Difference Between Entrepreneurship and Intrapreneurship
This article is about the difference between entrepreneurship and intrapreneurship. It has been written by Russell Bowyer. Towards the end of the article is an info-graphic showing the seven differences between entrepreneurship and intrapreneurship.
I shall begin by explaining what an entrepreneur is versus what an intrapreneur is, before running through the differences between the two.
In the Oxford Dictionary, entrepreneurship is defined as ‘The activity of setting up a business or businesses, taking on financial risks in the hope of profit.’
Traditionally entrepreneurship has been defined as the process of designing, launching and running a new business. Entrepreneurs start businesses, offering either products or services, or both. They are innovative and creative and happy to break the norm.
An entrepreneur is a person who is typically more comfortable with taking risk. They have given up the ‘Security’ of a job to startup a company to employ staff. They have to be comfortable as a leader and as a manager of people.
The level of risk that an entrepreneur takes is very much dependent on the individual. But where an entrepreneur is comfortable with taking higher levels of risk, a small business can become a much larger organisation.
An entrepreneur is the person who brings the product or service into reality. Sometimes being the inventor, whilst other times starting a new business to provide an existing product or service, but in a better way.
At the point of writing this article Intrapreneurship is not defined in the Oxford Dictionary, but it has made its way onto Wikipedia. Wikipedia’s definition of Intrapreneurship is ‘The act of behaving like an entrepreneur while working within a large organisation.
Effectively, an intrapreneur is nothing but an entrepreneur within the boundaries of an organisation.
Intrapreneurship is where an individual integrates risk-taking within his corporate management approach.
Intrapreneur however is a term found in the Oxford Dictionary, and is defined as ‘A manager within a company who promotes innovative product development and marketing.’
Gifford Pinchot III’s first book in 1985 was called ‘Intrapreneuring: Why You Don’t Have to Leave the Corporation to Become an Entrepreneur’
The American Heritage Dictionary acknowledged the term 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.’
Intrapreneurs tend to take new initiatives without being first asked to do so. They tend to focus on innovation and on creativity, much like an entrepreneur.
So what is the difference between entrepreneurship and intrapreneurship?
1. Ownership of a business
The most obvious difference between an entrepreneur and an intrapreneur is ownership. An entrepreneur is an individual that starts up a business and is the owner. Whereas, an intrapreneur is an employee of the company and does not have any ownership. However, some employees, likely the intrapreneurs among them, may hold shares in the company they work for.
Ownership of a company gives the entrepreneur the ultimate control over what the business does. The Entrepreneur is the furthermost risk-taker of the business.
The intrapreneur may take ‘risks’ within the corporation where he works. However, the final risk comes down to the responsibility of the business owner. There is no actual financial risk taken by the intrapreneur.
The main difference between entrepreneurship and intrapreneurship is in the level of risk taken by the individual.
2. Financial loss
The ultimate sacrifice made by an entrepreneur is one of potential financial loss. Many times the entrepreneur will use his own money for his startup business. They will also use their own assets (like their own home) to secure loans to finance their small business.
An intrapreneur will not usually be in a position to raise funds for the organisation. The intrapreneur is therefore not risking any of their own money in any organisation they are involved with.
Entrepreneurs have been known to lose everything. This sometimes includes their home after their business has collapsed. Whereas, if a company fails, the intrapreneur can just walk away, so bear no risk at all.
Financial loss for the entrepreneur comes in two forms. Firstly, if the business makes a loss, and runs out of cash, the entrepreneur is the one who has to make up the difference. Secondly, where a company collapses and goes into liquidation, the entrepreneur could lose everything. This will depend on what monies are owned by the company, and what’s personally secured by the entrepreneur.
3. Financial gain
On the converse of financial loss, the entrepreneur is the one who will reap the rewards of success. This is two-fold. Firstly, where the company makes a profit, the entrepreneur will be able to reward himself with profits in the way of dividends.
Secondly, the final benefit to the entrepreneur is on the sale of the business. Where the organisation has done exceptionally well, the entrepreneur could be in for a significant gain from the sale proceeds.
It’s possible that due to the nature of an intrapreneur, they may have arranged a ‘profit share’ for themselves. This will mean they receive a reward for their efforts. However, this will always only be a share of profits. Which compared to the entrepreneur, who is entitled to 100% of the balance of the profits.
Also, the intrapreneur will not gain from the sale of the business in the same way. This is except where they have an agreement in place with the business owner to take a share of the proceeds at the point of sale.
The difference between entrepreneurship and intrapreneurship is. Without entrepreneurs there would be no intrapreneurs
All intrapreneurs are dependent on entrepreneurs in the first place to start the business. Without entrepreneurs there would be no intrapreneurs.
Good entrepreneur leadership will lead to having intrapreneurs within their business.
The initial spark or original genius is provided by the entrepreneur. Whereas the intrapreneur is responsible for keeping the fire going and for adding fuel to it.
5. Fund raising and capital
A small businesses survival can sometimes depend upon the entrepreneurs ability and willingness to raise funds.
There will be the initial startup capital, but most businesses go though a certain amount of ups and downs. In the downs, which usually involves cash flow problems, it is the entrepreneur, and not the intrapreneur that will have to come up with the funds.
Any capital needed by the intrapreneur is provide for him by the company (or by the entrepreneur).
Effectively the resources used by an entrepreneur are provided by him. Whereas the resources for an intrapreneur are already provided for him by the company.
7. The ultimate say
The butt stops with the entrepreneur and they have the final say in what happens within a business. So although intrapreneurs do tend to have a high level of autonomy and creativity, they are under the ultimate control and guidance of the entrepreneur.
Whereas the entrepreneur lives and dies by his sword. And there’s no decision that an entrepreneur can’t take within an organisation that requires approval. Whereas intrapreneurs are given certain boundaries to work with.
Below is an Infographic on the difference between entrepreneurship and intrapreneurship
Examples of successful entrepreneurship
There are many successful entrepreneurs around the world. Some more successful and well known that others. The one that stands out for me and is most note worthy is Sir Richard Branson. Branson founded the Virgin Group, which controls more than 400 companies world wide.
Sir Richard Branson – The Virgin Group
Branson became an entrepreneur at an early age, starting his first venture at the age of just sixteen. His first business was a magazine called Student. His first business led to a mail-order record business. The rest is history, as they say. His net worth at the time of writing this article is over $5 billion.
Steve Jobs – Apple Computers
The second entrepreneur that I think about is Steve Jobs. It is difficult to put the two words ‘Successful’ and ‘Entrepreneur’ together without putting his name in the list. Like many successful entrepreneurs, Steve Jobs dropped out of college and then went on to setup one of the most successful companies in the world Apple with Steve Wozniak.
Bill Gates – Microsoft Corporation
Bill gates is one of the most famous entrepreneurs of all time. At certain points the richest man in the world and worth in excess of $79 billion. He co-founded the worlds largest PC software company Microsoft, which revolutionised computers with the Windows system.
Examples of successful intrapreneurship
Whilst it would seem that the term intrapreneurship is relatively new, this is in fact the opposite, with the first example of successful intrapreneurship is at Lockhead Martin in 1943.
Skunk Works Project
Skunk Works created some of the most innovative aircraft models, including the P-80 fighter Jet. Lockhead Martin allowed Kelly Johnson (Skunk Works Founder) to work as an autonomous organisation with a small team around him.
In this case it was Larry Hornbeck who was the intrapreneur. Hornbeck changed the then video projector from what weighed as much as a small child and costing in excess of $15,000, to reduce it in size and cost. The Texas Instraments digital projector became the industry standard.
A more recent innovation by intrapreneur Paul Buchheit who created Gmail. Gmail revolutionised email at the time when Google introduced 1GB storage. This allowed users to keep their emails rather than having to delete them to keep within their smaller storage limit.
Other companies where there are inspiring examples of successful intrapreneurship include the likes of Shutterstock, Facebook, 3M, Sun Microsystems and a few others.
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