WHY COMPANIES ARE BUILDING CORPORATE GARAGES
Large Firms Are Incubating
Ideas From Their Staff To Foster Innovation, Fight Attrition & Stay
Relevant
When Mahindra Group
chairman Anand Mahi ndra recently tweeted about corporations incu bating
startups, he was, in fact, putting his mouth where his money already is. The
`intrapreneur' idea is one that the $17-billion SUV-to-software group is
committed to -first through in-house private equity arm Mahindra Partners, and
through the `corporate garage' concept.
Set up in 2009, Mahindra
Partners is a $900 million private equity business, which has invested in 10
group companies from retail to vocational training, boat-building to film
making. Now, under the corporate garage concept, the group is incubating
startup ideas from its own employees. The first of these -an app called
SmartShift, which helps cargo owners connect with transporters -has been
launched and more are on the way . “Undoubtedly we are going to see an
explosion of entrepreneurship led by young talent,“ Mahindra told TOI.
“However, these startups will inevitably face challenges when trying to scale
up. Established corporations face the prospect of becoming bystanders as this
revolution of innovation occurs in front of their eyes. But if they can create
an internal ecosystem that attracts and retains this burgeoning tribe of
innovators, then it is precisely these large corporations that have the
resources and embedded skills to manage growth successfully .“
Mahindra isn't the only
large corporate betting on `intrapreneurship'. Last year, Nasscom launched an
Industry Partner Programme roping in 20 companies, including Google, Amazon,
Microsoft, IBM, Accenture, Dell and Wipro, to help startups by sharing employee
expertise, customer access and developing joint solutions. Ravi Gururaj,
chairman of Nasscom Product Council, said: “Large companies encouraging
`intrapreneurship' want to accelerate innovation and rapid
experimentation.Second, they want to motivate and retain talented employees,
who might exit the company . Third, they want to realign internal culture
towards a more agile mindset.“
Not surprisingly , the
incubation idea is already trending in Silicon South. The Tata Group, for
instance, runs Tata Group Technology and Innovations Office in Bengaluru under
Gopichand Katragadda, who is group CTO. Katragadda works with 50 employees and
runs the centre as an entity isolated from other group companies while deputing
engineers for various projects of all the group companies. “With the startup
boom, this is the best time to institutionalize intrapreneurship to channel our
talent,“ said Katragadda. “There are many technologies in which startups won't
have enough money to invest. That is where the role of larger companies comes
into play .“
Ditto for software giant
HCL Technologies, which has tweaked intrapreneurship into `ideapreneurship'.
HCL has a grassroots innovation platform that lets employees collaborate across
hierarchical structures to share ideas for clients to consider. With more than
22,000 employees engaged, the platform has generated 41,000 ideas for 450
customers.“This culture of ideation ensures that our employees are constantly
translating creativity into innovation, leading to customer growth and HCL
reinventing itself to be future ready ,“ said the company .
“Indian tech companies have
been slow in embracing intraprenruship,“ said angel investor Sharad Sharma.
“The startup boom has been good for intrapreneurs. If they don't get support
internally , they have the option to step out and become an entrepreneur. This
dynamic is forcing more and more big companies to create programmes for
intrapreneurs,“ he said.
CEOs say intrapreneurship
is the best means to make employees think beyond the daily grind. “With any
long-term business goal, it's easy to get bogged down by day-today tasks and
lose sight of the bigger picture,“ said Rajesh Janey , president, India and
Saarc, EMC. The company has a programme called Launchpad, which encourages
employees to come up with ideas and work with them to translate them into
products. The company also has an internal idea competition that has led to
several winning ideas being incubated and implemented as products, services,
and process improvements. “Encouraging employees to file patents is another way
of recognizing innovation and talent,“ added Janey .
According to the company ,
over the last three years, idea generation from EMC's India Center of
Excellence stands at around 30% globally . The India centre also piloted an
Asia Pacific crowd-sourced platform to incubate innovations. “We have put in
place defined mentorship programmes that help employees fine tune their ideas
to come up with winning propositions,“ said Sarv Saravanan, senior VP and GM
for EMC Centers of Excellence, Asia Pacific-Japan.
Experts say
intrapreneurship is critical both for home-grown companies and MNCs. “MNCs look
at ways to stay relevant to the global headquarters and intrapreneurship helps
them contextualize their products and services to the local market,“ said Nikita
Goel, founder of PurpleGull Services, a consultancy for startups to design
their innovation and growth strategies. Such strategies often turn into a big
revenue stream for many MNCs.
US-based BMC Software saw
three key products being developed in India from its intrapreneurship
programme. Its Cloud Lifecycle Manager product has generated millions for the
privately held company, said India CEO Tarun Sharma. “While the assumption is
that getting funding might be easy when you are inside your own organization,
it is much tougher and the employee has to go through severe scrutiny before he
she secures funding,“ added Sharma.
Sometimes companies use the
intrapreneur method to have small teams work preneur method to have small teams
work fast and independently . Online accounting software firm Intuit, for
instance, boasts `two-pizza teams' -creative groups so small that a couple of
pizzas are enough to feed everyone. It has a process to explore the viability
of a business to help employees channel their time and effort. One idea that
made it to the company's product was Beautiful Invoices, which lets clients
customize QuickBooks, the company's flagship accounting software. It was done
by engineers in India and funded by Intuit's business unit.
“Innovation cannot be
cultivated overnight. It is a natural byproduct of an organizational culture
that is based on rewarding risk-taking among employees and allowing them room
for experimentation,“ said Vijay Anand, MD, Intuit India.While Intuit is almost
8,000-people strong, it strives to work as a startup. “We try to celebrate the
failures that happen in our intrapreneurship cell,“ added Anand.
Of course not everyone is
an `intrapreneur' convert. Puneet Dalmia, MD, Dalmia Bharat Cement, who in his
personal capacity has invested in a slew of startups like Rapido, JetSetGo,
Prithu, Buildzar and LocalCircles, firmly believes it's best to keep startups
away from large organizations.“Startups need enormous ability to experiment and
fail quickly . They need quick decision-making. A successful corporation is
risk-averse, has too many layers of analysis for decision making to be really
quick, and is afraid to fail,“ he said. “Culture is the biggest stumbling
block.“
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Nandini
Sengupta & Anand J
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TOI1MAY16
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