November 11, 2012

MU0010 [Manpower Planning and Resourcing] Set2 Q4

Q.4 Discuss Intrapreneurship in detail.

ANS: 


Entrepreneurship
Many employees have this dream of turning into an entrepreneur. They feel and think that organizations will not allow them to implement their business ideas even if the idea is associated to the business of the organization in which they work. They know for sure their idea will make the organization even more profitable. But they know that no one will listen to them. These employees at some point in time quit and start their own venture and some of them turn into successful entrepreneurs.

An entrepreneur is someone who organizes a business venture and assumes the risk for it. A person who possesses a sense of enterprise in his mind, and new ideas for venturing out by assuming significant accountability for the inherent risks and the outcomes is called an Entrepreneur. Jean-Baptiste Say, a French economist is believed to have coined the word "entrepreneur" first in about 1800. Entrepreneurship is the act of being an entrepreneur.


 Intrapreneurship
When entrepreneurship describes activities within a firm or a large organization it is referred to as Intrapreneurship. 

Intrapreneurship may include corporate venturing, when large entities spin-off organizations.In 1992, The American Heritage Dictionary acknowledged the popular use of a new word, intrapreneur, to mean "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". 

Intrapreneurship is today a tool used by corporates to harness the true potential of their high performers which integrates risk-taking and innovation approaches apart from reward and motivational techniques which were usually thought as only possible by entrepreneurs.Intrapreneurship is the practice of entrepreneurship by employees within an organization.

Example :A classic case of intrapreneurs is that of the founders of Adobe, John Warnock and Charles Geschke. They both were employees of Xerox. As employees of Xerox, they were frustrated because their new product ideas were not encouraged. They quit Xerox in the early 1980s to begin their own business. Currently, Adobe has an annual turnover of over $3 billion. While this could have happened inside Xerox, alas it did not.

Steve Jobs has described the development of the Macintosh computer as an intrapreneurial venture within Apple.

Features of Intrapreneurship
Entrepreneurship involves innovation, the ability to take risk and demonstrate creativity. An entrepreneur will be able to look at things in novel ways. He will have the capacity to take calculated risk and to accept failure as a learning point. An intrapreneur thinks like an entrepreneur looking out for opportunities, which profits the organization he/she is employed with.
 Intrapreneurship is a novel way of making organizations more profitable where imaginative employees entertain entrepreneurial thoughts. It is in the interest of an organization to encourage intrapreneurs. Intrapreneurship is a significant method for companies to reinvent themselves and improve performance.

Intrapreneurship and Employee Engagement
The highest form of employee engagement is possibly intrapreneurship. Organizations can benefit from engaged employees, by listening to them, understanding their needs, thoughts and plans, allowing employees to practice intrapreneurship and create wealth for themselves and the organization.

Engagement is also directly proportional to the amount of listening that an organization does and the action it takes thereafter to respect the employees’ thoughts and plans. Engagement is possible when an organization nurtures the employee and the employee nurtures the organization.

A lot of companies are known for their efforts towards nurturing their in-house talent to promote innovation. “Skunk Works” group at Lockheed Martin is a prominent example. This group was formed in 1943 to build P-80 fighter jets which it did successfully.At “3M” employees can spend 15% time working on projects they like for the betterment of the company. On the initial success of the project, 3M even funds it for further development, thus promoting employee engagement.

Employee Needs
Employees need the following:
1. Someone to listen to their ideas of growing the company
2. Someone who will provide the framework for creating something valuable
3. Someone who use their capabilities in creating something valuable
4. Someone who allows them to do what they do best
5. Someone to provide them feedback in a non threatening manner
6. Someone who is interested in their growth and development
7. Someone who respects and values them
8. Someone who does not doubt their integrity
9. Someone who knows to differentiate between engaged employees and disengaged employees
10. Someone who ensures they are not treated in the same manner as disengaged employees

Attend to employee needs and enhance talent engagement. If you as an employer don’t listen to your engaged employees, they will find other better employers who will, or they will find venture capitalists who will listen to them and fund them, or they will find friends and relatives to fund their own business and create a business empire of their own.

Appreciate and value the engaged employees and the talent which is engaged. You will not only gain in higher productivity, but may stand to exponentially grow your business because of committed and talented employees.

Entrepreneurship
An entrepreneur, which can be defined as "one who undertakes innovations, finance and business acumen in an effort to transform innovations into economic goods". This may result in new organizations or may be part of revitalizing mature organizations in response to a perceived opportunity. The most obvious form of entrepreneurship is that of starting new businesses (referred as Startup Company); however, in recent years, the term has been extended to include social and political forms of entrepreneurial activity. When entrepreneurship is describing activities within a firm or large organization it is referred to as intra-preneurship and may include corporate venturing, when large entities spin-off organizations.

According to Paul Reynolds, entrepreneurship scholar and creator of the Global Entrepreneurship Monitor, "by the time they reach their retirement years, half of all working men in the United States probably have a period of self-employment of one or more years; one in four may have engaged in self-employment for six or more years. Participating in a new business creation is a common activity among U.S. workers over the course of their careers."
And in recent years has been documented by scholars such as David Audretsch to be a major driver of economic growth in both the United States and Western Europe.

Entrepreneurial activities are substantially different depending on the type of organization and creativity involved. Entrepreneurship ranges in scale from solo projects (even involving the entrepreneur only part-time) to major undertakings creating many job opportunities. Many "high value" entrepreneurial ventures seek venture capital or angel funding (seed money) in order to raise capital to build the business. Angel investors generally seek annualized returns of 20-30% and more, as well as extensive involvement in the business. Many kinds of organizations now exist to support would-be entrepreneurs including specialized government agencies, business incubators, science parks, and some NGOs. In more recent times, the term entrepreneurship has been extended to include elements not related necessarily to business formation activity such as conceptualizations of entrepreneurship as a specific mindset (see also entrepreneurial mindset) resulting in entrepreneurial initiatives e.g. in the form of social entrepreneurship, political entrepreneurship, or knowledge entrepreneurship have emerged.

The entrepreneur is a factor in microeconomics, and the study of entrepreneurship reaches back to the work of Richard Cantillon and Adam Smith in the late 17th and early 18th centuries, but was largely ignored theoretically until the late 19th and early 20th centuries and empirically until a profound resurgence in business and economics in the last 40 years.

In the 20th century, the understanding of entrepreneurship owes much to the work of economist Joseph Schumpeter in the 1930s and other Austrian economists such as Carl Menger, Ludwig von Mises and Friedrich von Hayek. In Schumpeter, an entrepreneur is a person who is willing and able to convert a new idea or invention into a successful innovation. Entrepreneurship employs what Schumpeter called "the gale of creative destruction" to replace in whole or in part inferior innovations across markets and industries, simultaneously creating new products including new business models. In this way, creative destruction is largely responsible for the dynamism of industries and long-run economic growth. The supposition that entrepreneurship leads to economic growth is an interpretation of the residual in endogenous growth theory and as such is hotly debated in academic economics. An alternate description posited by Israel Kirzner suggests that the majority of innovations may be much more incremental improvements such as the replacement of paper with plastic in the construction of a drinking straw.

For Schumpeter, entrepreneurship resulted in new industries but also in new combinations of currently existing inputs. Schumpeter's initial example of this was the combination of a steam engine and then current wagon making technologies to produce the horseless carriage. In this case the innovation, the car, was transformational but did not require the development of a new technology, merely the application of existing technologies in a novel manner. It did not immediately replace the horsedrawn carriage, but in time, incremental improvements which reduced the cost and improved the technology led to the complete practical replacement of beast drawn vehicles in modern transportation. Despite Schumpeter's early 20th-century contributions, traditional microeconomic theory did not formally consider the entrepreneur in its theoretical frameworks (instead assuming that resources would find each other through a price system). In this treatment the entrepreneur was an implied but unspecified actor, but it is consistent with the concept of the entrepreneur being the agent of x-efficiency.

Different scholars have described entrepreneurs as, among other things, bearing risk. For Schumpeter, the entrepreneur did not bear risk: the capitalist did.

Some notable persons and their works in entrepreneurship history.

For Frank H. Knight (1921) and Peter Drucker (1970) entrepreneurship is about taking risk. The behavior of the entrepreneur reflects a kind of person willing to put his or her career and financial security on the line and take risks in the name of an idea, spending much time as well as capital on an uncertain venture. Knight classified three types of uncertainty.
Risk, which is measurable statistically (such as the probability of drawing a red color ball from a jar containing 5 red balls and 5 white balls).
Ambiguity, which is hard to measure statistically (such as the probability of drawing a red ball from a jar containing 5 red balls but with an unknown number of white balls).
True Uncertainty or Knightian Uncertainty, which is impossible to estimate or predict statistically (such as the probability of drawing a red ball from a jar whose number of red balls is unknown as well as the number of other colored balls).

The acts of entrepreneurship are often associated with true uncertainty, particularly when it involves bringing something really novel to the world, whose market never exists. However, even if a market already exists, there is no guarantee that a market exists for a particular new player in the cola category.

The place of the disharmony-creating and idiosyncratic entrepreneur in traditional economic theory (which describes many efficiency-based ratios assuming uniform outputs) presents theoretic quandaries. William Baumol has added greatly to this area of economic theory and was recently honored for it at the 2006 annual meeting of the American Economic Association.

The entrepreneur is widely regarded as an integral player in the business culture of American life, and particularly as an engine for job creation and economic growth. Robert Sobel published The Entrepreneurs: Explorations Within the American Business Tradition in 1974. Zoltan Acs and David Audretsch have produced an edited volume surveying Entrepreneurship as an academic field of research, and more than a hundred scholars around the world track entrepreneurial activity, policy and social influences as part of the Global Entrepreneurship Monitor (GEM) and its associated reports.

Though Entrepreneurs are thought to have many of the same character traits as leaders,[clarification needed], involve particular psychological dispositions, or operate in purely business spheres of life, recent European theorising on the subject has suggested that, come the era of neo-liberalism and 'big society' politics that promote conceptualising humans as economic agents per se, normal, everyday people usually marginalised from the term 'entrepreneur' are too involved in the very same kind of processes that 'big business', proper entrepreneurs are involved with. Entrepreneurs, and entrepreneurship, as such, might be enacted by anybody, encountering as they do economic uncertainty on an everyday basis.

Concept of Entrepreneurship
It has assumed super importance for accelerating economic growth both in developed and developing countries. It promotes capital formation and creates wealth in country. It is hope and dreams of millions of individuals around the world. It reduces unemployment and poverty and its a pathway to prosper. Entrepreneurship is the process of searching out opportunities in the market place and arranging resources required to exploit these opportunities for long term gains. It is the process of planning, organising, opportunities and assuming. Thus it is a risk of business enterprise. It may be distinguished as an ability to take risk independently to make utmost earnings in the market. It is a creative and innovative skill and adapting response to environment of what is real.

Promotion of Entrepreneurship
Given entrepreneurship's potential to support economic growth, it is the policy goal of many governments to develop a culture of entrepreneurial thinking. This can be done in a number of ways: by integrating entrepreneurship into education systems, legislating to encourage risk-taking, and national campaigns. An example of the latter is the United Kingdom's Enterprise Week, which launched in 2004.

Outside of the political world, research has been conducted on the presence of entrepreneurial theories in doctoral economics programs. Dan Johansson, fellow at the Ratio Institute in Sweden, finds such content to be sparse. He fears this will dilute doctoral programs and fail to train young economists to analyze problems in a relevant way.

Many of these initiatives have been brought together under the umbrella of Global Entrepreneurship Week, a worldwide celebration and promotion of youth entrepreneurship, which started in 2008.

The charity The Aldridge Foundation sponsors Academies specialising in entrepreneurship, teaching core entrepreneurial attributes to young people with the aim of improving their life skills. The Collegiate Entrepreneurs' Organization was started in 1983 and it's mission is to support and inspire college students to be entrepreneurial and seek opportunity through enterprise creation.

Financial Bootstrapping
Financial bootstrapping is a term used to cover different methods for avoiding using the financial resources of external investors. Bootstrapping can be defined as “a collection of methods used to minimize the amount of outside debt and equity financing needed from banks and investors”.[11] The use of private credit card debt is the most known form of bootstrapping, but a wide variety of methods are available for entrepreneurs. While bootstrapping involves a risk for the founders, the absence of any other stakeholder gives the founders more freedom to develop the company. Many successful companies including Dell Computers and Facebook were founded this way.

There are different types of bootstrapping:
Owner financing
Sweat equity
Minimization of the accounts receivable
Joint utilization
Delaying payment
Minimizing inventory
Subsidy finance
Personal Debt

Traditional Financing
Having outside investors is not necessarily beyond the realm of entrepreneurship. In many cases, leveraging the owners' credit cards and personal assets, such as mortgages, may not be sufficient. Inadequate investment can also kill a start up. And bringing in outsiders can be beneficial. Outsiders can provide financial oversight, accountability for carrying out tasks and meeting milestones, and many can even bring valuable business contacts and experience to the table.

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