Secrets Of Intrapreneurship

WHEN YOUR BEST PEOPLE WANT TO START A NEW VENTURE, SAYS GIFFORD PINCHOT III, LET THEM DO IT -- RIGHT WHERE THEY ARE.

 

They are among the most pressing issues facing business executives today. With the rapid pace of innovation, how can we develop the new products and services we need to compete? With the explosion of venture capital, how can we keep our best talent inside the organization? Is there a way to tap the energy of the entrepreneur to fuel the growth of an established business?

The answers, says Gifford Pinchot III, lie in "intrapreneurship," a new concept of management that he has spent the past six years developing.

Intrapreneurship -- the word is Pinchot's trademarked shorthand for "intracorporate entrepreneurship" -- offers a radically different vision of how to encourage freedom and creativity in a comany. Already it has been hailed as "liberating" by The Christian Science Monitor and as "one of the great social inventions" by The Economist. And this month, when Harper & Row publishes Intrapreneuring: Why You Don't Have To Leave the Corporation to Become an Entrepreneur, Pinchot's concept may well enter the business mainstream, joining cexcellence" and "corporate culture" in the lexicon of the modern manager.

Like those terms, intrapreneurship is more a description than a discovery. Pinchot argues that innovation in corporate America has always come from intrapreneurs: people who fulfill the role of the entrepreneur inside a larger corporation. "But," he says, "that's generally despite the system." His book looks at cases in which the system has let intrapreneurship survive, and it sets down some basic rules and strategies for executives who want to nurture the intrapreneurial genius.

"I approached the problem from the point of view of the entrepreneur," Pinchot explains. "I said, OK, let's assume that the corporation is flexible. What would have to happen in order for it to work for the entrepreneur? The only constraint I put on the system was that it had to make sense for the corporation financially."

For a model, Pinchot turned to venture capitalists. Venture capitalists understand that the innovator is "a dreamer who does" -- a special kind of human being, with special needs for freedom and power. Most established companies find it hard to understand these needs and even harder to meet them. Venture capitalists do both: The capital they provide offers freedom and discipline, power and responsibility. Intrapreneurship, as Pinchot conceives of it, is a way for corporations to offer the same combination of opportunities and rewards.

Pinchot began developing the idea of intrapreneurship back in 1978. The owner of a small ironworking business in upstate New York, he enrolled in the School for Entrepreneurs, in Tarrytown, N.Y., not far from his home. There he heard Bob Schwartz, the school's founder and primary teacher, sketch out the opportunities of the future. One of the best, said Schwartz, would be to teach large businesses to harness the drive, determination, and imagination of the entrepreneurial revolution.

Seldom have seeds born fruit more quickly. Three weeks later, Pinchot sent a long letter to Schwartz outlining the basics of his concept, along with a plan for turning it into a cash-generating operation. "It seemed like an interesting challenge to hustle on during evenings when there was not much happening," Pinchot says wryly. "So I went to work."

In effect, Pinchot had come to the realization that he was an entrepreneur himself. The grandson and namesake of one of America's foremost conservationists and the son of a Yale University professor of biochemistry, he had always been restless. As a Harvard University undergraduate, he tried first physics then economics; as a graduate student at Johns Hopkins University, he shifted from sociology to behavioral physiology. After leaving school, he tried dairy farming before starting his ironworks. In 1978, when Schwartz described the personality of the entrepreneur -- the high achievement drive, the balance between intuition and reason, the general disregard for money -- Pinchot finally understood his own character.

Like most entrepreneurs, Pinchot didn't find it easy to get his fledgling venture off the ground. "Bob Schwartz had kind of tested it with some of his clients," Pinchot recalls, "and they said, 'Gosh, you've got to be bats.' We concluded that the world simply wasn't ready for intrapreneurship in 1978." So Pinchot went to Sweden, studied, and developed his concept. In 1982 he brought the idea back home.

Now, after three years, Pinchot has started two separate consulting firms, both thriving: The New Directions Group, founded in 1982, specializes in inventions for sale; and Pinchot & Co., founded in 1984, was created to push intrapreneurship. As a director of New Directions, Pinchot has more than 200 inventions to his credit. As president of Pinchot & Co., the 42-year-old ex-black-smith has consulted for such Fortune 500 clients as Tektronix, Exxon, Xerox, and American Telephone & Telegraph, has run intrapreneurship seminars across the country, and has started The School for Intrapreneurs at Tarrytown to teach would-be corporate innovators how to survive. He also teaches at his most recent alma mater, Schwartz's School for Entrepreneurs, where he is celebrated as its most famous alumnus.

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