What’s an idea worth? To a corporate entity willing to embrace and support it, the right idea could bring millions. Lockheed Martin Information Technology, a subsidiary of Lockheed Martin and the brainchild of its president, Linda Gooden, made more than $2 billion this year. Dafina Books, an imprint of Kensington Publishing conceived by Karen Thomas, has grossed more than $12 million a year. And when Microsoft dropped from $7.3 billion in 2001 to $5.4 billion in 2002 to a competitor offering a software system for free, Martin Taylor developed a strategic platform to recapture those dollars without discounting Microsoft’s offering.
Gooden, Thomas, and Taylor are among an elite grouping of enterprising and innovative corporate professionals called intrapreneurs. Coined by author and business educator Gifford Pinchot in 1978, intrapreneurship, also referred to as corporate entrepreneurship and corporate renewal, is a concept by which perspicacious corporate employees—at any level of the company—identify and construct a unique business model that offers significant growth opportunities for their company. “Intrapreneurship is creating some type of value inside of an existing entity by taking some kind of new product or business and looking for new ways to bring it into the market,” explains Joe Watson, CEO of Reston, Virginia-based StrategicHire, an executive search firm. “But in order for it to be truly an intrapreneurial opportunity, it has to be a product or service that’s different from the company’s traditional business.”
Many of the same precepts apply to entrepreneurship: developing a unique idea, constructing a market analysis, assessing the competition, creating a sales and marketing plan, determining risks and rewards, and executing a plan. For the intrapreneur, however, there is the security of knowing that the parent company will provide the necessary resources and still pay a salary even if the venture is not as successful as anticipated. But even with those benefits, there is still inherent risk. An unsuccessful venture could derail your career.
Both endeavors require a certain type of individual to be successful—a process-oriented, creative thinker. Coming up with a great idea is easy. The intrapreneur is someone who can develop an exciting concept into a profit-driven enterprise. Successful intrapreneurs are also unwavering in achieving their goals. Your level of resilience will be challenged against obstacles and roadblocks, says Watson. Failure to properly navigate problems that could arise is a sure way to hurt yourself and your reputation.
Gooden, Thomas, and Taylor exemplify the true spirit as well as the intricate components of intrapreneurship: discovering a concept, developing a plan, generating buy-in from senior management, executing the business model, and having the ability to adapt and overcome challenges.
At its very core, intrapreneurship is the innovation that corporations need to keep them competitive—particularly in today’s aggressive and rapidly changing business environment of globalization, emerging markets, and technology innovations. Pinchot, who is today chairman of Pinchot & Co., a consulting firm focusing on intrapreneurship and sustainability, says that the degree to which corporations encourage intrapreneurial activity can also be impacted by economic conditions. “Intrapreneurship changes as the nation goes through phases,” he offers. “When corporations are trying to generate revenue, intrapreneurship opportunities increase.” He explains that, despite the demands for the creative development of new products and services that can enhance the profitability of a business, in large organizations such innovation only takes place when there are intrapreneurs to drive it. They are the individuals who, because of their work in a specialized area or unit, gain a unique perspective on how changes in one area of a company’s business can impact the organization overall. Enterprising employees will often make recommendations to senior executives on how they can capitalize on these market shifts.
TURNING AN IDEA INTO REALITY
While working on a new $43.9 million contract with the Social Security Administration (a contract not typical of the Department of Defense jobs Lockheed usually pursued) an idea suddenly struck Gooden: “Why not go after more civil agency contracts?” Researching the possibility led her to two important findings: Government had an increasing need for information technology services and legislation on buying information technology was changing—to Lockheed’s advantage. Until that time Lockheed had focused on delivering very large and technically challenging solutions, which was where the government focused 80% of its $26 billion information technology budget in 1993. Of that budget, $13 billion, or 50%, was being contracted to companies like Lockheed. Only 20% of those contracts were for information technology services. Gooden recognized, however, that the industry was changing and growing in the area of information technology services and that Lockheed could capitalize on this growth if the company would agree to expand the type of contracts it procured.
After months of gathering research and outlining a plan of execution, Gooden was ready to sell the idea to her superiors. With her heart in her throat, she stood in a room surrounded by senior management, attempting to persuade them that this was a move they had to make to remain competitive. “Scared, excited, anxious—I was all the above,” she recalls. But determination kept her steady. Management agreed with the plan and Lockheed Martin Information Technology was born, with Gooden as president, a condition in her proposal.
“Execution is by far the most exciting part,” says Gooden. “At first I felt fearful about whether or not management would accept my plan but once the plan, was accepted then I was equally as fearful of executing the plan,” she recalls.
“There is a sign on my wall—a big red circle with an x through it but in the middle of it is the word ‘can’t’ in large letters. We decided that success wasn’t an option but rather a mandate.”
As Gooden predicted, today only 20% of the government’s budget (which now totals $71 billion) is spent on large and challenging solutions and 80% is budgeted for information-technology services. The government now also doles out 80% of its total budget in contracts.
LMIT contributes over $2 billion, up from $8 million 10 years ago, to the $35.5 billion in information-technology-generated revenue for Lockheed and enjoys 12% market share. LMIT, an 11,000-member company in more than 50 locations and 16 foreign countries, has become the fastest growing organization responsible for information technology and other services for federal agencies across the U.S., with clients ranging from NASA and The Department of Justice to every branch of the Armed Forces and the Department of Defense.
Like Gooden, Thomas noticed a change in the market during her position as editorial director at Kensington Publishing in 2000—interest in African American books was growing. Although Kensington already published an assortment of black titles, Thomas knew that the company could not accommodate the surging amount of African American authors seeking publishers nor would they be able to provide the adequate marketing resources that the books deserved. “I wanted to develop a way to focus those titles toward the community and also to focus some of the publicity and attention those titles should receive. I didn’t want those titles to get lost in the huge list of [Kensington] titles,” explains Thomas.
She suggested that the publishing house
spin off an imprint that would focus 100% of its attention on developing and marketing black titles, even republishing classic titles that are no longer in print. The imprint became Dafina Books, which Thomas oversees. It isa line of original trade hardcover and paperback, fiction and nonfiction books aimed at the African American, book-buying community.
Today, titles include God Don’t Like Ugly by Mary Monroe and Mary B. Morrison’s Somebody’s Gotta Be on Top. Dafina’s gross revenue has more than doubled over five years, from $5 million to more than $12 million. “I believe that is only the tip of the iceberg,” says Thomas.
SUCCEEDING IN THE FACE OF OBSTACLES AND OPPOSITION
Not every idea is well received or easily executed. However, the most successful entrepreneurs remain steadfast in their goals and flexible in their approach. Problems can arise during any phase of the process. The person leading the project has to not only effectively manage, but encourage the team as well. Taylor experienced obstacles at several junctures before realizing the success of his strategic platform.
Unlike Gooden and Thomas, Taylor’s incentive to develop a new service was not in anticipation of changes in the market—it was in reaction to one. Three years ago, a competing company aggressively and swiftly cut into the software giant’s market share. Microsoft found itself in a sparring match with a competing operating system, Linux, which was free of cost. Linux was highly attractive for companies and government agencies faced with tight budgets and Microsoft’s comparatively steep prices. Net income for Redmond, Washington-based Microsoft dropped from $7.3 billion in 2001 to $5.4 billion in 2002. And by the start of 2003, company executives were forced to hammer out a viable defense strategy.
“This was one of the biggest challenges that Microsoft has ever faced,” explains Martin, then-director of business, working directly for Microsoft CEO Steve Ballmer. In his 10 years at the company, Taylor had moved up the ranks and was responsible for all sales, marketing, consulting, business development, and operations for all of the Caribbean. During his tenure, the subsidiary more than doubled in overall headcount and revenues grew 55%. Taylor had an idea of how to regain the company’s position in the marketplace, but had anticipated early on that it would not be an easy sell.
“I knew I’d have to go up against some of the pioneers that had been at Microsoft for 20 years and that they might not all agree with me.” His plan would have to be supported by extensive research. To make his point, Taylor had to present to several levels within the organization. “I had multiple layers of selling to do,” he explains. “First I had to get Steve on board then I had to present my plan to the worldwide senior leaders.”
Taylor employed top research companies, such as Yankee Group and Security Innovation, to develop studies that looked at the total cost of ownership, reliability, security, performance, interoperability and overall partner success of Linux. He also knew that Linux customers had to be handled carefully. Many of them were very passionate about and loyal to the technology. He used all the information he gathered to develop a plan that included a description of the integrated Microsoft platform, how it compared with Linux, how it fared in research studies, the size of his team, and a strategy to win new business. The solution was the creation of a companywide infrastructure, team, and strategy to ensure that all of the company’s products met customer needs and growing trends more efficiently than competing alternatives.
“Even with the research data,” Taylor continues, “there were some heated debates because everybody believes they can do it better than you. Even after the meeting, Steve got several e-mails saying ‘We should not do this.’ But we pressed forward with the plan.” Taylor recalls that out of approximately 50 senior leaders, 15% to 20% were opposed to the idea and about 10% were on the fence. “Although I had Steve’s endorsement, I knew that if I failed it would be on me.”
Because of resistance from senior management, Taylor managed test runs before the official launch. It took six months to fully execute the plan. And then he was met with external opposition. Although he expected some resistance from senior leaders within Microsoft, he admits that he was surprised about the amount of resistance he got from the industry as a whole. “Our first client was 7-Eleven and the chief information officer said that people actually called him and threatened to never go into another 7-Eleven because the chain was not using Linux,” reveals Taylor. “Major researchers in the industry called me and said that they would never do another study for me again because of the industry backlash.” As a result, many employees on Taylor’s team became disheartened.
“We just had to ride it out and respond by doing more to inform the industry about the shortcomings of Linux and traveling the world with the research we had,” says Taylor. These challenges led him to develop trial software applications, which were distributed to consumers to encourage them to experience the difference between Microsoft and competing products. He launched a Web page called “Get the Facts,” which compiled studies and reports, provided client case studies, and illustrated all the pros and cons of both Microsoft’s product and Linux. For example, studies showed that Windows servers recovered 30% faster from security attacks than Linux servers, and survey respondents found a 100% improvement in Microsoft’s security in the previous 12 months. Eventually, clients started to see the cost benefits that occur over time, and as more clients came on board the research companies felt encouraged.
Gooden first faced a learning curve. She was not familiar with writing proposals, developing the cost and submitting a bid for a desired contract—a major component of her new responsibilities. Her first hire was someone experienced and adept at writing bids. “We won our first two jobs with the Social Security Administration very easily,” she boasts. But Gooden admits that her first major challenge could have ended it all. “As soon as we felt we understood the market and knew how to execute a successful bid, the one thing we had not counted on occurred—the market changed. Instead of writing a proposal and waiting for the customer to answer, we were required to give oral proposals,” recalls Gooden. Her team was unprepared for the change. They lost their first oral proposal.
“I learned that you have to pay attention to the changes in legislation but also to changes in the market that you’re working in,” she explains. Gooden became more focused on internal, external, and customer changes throughout the entire industry. “We won our second oral proposal. And we learned a hard lesson,” she adds. “Change is constant. In business the strategic advantage is usually fleeting and so you have to always adjust.”
RISK OVER REWARD
Of course if the business model is accepted by senior management, the result is often a new division or subsidiary. There are obvious benefits for the company—increased market share and
‘s really a source of pride, it’s a resumé builder, it plays to the high visibility level and can catapult your career.”
With all the benefits, however, there are a number of risk factors. Any mistakes or missteps will not go unnoticed, warns Hall. Depending on the company, failure could result in demotion or the loss of your job—and a tarnished reputation. There are also no guarantees. An employee is at the whim of an organization, says Pinchot. “Once a person comes up with an idea and gets the business up and running, the company may take it away and give it to [another employee]—someone they know better and trust,” he explains. One way to secure your place as well as your compensation package is negotiate everything up front, he advises. That’s what Gooden and Thomas did. Taylor’s expertise as well as his relationships within the company helped to solidify his position once the idea was approved. “I was working for the CEO at the time and I had a blend of the skills they needed to go do this,” says Taylor. “We needed someone who could move left to right across the company. Because of my time working for Steve directly, I learned how to navigate all aspects of the company. Because I had spent a lot of my time at the company in the field, both internationally and in the U.S., with large customers and small customers … and we needed to understand customer drivers around this, I had customer empathy. I knew how to talk to our executives and to our customers.”
Perseverance, flexibility, a solid work ethic, and heart were factors that made Gooden, Thomas, and Taylor successful in their endeavors. Building a business division from the ground up is hard work and many people are not cut out—mentally or emotionally—for the level of devotion required, says Watson. “It is a test of your mettle on whether you’re truly committed.”
INTRAPRENEURSHIP
Intrapreneurs are still employees of a company, but enjoy greater freedom to run a particular aspect of the company such as a new product line or subsidiary.
Intrapreneurs are chosen based mostly on corporate standards and not entrepreneurial success.
Intrapreneurs have some security in that the company will continue to compensate them even through challenging times.
Intrapreneurs are usually selected by a corporation and don’t have to worry about building the infrastructure (e.g. tech support, human resources, or accounts payable/receivables) to support their business.
ENTREPRENEURSHIP
Entrepreneurs are self-employed.
In crisis, entrepreneurs have nothing to rely on other than what they possess.
Entrepreneurs set their own standards for embarking on an idea.
Entrepreneurs build every aspect of the business and its support systems.
—Additional reporting by Glenn Townes & Tykisha Lundy