Corporate Entrepreneurship or Intrapreneurship built around entrepreneurial techniques and innovation within a corporation, partnership, association, or organization to help them to create new products, services, or even a new division to help the business or organization, grow and survive in tough times. This article provides an overview on a “real world” successful case study of corporate innovation by utilizing intrapreneurship. Intrapreneurship has successfully been utilized by corporations, partnerships and non-profit firms in the US, Europe, Asia and Africa.
Enlightened or innovative organizations with a formal intrapreneurship program will allow an employee-intrapreneur some time freedom to pursue new ideas and innovation with their organization. The successful creation of Corporate Entrepreneurship or Intrapreneurship Programs continues to grow around the world over the last four decades, starting back with the Lockheed Aircraft “Skunk Works” operation, well over 40 years ago in Southern California.
Corporate Entrepreneurship or Intrapreneurship is build around the concept or idea of using entrepreneurial innovation, approaches and techniques within a corporation or organization to create a new product(s), service(s), or division to help a corporation grow, become more profitable, and in some cases, survive.
Successful Intrapreneurship programs need to deal with the issues of existing rigid organizational structure and bureaucracy. Intrapreneurship programs must be accepted and embraced by both middle management and senior management that the innovation that can come out of such a program is beneficial and necessary to the firm. All parties must understand that their support will create an intrapreneurship program that will be both profitable and synergistic to the organization’s basic mission and long term success.
Being a successful corporate intrapreneur takes a unique set of skills beyond creativity, including being willing to take some risks at sharing and pushing an unique idea, having the perseverance to wait for senior management’s final approval to create and launch the product or service, and the drive to see it through to fruition, no matter what.
The basic concept of Intrapreneur had been in use for decades, but came into popularity in the 1980′s. PR1ME Computer was one of the prominent users of intrapreneurship in the late 1970′s and Apple Computer used it in the early 1980′s. In 1981 a principal participant in the creation of PR1ME Leasing wrote a “real world” case study by a participant in the creation and operation of the venture documented the significant growth and impact over four years using intrapreneurship. PR1ME grew from a small share here company and grew to over $480 million in sales. Haller was a Co-Founder of the Intrapreneurial venture PR1ME Leasing in 1977 and helped build it until 1981. Haller document the financial and marketing impact of the successful intrapreneurship operation of PR1ME Leasing from 1977 until 1980 in his Master’s Thesis completed in 1982.
In 1981 Anaconda-Ericsson Inc. was formed as a joint venture between Atlantic Richfield/ARCO’s Anaconda Copper Subsidiary and Swedish (European) Telecommunication Giant L.M. Ericsson). These two parent companies had previously been partners in copper mining interest in the western hemisphere. The products of this venture ARCO’s Anaconda mining cables, and L. M. Ericsson’s main products were PBX equipment and transmission systems. Anaconda-Ericsson would also eventually market computers and other business-oriented products from Ericsson Information Systems, as well as some US acquisitions of computer companies, such as AXXA Corporation (manufacturer of word processing system build to compete against Wang Computer, until the introduction of the IBM PC and the invention and growth of use of personal computers).
The transmission operations of Anaconda-Ericsson Inc. got off to a successful start, mainly due to the fact that new carriers of long-distance networks like MCI needed equipment. Anaconda-Ericsson Inc’s sales of MCI equipment were the right product at the right time , with captive financing in place to make the sale easier and a short selling cycle. Anaconda-Ericsson sales of $100’s of millions in MCI equipment were accelerated by the more information creation of a captive Leasing and Finance subsidiary. The cable division fared less well than expected (the captive A-E leasing subsidiary was not able to provide financing for the short life product of mining cables). With the help of Anaconda-Ericsson Leasing & Finance provide vendor financing the sales of PBX switchboards picked up after a slow start.
In the early 1980’s Anaconda-Ericsson was a leader in the introduction of the AXE-system to the US market. Because of strong domestic competitors like Northern Telecom and Western Electric, Anaconda-Ericsson’s AXE product only achieved limited success in the 1980s and 90s. Fortunate in 2001 Ericsson received a large order from the US based WorldCom which was a major breakthrough on the fixed networks market in the US.
Anaconda-Ericsson Inc explored a number of ideas and met with a number business consultants and CPA firms to explore other idea. One of the consultants that had build an intrapreneurial captive leasing and finance company in another high technology firm suggested the creation of a captive finance subsidiary, and they was well received but they Anaconda-Ericsson hill climb racing hack tool would need to get outside help to structure, create, build and run such a venture.
The formal business plan to Anaconda-Ericsson Inc., ARCO and L. M. Ericsson, was approve after meeting with consultants to design and create “de novo” an intrapreneurial venture “Western Hemisphere Finance and Leasing Subsidiary” for Anaconda-Ericsson Inc. to finance the sales of the their products internationally which they build in the US and Europe.
Anaconda-Ericsson Inc., then hired one of their outside consultants with solid experience in building an intrapreneurial captive leasing and finance company. Anaconda-Ericsson Inc retained him full time and he was then appointed as the Managing Director (the European title for Chairman and CEO) of the new wholly owned subsidiary, Anaconda Ericsson Leasing and Finance Inc.
Anaconda- Ericsson Leasing & Finance Inc. was able to borrow over $650,000,000 on a non-recourse basis from a group of major banks (similar to what was done by PR1ME Leasing) to fund Anaconda Ericsson Leasing and Finance with only a minimal investment by Anaconda-Ericsson Inc. and no parent companies (ARCO and L. M Ericsson) guarantees on the bank debt to fund the new innovative captive equipment leasing subsidiary. In addition to bank debt, Anaconda- Ericsson Leasing & Finance Inc. also used SEK debt (Swedish Ex-IM Bank funding for export sales as the debt sources at low interest rates) to structure leverage leases and increase the leasing subsidiaries sales and profits.
Anaconda-Ericsson Leasing & Finance Inc. was able to finance over $1 Billion of Anaconda-Ericsson equipment in just 30 months, primarily on leasing or financing the L. M. Ericsson MCI equipment.
At the same time that Anaconda-Ericsson Inc. was utilizing intrapreneurial ventures to build their company, Apple Computer was also using intrapreneurship for the creation of Apple’s Macintosh computer. Intrapreneurship had now become a moving force in helping firms grow in the United States, and around the world.
Apple’s Chairman then and now, Steven Jobs is credited with bring the term Intrapreneurship into the mainstream media and with popularized the term Intrapreneurship in his Newsweek magazine article September 30, 1985 issue. Steven Job’s said in his article that, “The Macintosh team was what is commonly known as intrapreneurship… a group of people going, in essence, back to the garage, but in a large company.”
Then the next year, John Naisbett discussed in his 1986 book, “Re-Inventing the Corporation,” how the use of corporate entrepreneurship or intrapreneurship concepts as a significantly important method for a existing businesses to find new markets and new products.
But the early 1990′s, after well over a decade of observing successful firms such as APPLE Computer, PR1ME Computer, Corona Data Systems, and Anaconda-Ericsson was proven and established. APPLE, PR1ME, Corona Data, Anaconda-Ericsson and other firms has proven that successfully using intrapreneurship to significantly grow their high tech businesses that corporate entrepreneurship or intrapreneurship were now an important part of best business practices in innovative companies.
In 1990. Harvard Business School Professor Rosabeth Moss Kanter commented on the use of corporate entrepreneurship (intrapreneurship) in “When Giants Learn to Dance” a significant growth factor in ensuring the survival of the company.
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