Are Startups overrated? Are intrapreneurs better bets?
Startups are great because they create growth and lots of jobs so let’s pour lots of private and government money into programs that create more startups. Entrepreneurs and startups kick ass!
This is the common wisdom in most countries. Does it hold? I do not think so and an article in Borsen, a leading business daily in Denmark provided some interesting facts that support my view on this.
In short, the article argued that gazelle companies – defined as companies that have created growth each of the last four years and in total have more than doubled their revenues in that time span – create more jobs than other company categories. This is not much of a surprise as growth companies almost per definition need people to create growth.
The article showed a list of 50 companies that during 2005 to 2008 each had grown from 102% to 2172% in terms of revenues and created from about 20 to 900 jobs. More interestingly, only five companies had less than five employees in 2005 indicating they were pure startups. 45 of the 50 growth companies already had a platform to grow from leading to my point; established companies create more revenue, more profit and more jobs than pure startups.
What I really would like to see is that private and government funds currently used on startups are diverted to established companies setting up intrapreneurship programs. I am not saying that we should give giants such as Hewlett-Packard, BASF or Lego a lot of money and support to set up such programs. The big companies can – or should be able to – do this by themselves.
But the innovation community as well as governement people should take a better look on how we can help small to medium-sized companies develop a better understanding of intrapreneurship and help them set up programs aimed at identifying and developing not only ideas, but also intrapreneurs; the people driving innovation.
As some of you might not have heard of intrapreneurship before I have inserted this definition from Wikipedia:
“Intrapreneurship is the practice of using entrepreneurial skills without taking on the risks or accountability associated with entrepreneurial activities. It is practiced by employees within an established organization using a business model.
Employees, perhaps engaged in a special project within a larger firm are supposed to behave as entrepreneurs, even though they have the resources and capabilities of the larger firm to draw upon.
Capturing the dynamic nature of entrepreneurial management (trying things until successful, learning from failures, attempting to conserve resources, etc.) adds to the potential of an otherwise static organization without exposing those employees or self employed people to the risks or accountability normally associated with entrepreneurial failure.”
Imagine all the jobs and thus growth and prosperity we can create if not only the large, multinational companies, but also the smaller, mid-sized and yet established companies really knew how to develop and nurture intrapreneurship.
Everyone working with intrapreneurship – including myself – have an interesting business case as well as a worthwhile cause to pursue. Let’s go for it…
Stefan Lindegaard is a speaker, network facilitator and strategic advisor who focus on the topics of open innovation, intrapreneurship and how to identify and develop the people who drive innovation.