How To Bridge The Innovation Gap Between Leadership & Intrapreneurs - And Actually Make It To Market

What’s your company’s intrapreneurship vision? And how have you integrated that vision as a measurable, company-wide business process?

If you can answer that question, stop reading right now - you’ve earned the right to spend the rest of the day at the beach, sipping an umbrella drink and basking in your own awesomeness. The rest of us, however, should probably pay close attention, especially if we’re thinking about starting an innovation program - or, shutting one down for not producing results.

Accomplished executive, author, and intrapreneurship expert Guillaume Hervé helps companies implement and optimize intrapreneurship programs and develop and foster entrepreneurial cultures. In his experience, many corporate innovation programs start off strong, but fizzle out for reasons that are both predictable and avoidable - especially once you bridge the top-down, bottom-up gap.

We sat down with him to find out what we can do to ensure our initiatives not only survive, but result in successful innovations that actually make it to market, scale, and grow long-term.

There's a lot of enthusiasm and optimism around corporate innovation, and it seems more companies are getting better at it. Still many innovation labs die, and their innovations never make it to the market. Why?

I think those are actually two separate points of discussion. The first one, why do so many innovation labs die: I think what we saw in the evolution of intrapreneurship is this slow progress over years to distinguish intrapreneurship as a standalone business process within a corporation. And that's great, and a lot of progress has been made. But ultimately, what that led to is this concept of innovation labs.

These labs were meant to mimic or to copy what was happening in the world of independent startups, which were creating what we called working spaces or joint labs or social environments, where entrepreneurs, pure entrepreneurs, could get together, exchange ideas, maybe meet a potential co-founder or member of the team, and together move an idea into a startup. And so, a lot of corporations went to look at that and thought 'well, that's great, we should do the same thing.'

The problem with innovation labs as they're being deployed in companies, from my perspective, is that they tend to be a standalone, isolated part of the business.

I've been in corporations and I've had leadership roles in very big companies, and I also work with entrepreneurs and startups, and that’s the biggest mistake I’ve seen companies make. If you think of quality improvement, continuous improvement, six sigma, even innovation and product development - the waves of change that have been pushed into companies - the companies that succeeded were the ones that were able to take this new idea, or ideas, and make it part of the business processes of the company. The ones that were not successful were the ones that kept these ideas isolated in a dedicated group, with everybody else kind of looking from the outside in.

A change becomes institutionalized in a business when it goes from an idea to a business process. And what I mean by business process is a process that is well-defined, that cuts across the organization, that has ownership, that you can measure KPIs and efficiency, and that you can continuously measure over time.

By continuously measuring over time you learn from your failures and your successes, and you become better and better at that business process as a company. And because it's a business process, it's owned across the business - it's not isolated in a lab.

The problem with labs today is that they become harder and harder to access. In many cases they become the pet project of whoever had the initial funding for the lab, and so it becomes associated with either an individual or a function in the business as opposed to the function as a whole. And because it's not deployed across the whole business, most employees don't understand how they can have access to the intrapreneurship initiative that is sort of hidden or captured in that lab.

And so for me, the reason innovation labs are dying is because they're standalone; they're not part of an overall business process that allows you to take an idea and move it from a pure idea into an idea that gets looked at, that gets funded, that gets resources, that later gets launched as a business, and gets scaled from there. That only happens when your lab is part of a business process no different than the business processes that you use to run your core business inside a corporation.

Do you see examples of companies who are doing this better, or who are experimenting with making it a process and implementing it company-wide?

In Canada right now, what I see, and I'm not going to list them, but I do see examples of companies that have launched the equivalent of innovation labs or working spaces, and they become a bit of a white elephant. You can see that they're great for show and tell, but they're not very good for actual intrapreneurship.

To identify specific companies in Canada that seem to have institutionalized intrapreneurship well, I think Kruger certainly seems to have tried to deploy ideas of intrapreneurship across the business. I look at Telus: it took them years, but they deployed intrapreneurship or corporate innovation throughout the company; now, they do have a lab, but they use labs as part of a business process, as part of one step inside the overall intrapreneurship process.

Is a lab a necessary first step, and then the logical next step is this company-wide adoption? Or is it maybe not the best step to start with?

I don't think that the lab is the best step to start with. I think the best step to start with when you're looking at launching intrapreneurship - and it goes to this issue about bridging the gap - is the fact that a solid intrapreneurship program starts from the top, but it doesn't stop at the top.

To me, first and foremost, it's about defining what I call the intrapreneurship vision. An intrapreneurship vision is basically a statement that clearly captures what the company will look like in, let's say, 5-10 years if our intrapreneurship program is hugely successful.

How diversified will it be compared to today? What new revenue streams will it have developed compared to today? What new customer base will it have found and captured compared to today? And so it's a vision that tells you, very clearly, how this process will help us grow as a business.

Once you do that, then you identify the leaders who will help deploy this process within your company, and the innovation lab becomes a step in the overall journey from idea generation to idea validation to launch and then to business scaling. The lab becomes a step in that process where employees, and also external people in the case of open innovation, can gather to help you work through the process in an effective way so as to be able to validate the ideas and launch them effectively in the marketplace.

But the innovation lab is not a be-all, end-all. It's just one tool within an overall way of looking at and doing intrapreneurship.

So then, would innovation become just like finance and HR, a support function? Or would it be part of every employee's job description?

I think you hit the nail on the head. When you institutionalize a business process, then the business functions - like HR, finance, legal, procurement, and even R&D - have a role to play in supporting the business of intrapreneurship.

Now I'll say this: you can do that once everybody understands the objectives of intrapreneurship, and when intrapreneurship is part of everybody's objective. If it's a pet project that I asked you, as an HR or a finance person, to look at once in awhile, then you give it no priority. But by stating your intrapreneurship vision, it becomes part of the company vision. And by making it part of the company vision, best practices tell you that it becomes part of everybody's objective.

I do believe, however, that to launch an intrapreneurship program you need to identify the intrapreneurs that will lead it. I always say when I talk to people: intrapreneurship is not a part-time job. And the mistake that companies have made is: ‘oh, we have a good idea, why don't you lead that, Mr. Intrapreneur, in addition to your other responsibilities?’

Once you have a good, solid idea, and you want to bring it to market, you need to identify the intrapreneurs, full-time, that will lead that particular business initiative. The people who are supporting the innovation lab, depending on the volume of activity, can certainly have a core of full-time people, but it does not in any way remove the responsibility from the rest of the functional groups to support it like any other business objective. And so that's where I draw the line there.

It sounds like a lot of companies would benefit from thinking about and implementing intrapreneurship this way. So why isn't it happening, as you are clearly laying out here?

I think there are two problems. First, you have well-intentioned business leaders, C-suite executives, that hear of this great idea. Certainly , they are in search of organic growth initiatives, growth from within the business, and so they launch this great idea as a business initiative; but something’s missing. A strategic business initiative - and I've been part of many - usually always has the support of everybody until you get into how it gets supported, how the resources get allocated away from the core business and into this new idea, whatever it may be.

And often, the leadership team does not do a good job of working at the next level, which is to say: Ok, we have an intrapreneurship vision, we understand how we want to do it and how will it work inside our business. How do we define who will lead it? How do we define a sandbox so that we clearly tell our employees what we want to see inside this intrapreneurship vision, and also what we're not interested in?

One of the biggest mistakes CEOs make, they think they're helping their employees by saying: 'Every idea is good, it's a wide business canvas, come up with whatever you want and we'll look at it.’

Well that's not true; in fact, that's not fair to the employees who will spend a lot of their own sweat equity developing ideas, only to be told by the leadership team 'it's not what we had in mind, it's not what we thought we were looking for, it's not big enough'. All these comments should be well documented as part of your intrapreneurship sandbox, which is not meant to be limiting by any means, but is meant to give employees a broad guideline as to what you want to see, and what is not important.

By doing that exercise, it forces the leadership team to think about what intrapreneurship really means for the business - and so now you're bridging the gap.

The second problem is the other extreme that I'm seeing a lot of: employees, and what I'll call first or second-level supervisors, who hear about intrapreneurship or hear about lean startup in corporations and they think: this would be great, we should do this in our business.

So they'll start what I call grassroots initiatives; they'll start projects on their own and they'll put in a lot of effort to come up with ideas to improve the business, but without being anchored on an overall business strategy, because it's bottom-up.

And so they're creating the gap as well, because they spend all this time and effort, they come up with these ideas, they present them in some business meeting, only to be told that the company is not interested, that the core business is more important than intrapreneurship activities right now, that we have no budget for it, that we don’t want to free up the people or the resources to support it.

And so you've got the same frustration created, but now it's from the employee all the way up. It’s all based in good intentions, nobody's trying to do anything bad, but the bridging is not happening between the two levels.

And the bridging should, in your view, ideally happen first top-down?

Yes. The best practices tell you that it has to start top-down, and then - because it's so new and because you are developing a new business process - you start implementing things like the business model canvas, or testing hypotheses, or some of the other best practices in the startup world. You start with a few smaller projects to just validate and understand what it is that you're doing, and then based on that you launch it on a bigger scale throughout the company.

And so, the grassroots ideas get linked to this overall strategy first with some low-hanging fruit type of things just to demonstrate that, you know, this is a good thing for everyone. Then, you institutionalize it as a business process.

And because it's a process, you need to capture lessons learned, what's working and what's not working. To me, intrapreneurship is no different than any other important key strategic process in a business. You have to always look at it and make sure you're continuously improving it like any other process: finance, HR, innovation, R&D. They're all on an equal footing, they're that critical to the business. You should be looking at it regularly.

How about the second part of the original question: why do so many innovations never make it to the market? Is it related to what we've been discussing? Is it too ad hoc and not structured, or not supported enough?

We tend to confuse innovation and intrapreneurship. Innovation is about coming up with new ideas for solving either a new problem or an old problem, right? So whether it's a technical solution or a new process, your company creates something new, either to them or to the world, that will answer an unmet need. That's great.

Unfortunately, many innovations never make it out of the R&D lab, or the basement of the company. Why is that?

Because taking an innovation and making it live in the marketplace, with a paying customer- that's another skill set. That's intrapreneurship. That's saying: how do I now turn this idea into a business that will be material to the core business that's funding me?

And so, you may have great innovation happening, and maybe great R&D organizations and people that are doing great work, but they don't have a means to then commercialize, if I can use that term, that innovation into something that will create a business. Intrapreneurship gives you that.

I think a lot of the mistakes that we’ve all seen out there come from not thinking through what you do once these ideas have been worked through. I always say it's not a step function, where you do innovation and then you decide if there's a business for it. It's very much an integrated process that says: ok, look at our innovations, and very early on - and this is where some of the best practices in lean startup come into play - let's make sure there's interest from a potential customer base, so that we continue to invest in that innovation as we get more and more customer feedback.

So you have a continuous loop there. A lot of companies are still making the mistake of letting the R&D and the product development people come up with great new ideas, and then seeing if they fit. The problem with that is you spend a lot of money to find out that they don't fit, and then that creates a lot of negative feedback inside the business.

And so a lot of innovations don't make it to the marketplace because that continuous loop doesn’t exist: that loop of idea generation and validation early on, of ensuring there is a potential customer base, working with the customer and the intrapreneurs to ensure we understand how to create and develop effectively so that eventually, we launch this new idea as a product or service in a way that lines up with the company strategy. That's the gap that needs to be filled in the innovation space.

Is it just because the field itself is immature? Why is that gap still there after all these years of exploring innovation?

That's a great question, because we've had product development processes that have existed for many many years, and they try to do that. It's not intrapreneurship, but it's certainly incremental improvements to products.

There is a big discussion that needs to happen around the difference between what I call little-i intrapreneurship and big-i intrapreneurship. I think what we're doing is we're mixing apples and oranges. We tend to define intrapreneurship as being everything that looks like it's an improvement in the way we do business, and I take a different view. I take the view that a company has, in its core business, a need to continuously improve and grow; while those are technically skills found in intrapreneurship, to me that's core business improvement, continuous improvement. Whether you're optimizing your processes, incrementally improving a product or service - that to me is still your core business.

To me, intrapreneurship is big-i intrapreneurship; you're looking to either add new customers to your customer base, or you're looking to give existing customers something very new because you're looking to create a new line of business, or you're looking to grow adjacent to your core business, or maybe enter a brand new market.

To me, intrapreneurship lives there. So if you take that as the premise, then I think one of the reasons a lot of companies are still not succeeding is because they're mixing core business innovation and intrapreneurship. And when times are tough, and you need to cut, and you need to scale back, you end up cutting as much into what I consider your intrapreneurship initiatives as you do in your core, and so you're sacrificing all that work and basically making it all look the same.

If you're able to say no, intrapreneurship is about the future of the business, it's about diversification and growth, and the core business is about optimizing and growth but in a different way - then you will look at both separately, and you won't confuse core business incremental continuous innovation with intrapreneurship.

And when you budget it - here's the big takeaway - you budget it separately. It's not just an additional budget that exists in the core business. It's a separate budget that is for funding intrapreneurship, the big-i intrapreneurship.

When you do that, then you manage it differently. Then you're able to optimize it differently. Then you're able to ensure that it doesn't fail. You're managing it as a business process that's creating growth in a different way than the core business is creating growth.

I often hear two assumptions that, I think, are important for this new take on intrapreneurship. First, that we should be able to measure it effectively. Second, we are ok that it generally takes a bit longer to yield results, but it cannot take a decade to pay off - we want results in a reasonable amount of time. What is your take on that?

When I talk about intrapreneurship, I always say that managing expectations is probably one of the biggest challenges of the intrapreneur. And in managing expectations, the most difficult part of it is the time part. And so to your point no, it can't take ten years. But a well defined intrapreneurship vision will communicate to the business leaders of the company what realistic expectations are. If an intrapreneurship initiative is going to be successful, in my mind is has to be financially material to the business in the medium to long term.

I always give the example: if you come up with a 5 million dollar idea, meaning it will generate 5 million dollars of revenue once at maturity, and if I'm running a 10 million dollar business already, that 5 million dollars is material to me; but if I'm running a 100 million dollar business, or a 500 million dollar business, that 5 million dollar idea, though it may make money and be successful, is not really important enough to be worth all the effort. And so, an intrapreneurship vision will say: we are looking to add 25-30 percent, let's say, of new revenue to the business, and adding 25-30 percent to the business will take us 5 to 10 years. And so once you make it clear to people, it's no longer: 'it's not going fast enough'; it's: 'we're taking 5 years to get to that point'.

The problem with intrapreneurship today is people are launching these ideas, making the leadership team believe that we're going to create all this revenue in a short period of time, which is almost impossible.

Even if you're a startup working on your own, you can't grow that quickly. Scaling is always the limiting factor. So you hit it on the head - it's the time part of the expectations that are usually ill-defined. Everybody says: 'Oh, we're going to generate a 100 million dollar business'. By when? In 5 years? In 10 years? In 20 years? And if it's in 10 years, what does 100 million look like in 5 years, is it 50 million? And in 3 years it'll be 10? And so being able to do that really grounds everybody on how these innovations, innovations that make it to the marketplace, will contribute to the overall health of the business.

I'll tell you, I've been a serial intrapreneur in one of Canada's top high-tech companies, CAE, and it was always about managing the expectations. The expectations obviously are clearer if you're going to grow very close to your core business because you all understand it, more or less. You know what that market looks like.

But the further away you go from your core business - in our case we went from aviation to healthcare - the harder it is to understand with specificity how quickly you'll be able to grow the business, because you don't know that customer base as well as you do your own. And so that's an important part of setting expectations.

What about the intrapreneurs themselves - why do so many intrapreneurs grow frustrated?

I'll tell you very specifically. I think there are three reasons, I get this question a lot.

First, you have too many business leaders that are telling their employees: ‘We want you to act like entrepreneurs’. So, every employee has an idea, maybe knows a friend or family member who are entrepreneurs, so they think: ‘Great, I'll just do whatever I want and I'll show my idea to the boss.’

The reality is, when the boss says they want you to act like an entrepreneur, they actually meant they want you to act like an intrapreneur - be entrepreneurial, but respect some of the boundaries of being in my business.

And so when you tell employees to just be entrepreneurs, they see it one way and it doesn't usually match the expectations of the business leader. So that's one reason they get frustrated, because they'll put all this work and effort in, only to be told they're doing it wrong.

Second, and we touched on it earlier: there's a big gap between what the intrapreneurship vision of the business is, and how it's meant to be executed within the actual company. The number of times I speak to company employees that say: 'We're so frustrated, we launched this initiative a year ago, it was really exciting, the CEO gave the speeches, everybody was there, we had a lab...and now it's very hard to access the lab, I developed an idea but I was told it's not good enough, I worked on this on my own time on weekends and at night and it's not in line with what the company was expecting.'

So that's your second source of frustration. Employees are simply being sent down the wrong path and not being given any guidelines as to what intrapreneurship means for their business.

Third is a lack of follow-up and follow-through. Even in some of the best-intentioned programs, because they're not part of the strategy of the business, because there are not clear objectives for the functions on how they're supposed to support the intrapreneurship program, there's little follow-up or follow-through and execution of intrapreneurship ideas. So people get frustrated.

They have to fight for resources beyond what is reasonable. So the employees, bit by bit, give up. The biggest, biggest, biggest consequence of all that, and it's been demonstrated: once excited and committed employees are then disappointed, it takes your engagement level very, very low.

It's not like things go back to normal engagement levels, whatever that was for your business; in fact, by misfiring on an intrapreneurship program you've created, when you've built expectations so high and employees have given their own time and effort and energy, engagement actually drops below their previous engagement level. That's a real problem for companies.

So, would you tell companies to still go for it, because you have to learn in some way?

Exactly! Learn it, deploy it, learn from it, and do some quick hits, launch some initial programs that will get your feet wet, and then once you've learned how it can look for your own business, launch it more formally through a strategic initiative. Make sure it's a business process that can be followed and nurtured. Create the objectives throughout the company so that it's properly supported.

And then, for sure! People will have a chance to understand what you're looking for. They'll know that if their idea is rejected, it's for good reasons, not just because it was not properly defined upfront.

No employee expects that every idea will make it through, but they need to know that all this effort they're giving is worth it, and if they do get rejected, there will be good feedback for them so they can maybe work on another idea with a better view of what they can do with it.