Way back in the early eighties, I was privileged to be part of the original IBM PC development team, led by Don Estridge. He was a great leader, and one of very few who have even been able to dent the barriers to real change in a large corporation. We struggled with the differences between intrapreneurship and entrepreneurship, and I learned much about both.
For example, even though we were leading an entrepreneurial effort within IBM, we found it a challenge to deal with the inbred mainframe culture, reverence for process, and accounting practices of a large company. Despite a valiant effort, we only briefly succeeded in putting IBM in the personal computer business, but our efforts changed my view of entrepreneurs forever.
We all watched as several strong-willed entrepreneurs of the day, including Steve Jobs, Bill Gates, and Ed Roberts, without constraints, really drove the industry and changed the face of computing. For IBM, the Personal Computer was a paradigm shift from their big business legacy, built with new technologies for totally new markets, and battleships turn very slowly.
I’ve often asked myself why intrapreneurs like Don Estridge and peers from CDC, Burroughs, UNIVAC, and Wang are not household names today. They had the huge financial and technical resources of a large company, and they had the right dreams, but they also had a set of challenges that most entrepreneurs don’t have to deal with:
Team members are not selected based on entrepreneurial acumen. Typically, team members must be sourced internally, with their performance and credentials based on prior corporate assignments and relationships. No consideration can be given to experience running a startup, breadth of skills, or even thinking like an entrepreneur.
Partnering with outside entrepreneurial efforts is discouraged. The culture of a large technology company is to rely on internal development or large, stable, and proven external vendors. Dependencies on entrepreneurial efforts, like Microsoft and Intel, were frowned upon, no matter how innovative or relevant. Every such deal was an exception.
Key operational and pivot decisions require corporate approval. Like startup investors several layers deep, parent company executives often demand approval rights and exert their power, without understanding the issues of starting a new business. Required pivots and budged changes are painfully slow and over-analyzed.
Compensation and support carried the corporate burden rate. The burn rate was extremely high, with no one working for equity or deferred compensation. Legally and culturally, benefits, facilities, and work schedules for intrapreneurs have little flexibility. The alternative of an early spin-off from the parent with no return path was unthinkable.
Measurements set on internal objectives, rather than market traction. In enterprises, performance objectives are usually tied to internal processes, rather than beating competitors, customer acquisition, and revenue growth. This approach, when applied to a new venture, often actually inhibits progress and market penetration.
A single-minded focus and commitment is hard to maintain. In a corporate world, a small effort like the IBM PC was just one of hundreds vying for attention and resources. It’s easy for top executives to get distracted by the latest challenges or new opportunities. Intrapreneurs have a double visibility and selling challenge, both internally and externally.
Corporate entities operate under strict competitive and accounting rules. For example, IBM was always under scrutiny for potentially impacting small competitors, equitable contracts, and meeting the reporting and disclosure standards for public companies. Internal legal reviews and required new processes were slow to finalize.
Even with these extra challenges, the IBM PC was developed and delivered in eighteen months – at that time faster than any other mixed hardware and software product in IBM’s history. This was done while breaking all the rules for using outside vendors, and publishing all the interface specifications for the first time, leading to a booming after-market for external entrepreneurs.
That experience helped me to understand the excitement, determination, and satisfaction of an entrepreneur, and it made me a better one when I later worked for and with several real startups back in Silicon Valley. But like most entrepreneurs, I’m still learning, and still anticipating the next round of technology and change. I still enjoy the journey as well as the destination.
*** First published on Inc.com on 10/24/2016 ***
Martin Zwilling is the Founder and CEO of Startup Professionals, a company that provides services to startup founders around the world. See more details at www.startupprofessionals.com