We all know enterprises are looking to digital transformation in hopes of turning into innovation powerhouses. The problem is, they often ignore the other essential ingredient to innovation: entrepreneurship.
Yes, it takes two to innovate, in this caselma combination of digital know-how and entrepreneurial pluck. The ways and means to bring these two forces together are explored in a new book, Digital Entrepreneurship (available for free download).
Digital entrepreneurship is seen as the way to create entirely new businesses, as countless startups now run everything on the cloud, providing nimbleness and leanness that can shake up markets. But the possibilities for shaking up the inner workings of existing corporations is just as compelling.
For a digital entrepreneur working from the inside of an organization, there’s one place and only one place to start — the customer. This necessary part of the digital entrepreneur mindset was explored in a chapter authored by Mariusz Soltanifar and Edin Smailhodžić, who point out that “entrepreneurs need to be aware that they can be disrupted not only by competitors but quite possibly by consumer interaction with other similar digital products and services.”
A digital entrepreneurial mindset “is not only about technology,” they point out. “A company can introduce digital technology in its strategic plans, but that does not mean that it has taken on a digital mindset. Entrepreneurs, directors and individual employees need to share a strategy to develop an organization-wide digital entrepreneurial mindset.”
Digital entrepreneurs need to ask the following questions:
- How does the transformation affect the structure and borders of the sector?
- How are the value chain and its associated competitive activities influenced?
- What new strategic decisions do companies have to make to secure a competitive advantage?
- What organizational effects does the new product type have and what challenges are associated with the product?
“Reacting promptly to the demands of continuous product innovation, providing added-value services, improving the customer service experience and moving towards successful omnichannel marketing have become the new standards for doing business in the digital age,” Soltanifar and Smailhodžić note.
Taking the concept of digital entrepreneurship to the next level, Soltanifar teamed up with Gifford Pinchot III to advocate for digital “intrapreneurship.” Pinchot, by the way, first coined the term in 1978. “Digital intrapreneurs are employees who use their entrepreneurial spirit for the benefit of their employer and simultaneously to give meaning to their work by implementing their ideas to produce impactful digital innovations,” they write.
Sounds great. What does it look like on the ground? “Digital intrapreneurs must possess the skills to identify new digital-technology enabled business opportunities and bring them to fruition, either as a new concept altogether or as an existing, but transformed, business system.” That, of course, can be a tall order in an organization mired in bureaucracy or a stale, uninspired culture.
“Even though many companies seemingly focus on using innovation to drive commercial growth, what many of them miss is a corporate culture of innovation and a safe and supportive environment for their digital intrapreneurs,” Pinchot and Soltanifar point out. “Creating that environment requires supportive managers to protect and coach one or several intrapreneurs that they personally trust and want to empower. The collaboration between intrapreneurs and sponsors can be facilitated by a culture that permits them to act.”
Here are the ingredients necessary for building a culture of digital intrapreneurship:
Sponsors: “In practice, we have found that the answer lies in a special class of managers who choose to go out of their way to help the intrapreneurs,” Pinchot and Soltanifar state. “If an innovative solution works in a given company, it is almost always due to a close and trusting relationship between a self-motivated team of intrapreneurs and their management sponsors.”
Training, mentorship and awareness: “Companies can train managers to be effective sponsors. This training includes both a description of what a sponsor must look for in an intrapreneur and some dos and don’ts for managing them. Organizations can also promote sponsorship by authorizing lower-level managers to serve as effective mentors. Companies can provide managers with discretionary budgets to fund the early stages of innovation.”
Organizational knowledge of digital technologies: “An organization, as an entity, makes decisions and takes actions as if it understands and is gracefully creative with its use of digital technology. It is not just about how many people with digital skills are employed by a given company; rather, what matters is how an organization responds to digital opportunities and threats. Companies today hire many digital natives. However, if digital innovation does not take place, the issue is more likely that a company is blocking the intrapreneurial spirit of its digitally competent employees, while those with significant digital talent are leaving the organization or are disengaged and demotivated.”
High-quality management of digital intrapreneurs: “Motivating intrapreneurs is not necessary; instead, it is sufficient to merely not demotivate them by preventing them from taking their ideas further. A business leader can and should ask complex open-ended questions with the goal of helping them avoid trouble, but, whenever possible, trust them to come up with the right answer by themselves.”
Culture, culture, culture: “Building such culture is not about creating intrapreneurs, since they already exist, often concealed, within established organizations. It is, however, about discovering them, showing them that manifesting intrapreneurial behavior is safe, and supporting and empowering them.”
Take a grassroots approach to digital intrapreneurship, Pinchot and Soltanifar urge. “It will probably take time to help the senior management reach the required level of understanding of and familiarity with digital technology where it would be able to properly assess any proposed digital innovations,” they caution. “If more senior-level managers put their trust in selecting mid-level managers as sponsors, the growth of digital organizational competence within a company would significantly increase without the need for substituting any senior managers.”