Here are two articles on intrapreneurship and one on how venture capitalists are actually funding options to venture capital, potentially disrupting their own business with their investments. Entrepreneurship is the most important force in economics and intrapreneurship will become the most important force in business. These issues matter.
Steve Blank is my new favorite business thinker.* He's interviewed by J.J.Colao at Forbes in How to Turn Corporations Into Innovation Machines. This interview is worth watching and Colao does a nice job of not only drawing out Blank but succinctly articulating his main points in the accompanying article. Put simply, Blank argues that the 20th century model of executing well is simply not enough; companies that can't innovate and create new businesses will only last about a decade before becoming obsolete. Innovation in the form of creating new products, technologies, and businesses has to be the focus of a business now.
Obviously I like Blank in large part because his own view of corporations aligns so with mine. But it's more than that. Blank is far down a path of making this vision of companies becoming more entrepreneurial operational.
Key Steve Blank quotes:
“The solution is actually blowing up the architecture completely and figuring out how to make continuous innovation an integral part of the organization.”
“Rather than understanding that this is a systemic problem common among all corporations, every company is trying to solve it tactically themselves.”
“Companies in the 21 century are facing continuous disruption. The 20 century rules don’t apply anymore.”
The second article, Recognize Intrapreneurs Before They Leave, in Harvard Business Review, apparently represents the state of the art in thinking about entrepreneurship. If so, we still have some fundamental shifts to make.
One interesting claim they make is that about 0.5% of employees in a large organization are "great intrapreneurs who can build the next business for your firm." They've learned some things about these intrapreneurs that they describe in six patterns.
"Pattern #1: Money Is Not the Measurement. The primary motivation for intrapreneurs is influence with freedom. They want to be rewarded fairly, but money is not the starting point for them. Reward and compensation are a scorecard of how well they are playing the game of intrapreneurship."
There is so much to say about this matter of not being motivated by money. I will just say this. Imagine a modern country devising policy for entrepreneurs and saying that entrepreneurs want autonomy more than money (which might have a measure of truth) and that therefore this country won't let it's entrepreneurs actually get rich but will instead give them "influence with freedom." One of the ways we know that modern corporations are not as serious about encouraging innovation as are modern nations is because they give little opportunity for their employees to become rich. In the US, citizens can make more than the president. About 6 million did last year. By contrast, it's almost unheard of for employees in Fortune 500 firms to make more than the CEO. Entrepreneurs prefer a country where they can turn their innovation into financial independence (which some use as a means to become serial entrepreneurs). Intrapreneurs will too - once they have that option. The first companies to acknowledge this simple truth have the opportunity to outstrip their competition in innovation.
Finally, venture capitalists are apparently investing in options to venture capital. That, to me, is abundantly cool. Ari Levy at Bloomberg wrote Are VCs Investing in Their own Disruption? Venture investing is gravitating towards the Web. Naval Ravikant is the entrepreneur behind AngelList.
"Since its launch, more than 1,300 startups have raised a total of $200 million on AngelList. That’s still a tiny sliver of the industry: Venture capitalists invested $27 billion in almost 3,800 deals last year, according to the National Venture Capital Association."
I love the notion of democratizing venture capital; in the last century, that is what happened for credit markets and stock markets (think credit cards and mutual funds). Democratization is a powerful force, popularizing what was once reserved for the elite.
Google is among the companies investing in AngelList, and in a typically prescient comment one would expect of a Google executive, we get this.
“In the past it was kind of like a mafia,” said Wesley Chan, a partner at Google Ventures in Mountain View, California, the biggest investor in the round. “Folks had secret access to companies and it was all relationship-based. Naval is at the forefront of disrupting and democratizing access.”The key question of the Information Economy was how do we create more knowledge workers and make them more productive. The key question of this new Entrepreneurial Economy is how do we create more entrepreneurs and make more employees entrepreneurial? Find good answers to that question and you'll most definitely be on the right side of history.
So why did Google Ventures invest in its own potential disruption?
“I’d rather be on the right side of history than the wrong side,” Chan said.
* Blank is the first person I've heard cleanly and simply articulate the need to distinguish between the stage of startup that is simply a proof of plan vs. execution of a plan. For instance, he advocates that you first determine if their is a market for x or that your plan to make y more efficiently is viable and THEN put together the traditional business plan. it is not until you've done the first step - tested the hypothesis in its earliest articulation - that you can move into the business plan and execution that so many people expect to start with.