Corporates talk about wanting to be innovative, agile and entrepreneurial. They use the latest start-up jargon. They run incubators, accelerators and competitions for entrepreneurs, but in the end they don’t value entrepreneurs. They want their reflected glory. but hate the idea of employing them.
Why is that?
Corporate leaders always claim that entrepreneurs don’t fit in. They don’t want a boss. They don’t want to worth within the constraints of a big company. It all moves too slowly for them. They will get frustrated.
But is their argument based on fact or just their own assumptions?
After all in today’s world, many entrepreneurs are highly flexible and adept at working with different types of people. And entrepreneurs always have a boss. This could be an investor, the bank, the Chairman or even their critical customers.
Earlier in 2016 I was at an London Business School event, where the Chairman of Diageo, Franz Hamer, was being interviewed. He said that Corporates needed to become more entrepreneurial, but when i asked him, why then, Corporates didn’t hire entrepreneurs, he was unable to give a convincing answer. He said that they don’t fit in. They want to be elsewhere. But he also admitted that they didn’t actually hire entrepreneurs, so it was an unsubstantiated assumption.
If Corporates really want to innovate, they need to use the classic innovation technique of breaking assumptions. They need to challenge themselves to think differently about who they hire and how to create an environment where entrepreneurs are welcome.
There are 3 reasons why the Corporate could benefit from a change of heart:
- Organic growth is often the best way to drive long-term shareholder value. Corporates know this and run innovation pipelines to deliver these. But they use the same employees to do this. Even the supposed “Intrapreneurs” are generally standard Corporate employees. They often lack the brutal and necessary pragmatism, energy and lateral thinking of the entrepreneur. If Corporates want better percentages for their innovation, they have to change the people they use to drive their growth.
- Start-ups within Corporates and small and medium sized acquisitions by Corporates tend not to add the value that they were supposed to or merely allow the value to dissipate externally. Unless Corporates are prepared to parallel track younger businesses with entrepreneurs, over a longer period of time, they will miss out on this classic route to value creation.
- Corporates spend a fortune on hiring expensive external consultants to solve problems that entrepreneurs could solve for them at a fraction of the cost.
Corporates need to re-examine their outdated assumptions about entrepreneurs.