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Intrapreneurship/ Corporate Entrepreneurship

Fred Mugambi MwirigiJKUAT

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INTRODUCTION

(Lesson One)

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Entrepreneur

An individual who, rather than working as an employee, runs a small business and assumes all the risk and reward of a given business venture, idea, or good or service offered for sale.

The entrepreneur is commonly seen as a business leader and innovator of new ideas and business processes.

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Entrepreneurship Vs Intrapreneurship

What is the difference:• On the basis of theory?

- Supported by the same theory • On the basis of practice?

- Different practice

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The need• Firms are constantly on the look out for creative and

innovative minds• Owing to intense competition there is need to have

employees who can think outside the box• Very few employees have that capacity• Firms find themselves in a dilemma- do we hire/poach or

do we develop our own creative minds??• What are the challenges involved in either option?

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The Creativity Model

This is an incremental model where the sum total of creativity over time translates into higher value to customers and so better business.

Creativity Value adding

activities Innovative Behavior

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What keeps most people from becoming entrepreneurs?

• Funding• Manpower• Strong backing• Branding/Marketing• Fear

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Intrapreneur

A person within a large corporation who takes direct responsibility for turning an idea into a profitable finished product through assertive risk taking and innovation.

Intrapreneurs have entrepreneurial skills blended with managerial skills but operate within the confines of an organization.

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Also defined as…

Intrapreneurs are “dreamers who do”, those who take hands-on responsibility for creating innovation of any kind within an organization. Gifford Pinchot

The intrapreneur is an essential ingredient in every innovation. Dr. William Souder

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So, What is Intrapreneurship?

• Innovative corporate management style that encourages employees within an organization to create new product ideas.

• If employee ideas are approved, management will finance research and development of the product while sharing an equitable partnership arrangement with the employee.

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History of Intrapreneurship• Word was coined in 1976 by Gifford and Elizabeth Pinchot

• Based on their concept of an intra-corporate entrepreneur

• Began a school for intraprenuers in Sweden in 1985

• The American Heritage Dictionary made the word mainstream by adding it in 1992

• Intrapreneurship is not new but it can be applied in many new ways

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Why intrapreneurship?

Most support factors are easy to find:• Funding

• company/organization often has capital to fund the project• Manpower

• intrapreneurs do not have to worry about finding the talent to get tasks performed

• Branding• intrapreneurs can use the branding of the

company/organization to get their ideas to take root

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Characteristics of Intrapreneurs

• Results driven• Ambitious• Creative• Original • Self Confident• Risk Tolerant

• Persistent• Influencing• High Energy• Action oriented• Interpersonal • Innovative

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Misdiagnosed Characteristics• Ambitious – over zealous• Creative – does not follow guidelines• Persistent – pushy• Self confident – too egoistic • Innovative – dreamer• High energy – Over ambitious• Risk Tolerant – bends the rules / challenges the systemWhen we misdiagnose we block ambition and

innovativeness on the part of the employee

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Discussion Questions

• What is the cost of embracing intrapreneurs for a company?

• Should we develop intrapreneurs or should we hire/poach? Advantages? Disadvantages?

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Innovation

• To create and bring into use profitable new products, processes, services, and ways of doing business.

• Creation of new or alternative products• Opening of a new market• Capture of new sources of supply

• Innovativeness can be developed through a deliberate and elaborate structured program

• It is, however, expensive in the short term, but cost-effective in the long term

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Intrapreneurial ActivitiesInnovativeness can be embraced in any of the following broad

areas:

• Improvement of service/products

• Saving of time, money, or making processes easier

• Diversification of processes, products, services

• Improvement of communication with customers

• Market identification and nurturing

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How does Business benefit?

• Firms create competitive advantages by discovering new and better ways to compete in an industry and bringing them to market

• An enterprise that does not daily innovate inevitably ages and declines

• Even in a successful business the disease of bureaucracy and complacency is dangerous

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How do Intrapreneurs benefit?

• Flexibility

• Less restrictions but supportive environment

• Recognition

• Their ideas are vehicles towards advancement

• Increased value to organization - increased PAYCHECK

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IMPLEMENTING INTRAPRENEURSHIP: PROCESS AND CHALLENGES

(Lesson Two)

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Support factors

Entrepreneurial culture

Sound Resource Allocation

Mechanism

Skilled HR

Management and peer

tolerance

Management

Support

Obligated (Basic) Corporate Performance

Enhanced (Intrapreneurial) Corporate Performance

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Implementing the Intrapreneurship Culture

• Institutionalization of intrapreneurship is important in modern organizations

• Some ways of institutionalizing intrapreneurship are:1. Encourage employees to be creative and to look for new

ways to improve your current way of doing business2. Grant intrapreneurs something akin to ownership rights in

the internal intraprises they create3. Encourage company wide involvement by insisting on truth

and honesty in marketing and marketplace feedback

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Discussion Break

• Is it true that IT and research firms are more intrapreneurial than banks and hospitals?

• Why?• Do banks and hospitals have capacity to get

intrapreneurial?

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Implementing the Intrapreneurship Culture

• Manage more through teams as opposed to managing through individuals

• Treat intrapreneurial teams as profit centers rather than as cost centers- negative Vs positive management attitude

• Allow team members a variety of options in jobs, in innovation efforts, alliances, and exchangesAllow some degree of self regulation within teams

• Encourage employees to develop themselves through training and embracing new challenges

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Challenges of implementation

• Organizational culture• Management attitude• ‘sensitivities’ of tasks (e.g. Banks and Hospitals)• Intolerance of change and challenge • Risk averseness

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Managing Entrepreneurially

Key Cocepts• Entrepreneurial Management • Entreprenurial leadership

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Key Competencies

• Ability to identify skill, knowledge, commitment, ambition, • High degree of tolerance• Creativity/Innovativeness• Team orientation (vs manager orientation)• Confidence in staff• Adaptability to dynamics• General balance (esp. between goals and goal

achievement process, tasks and people, etc)

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Business Leadership and Intrapreneurship contrasted

Business Management

Plans Coordinates Leads Staffs Controls

Intrapreneurial Management

Plans creatively

Coordinates Creatively

LeadsCreatively

Staffs Creatively

Controls Creatively

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DEVELOPING INNOVATIVE ENTERPRISE CULTURES

(Lesson Three and Four)

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What is Culture?• Culture consists of a fairly consistent set of

beliefs, values and norms developed by a group of people in response to their environment.

• Culture acts to keep people together and focused to a specific value adding course

• Culture creates identity while identity sets aside the organization from competition

• If the identity is viewed favorably, this enhances value for the firm and its products

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Contd. • There is a powerful connection between the

culture of an organization and its propensity to be entrepreneurial

• It is important to identify some values around which to create an entrepreneurial culture

• Some cultures are pro-entrepreneurship while others are counter-entrepreneurship

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Distinctive Elements of Organizational Cultures

• Symbols• Heroes• Rituals • Values• Artifacts• Stories, Histories, Myths, Legends, Jokes

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Symbols

• Symbols are words, objects and gestures which are recognized only by "insiders".

• In a large sense, symbols include the entire area of language.

• At the level of the individual or organization, symbols include slang, modes of address, dress codes and status symbols.

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Heroes

• Heroes are real or imaginary people who serve as models for behavior within an organization.

• Past successful managers or directors often serve as role models who can be emulated, and provide a model for behavior at work.

• Heroes need to be celebrated

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Rituals • Rituals are collective activities that are

socially essential. • In organizations, rituals include how

meetings are run, who gives opinion, key ‘initiation rites’ (e.g. parties for new employees, retirees or those newly promoted), known activities (e.g. cakes for ‘birthday babies’)

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Values

• Values represent the deepest level of a culture.

• They are broad feelings, often unconscious about what is good or bad, beautiful or ugly, normal or abnormal.

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Artifacts• Artifacts are the physical things that are found that have

particular symbolism for a culture. • They may even be endowed with mystical properties. • Examples include the first products of a company and

prizes won in grueling challenges • Artifacts can also be more everyday objects, such as the

bunch of flowers in reception. • The main thing is that they have special meaning, at the

very least for the people in the culture. • Most artifacts have stories behind them.

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Stories, Histories, Myths, Legends, Jokes

• Culture is often embedded and transmitted through stories, whether they are deep and obviously intended as learning devices, or whether they appear more subtly, for example in humor and jokes.

• The power of a story lies in when and how they are told, and the effect they have on their recipients.

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Five Dimensions of Culture• Individualism/collectivism • Materialism/quality of life • Uncertainty avoidance • Power distance • Masculinity/ femininity

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Individualism/collectivism• Captures the relationship between individuals and the

group. • Individualistic cultures advance self-interest, self

determination, autonomy and notions of fairness. "Everybody for himself and God for us all".

• In collectivistic cultures people see themselves as a group. • The focus is on common goals. People expect the group to

look after them and in return give absolute loyalty to the group.

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Materialism/quality of life• Reflects the degree to which material as opposed to

spiritual ends are pursued by individuals. • In materialistic cultures people are ambitious and

assertive. • They pursue material acquisition and career success; they

live to work and they see work as having an intrinsic value.

• Less materialistic cultures emphasize quality of life. • People emphasize interpersonal relationships and

concern for the environment. • Hard work results from a sense of duty or obligation to

ones family or society. People live to work

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Uncertainty avoidance • Refers to the extent that individuals feel threatened by

ambiguous, uncertain or unknown situations. • In ‘low uncertainty avoidance cultures’ people are risk

lovers. Risk is sought out as being challenging, interesting and fun.

• High uncertainty avoidance cultures prefer stability. • Here, people believe in absolute truths, established rules

and regulations. Deviant ideas are rejected. People seek agreement and consensus and desire a stable long term employment relations. Conservatism is rife.

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Power distance• Refers to the extent that members of a culture

accept equal distribution of power. • In ‘high power distance cultures’ individuals

accept class differences and clear organizational hierarchies.

• ‘Low power distance cultures’ belief in equality of opportunity, individual involvement and participation and democracy.

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Masculinity/ femininity

• The degree to which "masculine" values like assertiveness, performance, success and competition prevail over "feminine" values like the quality of life, maintaining warm personal relationships, service, caring and solidarity - from tender to tough, or vice versa

• A good balance is ideal depending on the situation

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Spotting Entrepreneurial Gaps in Corporate Culture

Lack of one or two performance norms signifies a gap. These norms include:

1. Task support norms- have to do with information sharing, helping out colleagues and general concern with efficiency

2. Task innovation norms- emphasize creativity in everything all the time such as " improve everything every time"

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Contd.3. Social relationship norms- norms for socializing

with one's work group and mixing friendship with business (such as "get to know the people in your work group" versus "don't bother“)

4. Personal freedom norms- norms for self-expression, exercising discretion and pleasing oneself (such as "live for yourself and your family" versus "live for your job and career“)

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Importance of Values in creating and nurturing a culture

• Values represent the deepest level of a culture. • They are broad feelings, often unconscious about

what is good or bad, beautiful or ugly, normal or abnormal.

• When new employees enter a work environment, they are usually diverse individuals, with most of their values already variously but firmly entrenched.

• Through a socialization process they can take up the new values and slowly entrench into the new culture

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Developing a Culture of Innovation • Research (Howard Oden in Managing Corporate

Culture, Innovation, and Intrapreneurship) indicates that intrapreneurship succeeds when companies provide their innovators with support, encouragement, and an atmosphere that promotes innovation.

• Specifically, Oden enumerated a host of attributes often found in innovative cultures.

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Attributes of Innovative cultures

1. Long-term strategic and cultural leadership: upper-level management provides long-term strategies and challenging goals for the company's innovation.

2. Promotion of innovation and intrapreneurship: the company encourages new ideas and new ways of doing things at all levels and promotes risk taking.

3. Flexibility and adaptability: the company does not have a hierarchical structure, rather a flat structure, and the innovation process involves different teams of workers, not different levels of management.

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Attributes Contd. 4. Collaboration and teamwork: the company encourages

teamwork and collaborative innovation. 5. Ongoing learning: workers are expected to improve their

skills and learn new ones continuously. 6. Toleration of failure: since some innovations fail to bear

fruit, companies must accept failure as part of the innovation process in order to keep intrapreneurs free from the fear of failure.

7. Democratic leadership: fosters development of new ideas among staff and removes fear of reprisal

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The Effect of Structure on innovative cultures

• Organizational structures can foster or kill the culture of innovation in an organization

• Flat structures are seen to foster innovative cultures more than tall bureaucratic structures

• Structures that promote team work tend to also promote innovative cultures

• Structures that are goal-focused are more likely to promote innovative cultures than those that are means-focused

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Signs that the firm lacks an innovative culture

• General disinterest among staff• Interest only in matters pertaining to the self • Staff are generally risk-averse • High levels of ‘fear of management’ among staff• High levels of pessimism (as opposed to

optimism)• High staff turnover

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So, what should managers do?

• Develop work teams • Rid your system of unnecessary bureaucracies • Share credit• Provide supportive leadership rather than just

management• Allow staff opportunities to create formal and informal

bonds (within proper boundaries)• Protect your innovators and their innovations • Reward your innovators

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Things that kill innovative cultures- Manager-specific

• Regarding new ideas with suspicion • Cumbersome approval mechanisms, rules, regulations • Pitting departments and individuals against one another • Expressing criticism and withholding praise • Treating problem identification as signs of failure • Controlling everything ‘too carefully’ • Reorganizing your systems rapidly and secretly • Keeping tight control of information • Delegating unpleasant duties to ‘inferiors’ • Assuming that you those lower down have no contribution to

make

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The Intrapreneurship Culture Development Framework

Challenging Organizational

Goals

Organizational Policies

SupportiveEmployee-Specific

Factors

Management Style (Democratic)

Organizational Strategies

Supportive Task-specific

Factors

Intrapreneurial Culture

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CEATIVITY AND INNOVATION IN CORPORATE SETTINGS

(Lesson Five and Six)

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Introduction • Idea generation and idea nurturing are the

bedrocks upon which corporates are grown• Idea generation is, in turn, built on creativity and

innovation• The more creative the workforce in a given firm

the higher the likelihood of increased growth of the firm

• Creativity and innovation among staff has to be nurtured for the firm to stay ahead of competition

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Creativity and InnovationCreativity- developing something newInnovation- Improving an existing process, idea, product,

system, etc• Both creativity and innovation are driven by the concept

of ‘uniqueness’• It is possible to have a creative innovation- a change that

is very unique• Some one has argued that whereas creation (invention)

is the conversion of cash into ideas, innovation is the conversion of ideas into cash.

• Idea Generation sits at the core of both.

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Areas of Idea Generation (Creativity and Innovation)

• Improved quality • Creation of new markets • Extension of the product range • Reduced labor costs • Improved production processes • Reduced materials • Reduced environmental damage • Replacement of products/services • Reduced energy consumption • Conformity to regulations

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Innovation Adoption • Innovations are often adopted by organizations through

two types of innovation-decisions: 1. Collective innovation decisions- when the adoption of an

innovation has been made by a consensus among the members of an organization.

2. Authority innovation decisions- when the adoption of an innovation has been made by very few individuals with high positions of power within an organization

Read Everett Roger’s Diffusion of Innovation

(DoI) theory

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Divergent Vs Convergent Thinking

Creativity requires the input of at least two types of thinking:

1. Divergent thinking 2. Convergent thinking

Divergent thinking precedes and, indeed, sets the stage for convergent thinking

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Divergent Thinking• Divergent thinking refers to ‘free-wheeling” of ideas where ideas are

left to flow without hindrance• Brainstorming is commonly used in divergent thinking sessions• People need to be open to the idea that there may be many “right”

answers. The goal of using divergent thinking is to generate as many potential “right” answers as possible.

• In order to do this, the potential “wrong” answers must be included. One of the benefits of using divergent thinking is knowing that in the second phase, during convergent thinking, the best responses will be selected and ideas not worth considering will be left behind, modified, or saved for later.

• Some times it pays to ask people to give even the most outrageous of ideas

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Convergent Thinking • This a “narrow-down” way of thinking. • During the convergent stage, we apply critical thinking;

that is, we use some criteria to evaluate, select, and analyze the output from the divergent phase.

• If the divergent output is kept in the verbal realm, only in talking or in conversation, it is quite challenging to do a good job in the convergent stage.

• As a result, one of the standards for idea generating is to capture the ideas in a way that makes it easy to evaluate the total output later on.

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Divergent and Convergent thinking contrasted

Divergent Thinking Perception- Source of creative ideas

Convergent Thinking Judgment- Evaluating creative ideas

Extraverted Sensing (Se)•Change what is. •Give new uses and tactics for what is contextually happening now, what’s right in front of you •Experiencing and noticing the physical world, scanning for visible reactions and relevant data

Extraverted Thinking (Te)• Improve efficiencies, structures,

measurements, and organizing principles.

• Demonstrate excellence using provable and profitable standards.

• Organizing, segmenting, sorting, and applying logic and criteria

Introverted Sensing (Si)•Change what was. •Recombine past elements. •Recalling past experiences, remembering detailed data and what it is linked to

Introverted Thinking (Ti)•Improve understanding of how something works.•Provide clear categorical shifts •Analyzing, categorizing, and figuring out how something works

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Contd. Divergent Thinking Perception- Source of creative ideas

Convergent Thinking Judgment- Evaluating creative ideas

Extraverted iNtuiting (Ne)•Change what might be.•Infer new patterns, potentials, and spin-offs from the current situation.•Inferring relationships, noticing threads of meaning, and scanning for what could be

Extraverted Feeling (Fe)•Improve harmony among people.•Facilitate cooperation and interpersonal harmony in the outcome. •Considering others and responding to them

Introverted iNtuiting (Ni)•Change the representation of the future. •Integrate insights to form new concepts. •Foreseeing implications, conceptualizing, and having images of the future or profound meaning

Introverted Feeling (Fi)•Align with values, personal and corporate.•Demonstrate commitment to what is truly important to those impacted and involved. •Evaluating importance and maintaining congruence

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Idea Generation Process: Divergence Phase

• Step 1:

Clearly identify the issue that is to be addressed with the innovation process

• Step 2: Immersion:

Explore information relevant to the problem. This could be trends, current operating environment, market research, competitive data, etc. — specific information that helps to shed light on the issue being explored.

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Contd.• Step 3: Identify opportunity areas: The team identifies “opportunity areas” where a solution may be

found. For an innovation session focusing on introducing a new snack product the opportunity areas might be “healthy snacking”, “kid focused snacks”, “snacking for energy”, and “indulgent snacks.”

• Step 4: Idea Generation: For each of the opportunity areas, the facilitator leads the team

through idea generation techniques to help uncover new possibilities. During this process, the rules of brainstorming apply. As you move through the idea generation, new ideas become harder to find and the facilitator must be prepared with exercises that stimulate the group’s thinking. This is often when the best new ideas are born!

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Idea Generation Process: Convergence Phase:

• Step 1- Setting criteria: The group works together to set the criteria for how ideas will be

selected to move forward to the next step. At this stage, be careful not to narrow the sieve too much or you may lose some great ideas before they get a chance to be explored.

• Step 2- Idea Selection: Using a variety of convergence techniques the facilitator helps the

group narrow down the number of ideas to a manageable number. This will include voting, combining like ideas and championing favorite ideas. Championing favorite ideas is important so that the consensus oriented process doesn’t drive out really creative, unique (but sometimes difficult) ideas.

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Contd. • Step 3- Synthesis/Discussion: The team comes to agreement on the ideas that will

move forward into concept research or whatever the next step of your process will be. The group provides definition around each of the lead ideas — perhaps, at this stage, creating concept outlines that can be written into concepts for the research step.

• Step 4- Research Preparation: This is the process where the new concepts are finalized

and the research parameters are identified. Parameters include the key objectives of the research, the audience to test with, the screening criteria and the survey or discussion guide.

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USING INCENTIVES TO REINFORCE INTRAPRENEURSHIP

(Lesson Seven and Eight)

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What is Reinforcement?• Reinforcement is the process of rewarding

desired behavior to ensure it recurs• Reinforcement of behavior is most effective when

the reinforce occurs immediately after the behavior.

• The longer the time delay between the behavior and the reinforcement, the less likely the desired behavior is to be reinforced.

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Reinforcement Process

Antecedents Behavior Consequences

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Schedules of Reinforcement

• Continuous Reinforcement (CRF) • Fixed Interval Schedules (FI) • Variable Interval schedules (VI) • Fixed Ratio Schedules (FR) • Variable Ratio Schedules (VR)

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Continuous Reinforcement

• Continuous reinforcement occurs when each behavior results in a reinforcing consequence.

• Continuous reinforcement must be used to increase the performance of an activity.

• Here every improvement is reinforced

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Fixed Interval Schedules• A fixed-interval schedule of reinforcement is one in which

a behavior is reinforced following a constant passage of time (e.g. every 6 months).

• The FI schedules produce uneven response patterns with an increase in response rate near the end of the interval.

• For example, if we offer a salesman an incentive for reaching a quota within a six- month period, his strongest performance is likely to occur during the sixth month.

• Fixed Interval reinforcements are not very effective when trying to reinforce entrepreneurial behavior

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Variable Interval Schedules• A variable-interval schedule of reinforcement

involves delivering a reinforcement following an average, but varying passage of time.

• For example, if the manager wishes to reinforce behavior thrice every month he might choose different timings in each month depending on desired performance

• Another example is reinforcing behavior after two weeks for the first time, after four weeks the 2nd time, after three weeks the 3rd time, etc

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Fixed Ratio Schedules• A fixed-ratio schedule of reinforcement involves

presenting a reinforcer after a fixed or constant number of responses have occurred.

• Reinforcement is uniformly based on a fixed number of occurrences, e.g. paying a commission for number of items sold

• Fixed-ratio schedules of reinforcement result in the second highest rate of response of all the reinforcement schedules.

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Variable-ratio schedules• Variable-ratio schedules involve presenting a reinforcer

after a variable, or unfixed number of responses has occurred.

• Variable-ratio schedules of reinforcement lead to the very highest rate of response. In addition, behavior which is reinforced on a variable-ratio

• basis is also the most difficult to extinguish. • Variable-ratio and fixed-ratio schedules allow an

individual to exert a good deal of control over how much reinforcement is received.

• Working harder or increasing the frequency of behavior, will result in more reinforcement.

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Comparative Framework of Reinforcement Schedules

Description Effectiveness

Cost When Used

CRF Each behavior results in a reinforcing consequence.

Moderate Cost-effective

In developing or increasing the performance rate of a behavior

FI Behavior is reinforced following a constant passage of time.

Least

effective Can get expensive

When an increase in response rate near the end of the interval is desired

VI Reinforcement delivered following an average, but varying passage of time

Higher than moderate

Moderate When relatively even response patterns are expected

FR Presenting a reinforcer after a fixed or constant number of responses have occurred

Second

highest Cost-effective

When high levels of response and conformity are expected

VR Presenting a reinforcer after a variable, or unfixed number of responses has occurred

Highest Cost-effective

When high levels of response and conformity are expected

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Characteristic of a Good Incentive Scheme

• As a scientific organizational intervention, a well-designed incentive program should include six essential phases:

1. Specification of performance. 2. Measurement of performance. 3. Behavior analysis. 4. Design and implementation 5. Evaluation6. Maintenance of Performance

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Specification of Performance

• The performance to be changed must be pinpointed so that it may be observed and accurately counted and recorded.

• The performance may be stated either as a behavior, or as the result of a behavior.

• Sales volume is a result, while the number of sales calls made is a behavior.

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Measurement of performance

• Performance should be measured before an incentive program is instituted, in order to establish a base line.

• It must also be measured during and after the program. • Behavior may be measured according to frequency or

duration of the behavior, while results are generally measured in terms of quantity, such as sales or production volume.

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Behavior Analysis • The first question to be answered in a behavioral

analysis is whether the performance problem is one of skill, or of rate of performance.

• If the problem is lack of skill, training is required to help the individual acquire the necessary behaviors.

• If, on the other hand, the problem is one of low rate of performance, then the contingencies of reinforcement must be changed.

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Design and Implementation

Design is based on:1. Expected outcome2. Period within which outcome must be achieved3. Organizational capacity• In general, the broader the offering of

incentives, the greater the likelihood that more people will find something that is a reinforcer for them, and will therefore change their performance.

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Evaluation • Evaluation is done to gauge the extent to which

the incentive accounted for the change in performance

• Each result/outcome must be linked to a specific reinforcer or reinforcers

• If the outcome is positive after reinforcement has occurred then the reinforcer may be seen to be effective

• Evaluation must be done periodically

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Maintaining Performance • The high levels of performance achieved during a

short period of time under an incentive program will not necessarily remain at that high level without a planned effort to maintain that performance.

• Once a high level of performance has been achieved, that level can be maintained by planning a reinforcement schedule which will maintain the behavior.

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Using Incentives • Incentives, if used well, have capacity to reinforce

intrapreneurship among staff• However, if used wrongly they could create incentive-

dependent intrapreneurship which is not only undesirable but can also be difficult to sustain

• It is important to identify the right incentives to use and favorably tailor them to the organizational situation to avoid undesirable backlashes

• The secret is to align incentives as closely as possible to the desired intrapreneurial behavior (e.g. reward creativity if you wish to reinforce it)

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How should they be used?

The Incentive tool can be used in two ways:1. Availing incentives- to positively reinforce

intrapreneurial behavior2. Withdrawing Incentives- to negatively

reinforce intrapreneurial behaviour

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Categories of Incentives

Two general categories:1. Monetary incentives 2. Non-monetary incentives

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Monetary Incentives

They Include:1. Salary2. Allowances 3. Share schemes (ESOPs)4. Bonuses5. Retirement schemes6. Profit sharing

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Non-monetary Incentives • Flexi-times• Commendations and approvals• Job/Task designs• Manipulation of working environment factors• Medical schemed• Club memberships• Staff development

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Group Task

• Identify the key incentives that you could use in your organization to reinforce intrapreneurial behavior.

• How would you use them?

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Mistakes in Designing and Implementing Incentives

• Incompatibility with organizational mission, strategic objectives and culture

• Inadequate or wrong communication of incentives• Unforeseen (and undesirable) side effects• Inadequate or excessive incentives• Technical deficiencies (inadequate formulae etc.)• Misaligned incentives• Misapplication of incentives

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Key Concerns by Staff

1. Distributive fairness- How much do I receive and how much do I compare with my peers?”

2. Procedural fairness- What is the process that was used to decide how much I receive?

3. Status consistency- do staff lower down earn more than staff higher up?

4. Transparency- How were my incentives arrived at?

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Factors that Influence Choice of Incentive

1. Technology2. Composition of Workforce 3. Culture 4. Task factors5. Hierarchy6. Market (competitor/ peer) factors

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Steps to Designing An Effective Incentive Scheme

1. Analysis of the organization’s capacity2. Definition and clarification of the strategic goals of the

organization 3. Determination of the Intrapreneurial behavior needed

to achieve corporate goals4. Identification and development of incentives that have

capacity to reinforce the identified behavior5. Implementation of incentives 6. Evaluation of performance of the incentives in

reinforcing behavior