the innovative, entrepreneurial spirit many top performers share. When a smart, innovative person is told to stay within the lines and not try anything new or challenging, that individual may wonder if he or she is valued. The story I related at the opening of this chapter is a perfect example of what happens when an innovator is not supported. A wildly successful new media innovator was ready, willing, and able to try out a new idea for his employer, but he wasn’t supported. Instead of simply shrugging his shoulders and returning to his cubicle, he went out and found a company that valued his entrepreneurial spirit. In that new environment, he was able to find support for his ideas and launch them successfully.

To be faster.
The world moves faster and business must keep pace.   Entrepreneurs are key way a company moves quickly. It puts more minds to work on the process of innovation. It engages more brain cells in information gathering and trend spotting. Because the cornerstone of the concept is empowering your staff to take action, it cuts down on the time it takes for an idea to become a reality. If you get your ideas only from your dedicated R&D department, if it takes six months for an idea to be considered and vetted, you are moving at a distinctly twentieth-century pace. Too slow.

To be global.
No business today can be hemmed in by physical location. We must all be able to do business around the world. The global economy is the reality for all of us, whatever our industry or specialty.

If you want to do business globally, you must be willing to relinquish the old command-and-control style of business. A global business happens in a variety of cultures, across a variety of time zones. Your employees must be empowered to act. If one of your vice presidents has a line on a new business venture in Hong Kong, should he have to wait until the office is open in New York to move it forward? If a staffer in New York needs to tap a resource in China to make a current client happy, should that be slowed down by a company that only understands how to do business in the United States? Calling upon your employees to take responsibility for making their jobs work . They need to look outward and adapt. Certainly that is what makes for success in the global marketplace.

Strategies for Big Companies
Many managers of big firms realize the value of entrepreneurial thinking. What’s missing, from their perspective, is a way to create that mentality within the walls of a large operation. For many of these companies—especially those that have long histories and complex processes—the idea of instituting entrepreneurial thinking just seems impossible. How could that possibly work in a company of size? How can change like that come to a firm with decades of doing things a certain way? It seems daunting. For many, the thought of turning employees loose to follow their instincts rather than controlling their every move is downright scary.
These steps provide a roadmap for those looking to undertake or jumpstart the process of injecting entrepreneurial behavior into an existing large firm. Of course, it’s easier to be entrepreneurial when the company is just a handful of individuals powered up by startup funds and a dream. But an existing company can integrate the process too.

Hire right.
No matter the size of the company, the Army of Entrepreneurs starts with hiring the right individuals for the demands of Army life. The hard truth is that not everyone can handle the independence. When you work in a firm like mine, you can’t be the sort of individual who comes to work every day, punches a clock, does no more and no less than what you’ve been told, and leaves at quitting time. That kind of drone behavior won’t work for me, and if you are a big firm hoping to foster entrepreneurial thinking in your staff it can’t work for you either. Just as a small company looks for a selfstarter, someone who is always thinking, always looking for opportunity—that’s what a big firm must look for as well.
For big companies, this means instituting a key set of guidelines into the HR process. In a small company, the CEO can meet every potential new hire and determine whether the individual has what it takes to be entrepreneurial. In a big firm, that’s not possible, so a process must exist to help that sorting happen. Jim Walker, cofounder of Octagon Research Solutions, faced this issue when his firm began its growth spurt. The company went from a handful of employees to two hundred in just five years. But Walker worried constantly that the growth rate would dampen the entrepreneurial spirit he knew to be the cornerstone of its success. ‘‘We want to be a big company,’’ he once told a reporter. ‘‘We just don’t want to have a big company mentality.’’
To combat this, Walker focused on refining the company’s hiring practices:
– Octagon conducts team interviews so that one or two people aren’t fooled by a fast-talking candidate with less-than-stellar entrepreneurial skills.
– The company uses a lot of behavioral questions in an interview, encouraging the candidate to reveal how he or she would react in certain situations.
– Its interviewers watch for ‘‘high-maintenance’’ people. An individual who needs a lot of hand holding and doesn’t step up     and do what needs doing is someone who will not thrive in an entrepreneurial environment. Nor will that individual be a strong contributor. These are the people, Walker says, who say they are entrepreneurial in the job interview, but after the first week on the job they are asking where their ‘‘admin’’ support is.3

Hiring people who think like entrepreneurs is the first step to having an entrepreneurial spirit become part of your corporate culture.

Create internal support systems.
Once an entrepreneurial-minded person joins your organization, then what? Have you created a hospitable environment for his or her creativity? In a big company, the answer is often ‘‘no.’’ Creative people with lots of new ideas find themselves bumping up against the command-and-control system that has been in place for ages. Consider again the story I told you at the start of this chapter about the individual with a great new idea for his big media employer. When he hit a wall, he left for a new job.
A large part of fostering independent thinking in a big firm is laying the groundwork and creating a system where creative people will be happy and rewarded for their efforts.
An example of this is found in the consulting logs of McKinsey and Company. McKinsey was hired to help a European telecom company cope with both stiff competition from the marketplace and low morale within its ranks. The consulting firm found that the telecom company had an abundance of brainpower among its employees, but the workload most managers were assigned was so burdensome that it left little time or incentive for any of their creative people to explore new ideas.
This was hurting the company in a number of ways. First, it was creating a poor internal work environment. When people are miserable, they job hunt. You may be lulled into a sense of security during tough economic times, thinking employees will stay because they are happy to have a job, any job. But even if this is true, it is only a transient condition. As soon as the economy picks up (and it always does, eventually) your best talent is already prepped to bolt. Low morale creates a talent flight risk.
Second, it was creating a static business environment, which is death in the crowded and competitive telecom industry. If you are in an industry with lots of players and plenty of ‘‘churn’’ as customers are on a constant hunt for the next best deal or product, you can’t afford to be still. You must constantly be innovating just to stay even.
The McKinsey solution was to create an internal corporate venture capital group tasked with fully exploiting the professional talent already in place in the company. The group’s mission was to help the telecom’s engineers advance new ideas and accelerate new technologies. McKinsey also assisted the company in identifying and developing the internal leaders necessary to manage a fast-moving group within the walls of a traditionally slow-moving giant.
By creating this internal group, the company was able to act entrepreneurially within its own walls. The new unit launched new products and was able to put the company into new areas of business. It was clear, McKinsey concluded, that entrepreneurialism can thrive in a big-company culture, if given the right systems and support.
There’s another bit of advice for a big firm embedded in the McKinsey example. The company doesn’t come out and say so, but, reading between the lines, it’s clear that this telecom company was able to embrace an entrepreneurial solution in part because it had outside assistance. The introduction of an outside consultant to the project helped foster change in a firm that was tangled up in the burdensome paperwork and processes of its own making. Hiring an outside consultant isn’t the answer for every company—some can’t possibly manage the expense. And certainly the responsibility for fostering change cannot all be hoisted onto the consultant’s shoulders.
You have to be ready to lead this change yourself. If not, what will happen to it when the consultant packs up and goes home? Nonetheless, for some companies, the injection of an outside force helps to propel a change in behavior.

Give it time, but not forever.
A big company doesn’t get big overnight. And the processes and systems a big company uses did not develop overnight. These things came into being over time. So it would be reasonable to assume that the injection of entrepreneurial behavior into a large firm would not be an overnight process. It is a cultural change, and as a result it may take time to achieve. Professor Olivier Basso, writing for the Institut de L’Enterprise in Paris, cautions big firms against assuming that an entrepreneurial strategy is a quick-fix solution. ‘‘The very nature of a large company tends to oppose any interference with the established order,’’ he says. ‘‘Entrepreneurial dynamics, standing for autonomy and generating creative disorder, therefore need time to acclimatize to a highly structured universe.’’
In other words, expect the status quo to resist change. At first, the ideas you have and the beliefs held by your staff may be far apart, and it will take time for everyone to come together on the same thinking. But, that said, Basso cautions that a project should not be given unlimited time. A time frame for implementing new processes is critical to motivate everyone to work toward it. The changes need to be linked to short-term goals so they can be viewed as critical and ‘‘must do now’’ projects. Otherwise, your plans for fostering entrepreneurialism may be pushed to the back burner.

Incorporate entrepreneurial skills into your training program.
While hiring new people with the desired mindset is key, it’s also important not to leave your existing employees behind. Some may not be able to make the leap to the new way of thinking, but it’s been my experience that staffers can and will learn to function entrepreneurially when they’re trained to do so. Training is more than just asking for the behavior. It requires you as the facilitator to set up an educational system and enroll your staffers in it. If you want different behaviors, you have to be willing to provide the necessary training and education so that your employees possess the necessary skills to make that happen. Remember to teach your managers as well as your general staff. This may require additional leadership and coaching, as McKinsey provided for its telecom client.

Consider your reward system.
Just as Commission for Life inspired the members of my staff to step up and behave entrepreneurially, a big firm must find its own reward solution so that managers are motivating employees instead of just telling them what to do. Compensation is an obvious way to reward workers for the behavior you desire.
But it’s not the only way. For instance, publicly recognizing good entrepreneurial ideas and behavior can make a significant difference in an employee’s mindset. It can be scary to put yourself out there with a new idea; in a big company not used to this sort of individual behavior, the fear may be especially ingrained. Managers must step up and positively receive new ideas so that everyone will begin to process the notion of what has changed.

Spread risk.
Most of the efforts I detail involve fostering innovations within the walls of the existing company. But some big companies may opt to support and benefit from innovation by crafting an outside partnership. Siemens Medical Solutions embraced this model, putting time and effort into establishing partnerships with universities, research centers, and other companies to share the risks of new business opportunities. This process allowed Siemens to expand its knowledge base, since any partnership involves an exchange of information. It also allowed the company to reduce its own financial risk in the innovation process.
But perhaps the most important way a company can reward entrepreneurial behavior is to take it seriously. It is truly demoralizing to come up with a great idea and have it shot down. It is even more so when you feel as though you were never really given a fair hearing—perhaps because you are a young staffer or because you have suggested an idea for something truly new and unusual. Treating the idea process seriously is critical to fostering its creativity. Make sure that in your business there is a system in place for receiving, reviewing, and recognizing the ideas that come through the pipeline.

There’s nothing worse than being ignored. At LetterLogic, a print services firm in Nashville, Tennessee, founder Sherry Stewart Deutschmann keeps the spotlight on new ideas in a variety of ways. One of them is so simple, it is often overlooked by overachieving companies, says Deutschmann, who was one of the 2009 Ernst & Young Entrepreneurial Winning Women, an annual program designed to accelerate the growth of high-potential businesses founded by women entrepreneurs. As Deutschmann said in an interview, LetterLogic maintains a Suggestion Box:
It’s a mail box, right at the front door. Anybody during the month can drop a suggestion in for improving morale or a systems or process. Once a month we have an employee meeting—we close the plant for two hours and have lunch catered in. We go over the financials so everyone knows how much money we made the month before. Then, we read aloud all of the suggestions and give $100 to the best suggestion. Some of them are straightforward. For example, after about a month of our program encouraging employees to bike and walk to work, it was suggested that we install a shower. Three weeks later, we had a shower installed. Some ideas are much bigger and are just brilliant. One employee suggested we convert all our vehicles to hydrogen cell fuel boosters. She included with her suggestion the IRS form we’d need to fill out to get the tax break for doing that. I awarded a double bonus for that one. I don’t go for all the suggestions. One time, someone asked: Can we have Friday keggers? I said ‘‘Sure, at your house. I’ll be there!’’ But I’d say we implement about 80 percent of the suggestions. And a great one came recently from an MBA student who was interning with us. He suggested I let the employees pick the best suggestions of the month. Great suggestion. And we did it.

Communicate like an entrepreneur.
Big companies often lapse into an information-hoarding mode in which news is distributed on a strict ‘‘need to know’’ basis, which can leave employees operating in the dark. This dampens innovation and entrepreneurial spirit. Why would anyone be willing to take a risk in such a blind environment?
Big companies can work against this by communicating in the free and open way small entrepreneurial firms do as a matter of course.
But to make it work, it requires a senior-level commitment to this type of open communication.
Johnson & Johnson is one company that fosters communication across its divisions—no small task since the company is made up of more than two hundred operating companies spread across three business sectors. Johnson & Johnson set up its own Internet so that its scientists could go online and see what others in the company are working on, and communicate with each other. It encourages collaboration between specialties. For example, a team from its pharmaceuticals division collaborated with a team of engineers from its medical devices division and the result was a new product that delivered medicine to patients with cardiovascular disease via a stent.7
Encouraging employees to communicate across boundaries creates an environment in which innovation and entrepreneurial spirit are bolstered.