CHAPTER 1

The Demand for Intrapreneurs in the Age of Industry 5.0

Two decades from now, your company may not exist. That may sound like a downbeat assessment but I’m afraid it’s a statistical likelihood. Since the year 2000, 52 percent of companies listed on the Fortune 500 list have gone bankrupt, been acquired, or ceased to exist.

Just as startling is the fact that, in just 10 years, half of the companies currently on the Fortune 500 list will be replaced.¹ It’s a similar story with other leading share indexes. Back in 1990, the average tenure of companies on the S&P 500 was 20 years, down from 33 years for those founded in 1965.² It’s still falling. By 2026, it’s predicted that the average tenure of a company will be just 14 years.

This phenomenon is global and industry agnostic, and your organization is not immune. The question is: what will differentiate your organization from those that fail? How will it maintain its competitiveness and continue to thrive? The key is sustainable innovation. Only with innovation can a company constantly maintain its competitive advantage and grow its business.

Innovation is overused as a buzzword and the term itself can be very broad. People have tried to define it, however. When the entrepreneur and consultant Jorge Barba asked 15 leading innovation experts, they said that innovation involved new ideas, implementing them in a business, solving problems, and creating value for customers. My definition is slightly more precise. For the purpose of this book, I define innovation as the process of building a new product, service, process, or business model to create customer value.

Innovation is the ability to see change as an opportunity, not a threat.

—Steve Jobs

As an innovation practitioner, I have helped corporate leaders create value for their businesses by driving innovation. I have seen many of those leaders spend a tremendous amount on external consultants to create an innovation strategy, source new ideas, or organize innovation activities.

There’s certainly nothing wrong with hiring external help. But it cannot stop there. Innovation is not something that can simply be outsourced to external parties. What’s more, many leaders overlook one of the key assets of innovation they already have in their organization: their own employees.

By empowering your employees, you can drive innovation from within. Imagine that every one of your employees is a thought engine for your business, relentlessly exploring new value every day they come to work. Innovation at your organization would no longer be ad hoc; it would be continuous.

Employees who innovate are known as “intrapreneurs.” The origin of the word isn’t clear but it seems the idea was first mentioned in 1978 in a paper called “Intra-Corporate Entrepreneurship” by Gifford Pinchot and Elizabeth Pinchot. They were the founders of Pinchot & Co, a pioneering consultancy firm focusing on training for corporate innovation. In their work, Gifford and Elizabeth referred to intrapreneurs as “dreamers who do. Those who take hands-on responsibility for creating innovation of any kind, within a business.”

You’re familiar with the term “entrepreneur,” which defines someone who builds a new business and takes risks in the hope of making a return. An intrapreneur is an employee who takes on the challenge of building new solutions or business models. They act like entrepreneurs while working in an organization.

In this book, we will discuss the importance of driving innovation via intrapreneurship and guide you on creating an ecosystem to cultivate it. This book will help you identify the resources you already have in your organization and where the gaps are. You will discover which employees have the potential to help your company thrive and the mindset, skills, and capabilities they need to become intrapreneurs.

Based on my experience and the knowledge of corporate innovators across industries, this book constructed a formula for you to successfully build the right culture. You will need to invest in the right inputs to form an ecosystem that results in sustainable intrapreneurship. We will discuss what the various inputs are, what they do, how to build them, and how to measure the outcomes.

Corporate Versus Startup Innovation

Entrepreneurship is the process that turns those ideas into actual innovations, and when it occurs in large corporations we tend to refer to it as intrapreneurship or corporate innovation.³

—Dr. Tomas Chamorro-Premuzic

Innovation in corporates versus those in startups looks quite different. The major difference is due to the presence of an existing business. Because of that, the challenges that startup founders are facing are vastly different from those of intrapreneurs. That explains why the ways how startup founders solve things may not always work best for intrapreneurs in corporates.

In a startup, innovation is a spontaneous process that happens continuously through a few passionate people bouncing ideas off each other, prototyping, and developing until it works. It is a trial-and-error process. Founders of a business know that struggle. They are facing extreme challenges including lack of funding, resources, and network. Starting from scratch, startup founders might not find themselves struggling with existing legacy, corporate strategy, and red tape. They are freer to imagine the future. They are also relentless because until the business is launched and takes flight, there is no return.

It is not the same in a corporate. Innovation in a big, complex organization is hard, in a different way. Employees are not hired to take risks but to execute and manage. The majority do not have innovation as their job scope. Trial and error might not be rewarded because the company hired you to do what you know, and so you do it the way it’s supposed to be done. There are often established policies and procedures to avoid errors. Anything outside of the framework is seen as a deviation that might put the corporate at risk. Innovation is often something new being explored that does not sit well with the existing framework. For that reason, supporting innovation requires a long-term commitment from all levels, the redesign of processes and mechanisms, and disciplined execution. Without the right culture, skills, and infrastructure, innovation won’t just happen. Figure 1.1 shows a comparison between corporate innovation and startup innovation, ranging from the types of founders to the bureaucracy they face.

Figure 1.1 Comparison of corporate innovation versus startup innovation

Of course, you could always spend millions of dollars to get consultants to innovate for you and integrate it in-house. However, it is costly and not sustainable. The truth is that you have one of the strongest assets already: your employees. They are the ones who know your customers, business, strengths, and weaknesses. They know where the problems are and sometimes the solutions too.

Corporate leaders need to develop a pipeline of intrapreneurs who will innovate with new ideas and businesses. This book will provide a guideline on how you can achieve it. But first, let’s take a short detour to examine the complex and rapidly changing environment in which innovation will take place.

Moving From the Industry 4.0 to the Industry 5.0

At the start of the 21st century, corporates have been busy dealing with a digital revolution that’s often called “Industry 4.0.” First introduced by Klaus Schwab, executive chairman of the World Economic Forum in 2015, its foundations were outlined in his subsequent book, The Fourth Industrial Revolution.⁴ Industry 4.0 refers to technology that combines hardware, software, and biology and emphasizes advances in communication and connectivity.⁵ It emphasized the interconnectivity of the machines, which increases efficiency and transparency in the workplace. The interconnected machines enabled the capturing and analysis of data of the end-to-end process. With the help of data, it allows decision makers to make better and quicker decisions and increase overall productivity. Given the abundance of data and the machines’ capability to receive signals and react, the human’s role shifts from an operator of machines toward a strategic decision maker and flexible problem solver. During Industry 4.0, emerging technologies including artificial intelligence, robotics, the Internet of Things (IoT), blockchain, and virtual reality (VR), and crypto have gained popularity and have been more widely applied in the world.

Industry 4.0 has already caused a drastic change in the business environment. Blockbuster versus Netflix is often cited as an example of how technology and a new business model can disrupt an industry giant. Blockbuster was the champion of video rental companies throughout the 1990s and early 2000s. At its peak, it had more than 9,000 brick-and-mortar stores globally.⁶ But Netflix’s cofounder, Reed Hastings, identified a customer pain point. Customers did not like paying late fees, which was one of Blockbuster’s biggest revenue streams.

Netflix was launched in 1997 but did not take off immediately and Blockbuster did not consider Netflix as competition. In 2000, Hastings proposed a partnership but Blockbuster declined. But technology and business models soon changed. In 2007, Netflix transitioned from DVD shipments to online streaming. This led to exponential growth in subscriber numbers while Blockbuster struggled, eventually filing for bankruptcy in 2010. The Blockbuster versus Netflix example is one of the biggest nightmares for any corporate leader.

Blockbuster management was not visionary enough to see the opportunities in partnering with Netflix. On the other hand, I wonder what would have happened if an employee of Blockbuster had come up with the idea of online streaming. Would Blockbuster’s management have acted on this breakthrough idea by recognizing its potential and helping the intrapreneur experiment and develop it? It could have been a whole new business model that kept Blockbuster in the game. But Blockbuster probably wouldn’t have done it because it lacked the intrapreneurship formula to make it happen. And yet, Blockbuster was a profitable business for more than 20 years before it went bankrupt.

The pace of technological advancement back then was slower. Corporates nowadays might not have the same luxury of time. The change to digital technology has accelerated in the last two years and corporates are facing a more rapidly changing market environment than ever.

In the second decade of the 21st century, we have already set one foot into the era of Industry 5.0. Entering Industry 5.0 does not mean Industry 4.0 becomes redundant. We have to understand that Industry 5.0 is complementary to Industry 4.0. Industry 5.0 is the age of personalization, based on the digitization achieved in Industry 4.0. Industry 5.0 is putting humans at the center of focus of all technological advancement. While Industry 4.0 asked how can we digitize everything and make it seamlessly efficient, Industry 5.0 asks how can these digitized assets help humans bring more personalized services, build customized solutions, and create innovative experiences.

Industry 5.0 has a few key aspirations:

• Design of human-centric solutions: Leverage technologies to solve problems with a human-centric approach, to create the best experience for humans. It looks for solutions that build synergy and harmony between humans and machines. Robots are now shifting to “Cobots,” which mean robots that collaborate with humans.

• Hyper-personalization: Data, once trapped in silos or not captured to detail, can now be collected, unified, and transformed into actionable insights in real time. Personalization increases complexity during the production process. However, with the automated, agile, and flexible production achieved by Industry 5.0, the highly personalized product can be prototyped within a short turnaround time.

• Focus on sustainability: Industry 4.0 did not have a strong focus on environmental issues. Industry 5.0 seeks better technological solutions to achieve environmental protection. It leverages automation and artificial intelligence algorithms to increase sustainability in production processes.

The foundation of digitalization gave birth to vast opportunities for innovative products and services that can be produced on a mass scale yet unique to customers. Industry 5.0 aims not only to improve efficiency and transparency, but also to create a better quality of life for humans. It enhances the human factor of business, in terms of both customer services and operational processes.

Industry 5.0 Accelerated

There’s no doubt that the world has changed since 2020. The impact of the coronavirus pandemic was felt around the world. As of March 2022, there were more than 456 million confirmed cases of COVID-19 and more than 6 million lives lost.⁷

The pandemic changed how we work, learn, travel, and interact with others. During the lockdowns and circuit breakers, outdoor activities were restricted and those who had safety concerns also opted to stay home. A year after the first outbreak, 56.8 percent of the U.S. workforce was working remotely, at least part of the time.

To stay connected with the external world and manage their daily lives, many sought to leverage technology:

• Remote work infrastructure. People who work from home rely on digital and video conferencing tools to stay connected with colleagues, collaborate, and get their work done without physically meeting.

• Online shopping. Many had to rely on online e-commerce to purchase groceries and necessities for daily life during lockdowns.

• Contactless takeaway. During the period when no dine-in was allowed, people ordered takeaway by digital means for either self-pickup or delivery.

• Remote learning. Students attended virtual classes from home.

• Virtual fitness. With the closure of indoor gyms and sports facilities, people exercised from home. Home-gym apps and online fitness classes gained traction.

• Cashless payment. Without visiting physical venues, most payments were made digitally. People used more cashless means, including credit cards and e-wallets. Merchants are moving their sales online, creating more demand for digital methods of collecting payment. Even in physical stores, due to hygiene concerns, people preferred contactless payments (e.g., pay-Wave and QR codes).

• Online entertainment. Some 33 percent of Americans ranked streaming as the most important digital service during the COVID-19 lockdown, according to a survey by ExpressVPN. Of U.S. Netflix subscribers, 40 percent signed up for additional streaming services since the start of pandemic lockdowns.

Technology adoption will only accelerate as consumer behaviors change. Populations around the world, not just the born-digital generation, are getting into online retail, online payment, online entertainment, and more.

Corporations Need Innovation for Growth

In the age of Industry 5.0 and a pandemic, innovation is more critical than ever. It’s not surprising that innovative companies outperformed their peers by around 10 to 20 percent in shareholder returns, both before and during the COVID-19 downturn.

Many companies have realized that now is the time to take action. This is reflected in a recent survey of companies’ ability to adapt to the uncertain environment created by COVID-19. In its May 2021 report, “The Race for Innovation,” Boston Consulting Group (BCG) reported that 75 percent of companies had made innovation a top-three priority for 2021.⁸

The fallout from COVID-19 is set to fundamentally change the way organizations do business over the next five years. This was the view of more than 90 percent of executives in a recent McKinsey study of 200 organizations across industries. Almost as many executives asserted that the crisis would have a lasting impact on their customers’ needs.⁹

However, many saw opportunities too. Figure 1.2 shows that among leaders of various industries, more than three-quarters agreed that the crisis would create significant new opportunities for growth, with varied results in different industries. Take, for example, the technology industry: 85 percent of the executives expect the COVID-19 crisis to be a big opportunity.

It’s clear that innovation is one of the key success factors that enable organizations to sail through crisis. In past crises, companies that invested in innovation delivered superior growth and performance in the aftermath.

In its report, McKinsey reviewed the market capitalization of the World’s 50 most innovative companies recognized by Fast Company, both during and after the 2009 financial crisis. Based on Figure 1.3, these companies not only outperformed their peers by 10 percent during the crisis, but also outperformed the market by 30 percent in postcrisis years.

Unfortunately, many corporations had to focus on business continuity during the pandemic instead of innovation. Executives must indeed weigh cutting costs, driving productivity, and implementing safety measures against supporting innovation-led growth. However, in the long run, given the change in consumer behaviors, technology advancement, and intensified competition, corporations will have to build a consistent innovation focus to create and maintain their competitive advantage. If you are the leader of a large organization facing disruption, your company’s survival will depend on innovation. In turn, innovation will depend on your ability to harness the power of intrapreneurship. The time to act on this is now, before it is too late. Intrapreneurship is gaining in popularity due to accelerated changes in the market landscape. And yes, building this talent pipeline should keep you awake at night. Big tech giants like Facebook, Google, and Amazon have strong intrapreneurship cultures that make the majority of their employees intrapreneurs.

Figure 1.2 McKinsey Innovation Through Crisis Survey 2020

Source: mcKinsey Innovation Through Crisis survey, april 2020.

Figure 1.3 McKinsey Innovation Through Crisis Survey 2020

You might not see the immediate threat from this. Nor will you see an immediate return on investing in intrapreneurs. But compare a corporate that has only a handful of employees innovating to competitors that have the majority of employees innovating all the time. Which will still be in business and thriving in the next 10 years?

By now, I may have convinced you that you need intrapreneurs. So let’s examine what they do in a little more detail.

What Intrapreneurs Do for the Corporate

Intrapreneur should not be an assigned, full-time job for an employee. And it is not someone hired only to innovate new ideas. An intrapreneur can be anyone. Intrapreneurs are given access to resources and assets in the established business and some autonomy to explore new ideas.

Within these parameters, here’s how intrapreneurs should operate.

They Seek to Understand Future Megatrends

Intrapreneurs are interested in future trends in the market and businesses in general. They seek to understand trends on a large scale. They are good at taking in a lot of information and finding the relevant implications. They pick up signals showing where the industry is going and what competitors are doing. They expose themselves to external sources, including conferences, industry talks, and networking beyond the business, to proactively stay on top of the latest updates. They process information about the latest technology advancements to anticipate future changes in the business. They might see exciting trends that do not have an immediate impact on the corporate and sometimes are considered pure fantasy, as the trend is perceived to be so far away. Whereas most employees are saying “That’s not going to take place for another 20 years,” an intrapreneur will see it happening in five years.

They Analyze Problems In-Depth

Intrapreneurs look into the problems the corporate and the corporate’s customers are facing today. They observe customers in detail to understand what they desire and hate. They do not see a problem as a given and would raise an eyebrow if they heard people say “That problem has been there since day one and it is how it is.” They care about the problem they observe and have empathy with those experiencing it. They dissect the problem from various angles before jumping to solutions. They identify the pain point and try to understand the reason why it happens, where the friction comes from, and what it costs the users.

They Bring Big Ideas With Business Opportunities

Using the insights they have drawn from the problem, intrapreneurs brainstorm not only one or two but many alternative solutions. They would not limit themselves and would gather all possible solutions. Then they would evaluate which option is best. They are interested in big ideas that would solve the problem, delight customers, create value, and change the game. They are sufficiently savvy in business to apply a commercial angle to the solution.

They Execute and Deliver

Big ideas without execution are just thoughts. On the contrary, intrapreneurs are doers. Once they find a solution, they move on to an execution plan and relentlessly pursue it. They are extremely persistent and do not take no as an answer. They would form their team and gather resources by influencing others. They are good at removing roadblocks during the execution stage. They have a clear vision in their mind of what the outcomes would look like and what it takes to get there. They are strong performers who deliver results and will not stop until the results are realized.

Successful intrapreneurship can benefit the corporate in unexpected ways and make a tremendous impact on the business.

Who Are Intrapreneurs?

Not everybody can be an intrapreneur. Intrapreneurs are people with a strong entrepreneurial mindset who are attracted to the idea of building a business. People with a strong entrepreneurial mindset do not often find themselves in a corporate. They like to explore freely, and they might not fit in with established workflows and systems. On the other hand, most employees do not join a company to create something new. Some 90 percent of employees simply do execution work.

It’s also the case that intrapreneurs are not simply entrepreneurs who happen to work in a corporate.¹¹ Successful intrapreneurs need the drive to build a new business within the corporate and to navigate the complexities of the existing business. They have to be able to align with the corporate mission and strategy, navigate the politics when approaching senior leaders for sponsorship, and lead disciplined innovation practice (which is usually not the practice of the mainstream business).

An intrapreneur, then, is a refined version of both an entrepreneur and a corporate-savvy individual. Talents with intrapreneurial potential are scarce. They have some traits they are born with, and most can be learned. Later in this book, we will discuss how you can identify potential intrapreneurs and the skillsets they need for success.

Potential intrapreneurs come from all generations and backgrounds. Many would have believed that more senior employees are better intrapreneurs, given their expertise and experience. Knowledge and experience indeed play a major role in understanding the problem and finding the solution. However, your potential intrapreneurs can also come from less experienced talents, who are millennials and Gen Z employees in the workforce. Millennials have gone through the transition from the early stage of the Internet to an all-digital economy. They know what change is like and have seen it done. Gen Z was born digital and they expect everything in their life to be designed digitally. The following are further reasons why millennials and Gen Z employees are likely to be potential intrapreneurs:

They have been inspired by innovation brought about by technology companies. They saw how tech companies like Apple, Google, Facebook, and Amazon achieved great business success within a short timeframe. Many are inspired by the way these companies transformed our lives. The products and services these companies created and delivered have changed customer behaviors, including those of millennials and Gen Z. They are constantly comparing the standard of experience they get from these companies to any other product or service they get.

They are seeing the booming startup scene. Some of their peers are founding startups, joining startups, or shifting to join startups. These new companies provide an opportunity to leapfrog established companies and the potential to change the world. Those who join corporates want to experience the same “cool” things as their peers inside startups.

They are highly adapted to digital. Millennials have seen the digital transformation and Gen Z was born digital. They are exceptionally comfortable dealing with technology. Give them a well-designed digital product and they would be able to navigate it without an instruction manual. They are familiar with digital means of communication, entertainment, and work. They have instant access to limitless data and information via the Internet and social media.

Intrapreneurs are most often not at the top of the hierarchy; they could be spread across various levels and departments. Leaders need to find them, nurture them, and support their development to help the company innovate. But they are mostly overlooked by corporates, and this is a problem. If you can’t create the right environment and structure for them to work in, you risk losing talent. Intrapreneurship was named the most desirable skill for 2020 by the global recruitment specialist Michael Page and high-growth companies are hungry for them.

Who Are Not Intrapreneurs?

We have discussed how technological advances are driving the trends of Industry 5.0. However, technology is only one type of innovation. It does not mean that intrapreneurs are technologists or researchers who only work in the research and development department.

Imagine that you are a skilled researcher and you know about the research work or the model that you are running inside out. You do your most productive work in the lab and you’re driven to solve a particular problem. The moment people take you away from the laboratory and talk about using the technology for profit, you consider it beyond your scope. You cannot wait to go back to your actual work!

These persons may be fascinated to discover how science works, but it is obvious that they are not interested in building a new business out of it. It is not hard to see that this individual will not be motivated to become, or excel in being, an intrapreneur. There is nothing wrong with people following their hearts, doing what they are motivated to do. There is ample room for technologists to grow within their domain in a corporation.

Intrapreneurs might also not be the same people as high-potential leaders (Hi-pos). These are high performers who you identify as pipeline candidates for critical leadership roles like the C-Suite. Hi-pos and intrapreneurs indeed have many similarities in terms of mindset. They are high achievers and have a strong business sense. Hi-pos often have strong people-management skills and are put on the track to lead a large-scale corporate. On the other hand, an intrapreneur might not need to lead a large team. Innovation could, and usually does, happen faster in a team of a few driven people.

One key characteristic that distinguishes Hi-pos and intrapreneurs is their entrepreneurial spirit. While Hi-pos have to be comfortable managing an established large-scale corporate, intrapreneurs have to be comfortable dealing with the uncertainty and ambiguity of experimenting with new solutions.

Both Hi-pos and technologists can be potential intrapreneurs, given the right training and mindset shift. The point is that just because someone is tech-savvy, is a high-potential leader, or has deep-tech domain expertise, it does not mean they will make a great intrapreneur. Intrapreneurs can come from all domains and do not necessarily need a technology background. But they do need to be tech-savvy in the way they appreciate the technology, understand the concept, and see the potential business implications and risks.

How to Use This Book

Intrapreneurs are highly scarce, and they operate on different expectations compared to execution staff. They are full of ideas and seek satisfaction in creating change by realizing their ideas. You will lose intrapreneurs if your corporation does not allow them to create new things or businesses. That means your corporate will lose out, due to a lack of competitiveness. You will miss the business opportunities that intrapreneurs could have brought you. Alternatively, if you invest in intrapreneurs, they will pay your corporate back with a new product, solution, or business that justifies the investment. This book provides a framework and structure to help you identify and groom intrapreneurial talents to create new value. It will help your organization thrive and intrapreneurs to reach their full potential.

Sometimes, corporate leaders ask: “Will intrapreneurs ruin my business by taking too many risks?” No, they won’t if you create the right ecosystem. This book will help you understand the components you need to build to help intrapreneurs grow without compromising productivity or risking your existing business. Innovation is an investment that requires commitment. Investment comes in the form of not only money but also effort from corporate leaders. If you don’t have an ecosystem to support intrapreneurial talents, they will eventually leave to seek a viable environment in which they can thrive.

Make use of this book to create a pipeline of intrapreneurial talent and continue to upskill them. Work with your HR department to design an end-to-end employee journey for intrapreneurs. HR recruitment professionals need to know the importance of having intrapreneurs in the organization because they are the fuel that creates a future for the business. Corporate leaders and HR departments should join forces to transform the process of identifying, recruiting, and retaining intrapreneurs. Most of today’s recruitment tools, including the aptitude test and interview methods, might not fully measure a candidate’s level of intrapreneurship. Most do not even discover a candidate’s entrepreneurial spirit, which is understandable. After all, if the person is so entrepreneurial, why would they come to interview for a job? But times have changed. Intrapreneurship is a new skill that is required for future corporates.

Throughout this book are assessment tools that you can use to evaluate your employees’ current skillsets, understand their strengths and weaknesses, and build personalized training roadmaps for potential intrapreneurs. One key to success is to group intrapreneurs into cofounder teams. By building diverse groups of intrapreneurs in your organization, you can complement their skills and multiply the effect. Intrapreneurs can be employees from vastly different backgrounds and this book will help you understand the various types of intrapreneur profiles and exactly how they complement each other.

On the other hand, potential intrapreneurs also need reasons to join a corporate. A stable job with a rigid routine would not appeal to them. This book provides guideline to HR directors on how to find potential intrapreneurs, how to attract them to work for the corporation, how to train them with essential skills, and how to keep them motivated.

Finally, this book will discuss the pitfalls that can stop intrapreneurship and the boosters that can accelerate it. Take note of these practices and fill the gaps to ensure that your investment in innovation is not wasted.

In this chapter, we’ve seen how intrapreneurship is vital for driving innovation and innovation is crucial to the survival of corporations in the age of Industry 5.0. In the next chapter, this book will give you tools for assessing the level of intrapreneurship and the potential talent in your organization and practical advice on devising a customizable action plan.