A bit of innovation and corporate entrepreneurship could keep your company from getting flattened in the future.

by Jenna Schnuer
April 2006

Chris Consorte had no intention of taking the job. After launching his own marketing agency a year earlier, he had accepted an interview with a mortgage banking firm to get a foot in the door and, he hoped, a new client. Then, as they say, they made him an offer he couldn’t refuse. “They were willing to pay me my asking price, [which was] more than I was making at my own company,” says Consorte.

But soon enough, the surprise cash cow offered Consorte even more than he had ever expected. The boss, “an intuitive guy,” saw that his fairly new hire wanted more out of his job and work life and started bouncing ideas for new products and divisions off of him. “It was a big thing for him where he wanted to give people opportunities,” says Consorte. “They were sort of embracing my salesmanship and entrepreneurship.” The best bit? His boss made it clear that he wasn’t just giving Consorte the chance to learn a new thing or two (and take on hours and hours more work), he was going to share the wealth if all went well.

Eventually, among other responsibilities, Consorte was made head of the firm’s internal advertising agency, where he was free to take on outside clients as long they weren’t competitors of the firm and it didn’t interfere with his full-time job. “I’m the type of person that if I have unlimited potential in front of me, I’m going to put in extra hours,” he says. “If it’s going to line my pocketbook, I’m in—especially if I can see the results.”

Corporate entrepreneurship isn’t just good for the employee’s bottom line. It’s become a must-do for companies that don’t want to get left behind. “I don’t think there are any companies right now who can afford to rest on their laurels,” says Rita Gunther McGrath, associate professor at the Columbia Business School and author of The Entrepreneurial Mindset (Harvard Business School Press). “As the pace of competition gets faster and faster, yesterday’s winner can very easily become tomorrow’s roadkill.”

Would you like a side order of Shrek with that burger? In 2005, McDonald’s Ventures, a wholly owned, entrepreneurial-minded subsidiary of the fast food giant, announced a program with Coinstar to add Redbox, a company that installs DVD rental kiosks in stores, to its ranks. The kiosks, which rent DVDs for just a buck a night, are already in 800 locations around the country, including select McDonald’s, and the company just cut a deal with food retailer Ahold to install the rental machines in Stop & Shop and Giant Food Stores throughout the northeast U.S.

Along with raising revenue through the rentals, the company hopes it will “increase foot traffic” at McDonald’s locations, says Simon Mak, associate director of The Caruth Institute for Entrepreneurship at Southern Methodist University’s Cox School of Business, adding that the machines are already beating early revenue forecasts.

The hardest part? Letting it take hold of a company. It takes “fire in the belly,” says Dr. Fred Kiesner, the Conrad Hilton Endowed Chair of Entrepreneurship and chairman of The Center for Entrepreneurship at Loyola Marymount University’s College of Business Administration in Los Angeles, adding that a lot of corporate types just don’t have it. “Companies say we want you to be entrepreneurial, but a big company has a terrible time letting an individual create something. They want to have committee meetings and group think stuff, so that nobody can be blamed if something goes wrong. By the time they’re through with your idea, it’s dead. They pay lip service to being entrepreneurial, but they don’t let you be entrepreneurial.”

But there are ways in, even at companies that seem entrepreneur-resistant. “Create a network of supporters, so you’re not doing this by yourself,” says Gunther McGrath. “Then create some success—even if it’s on a small scale.”

From the middle

While innovations are usually driven by the middle managers at a company, Gunther McGrath says senior-level executives must set a climate “that makes innovating desirable,” as well as a broad mission and parameters around the types of new businesses or ideas they want. Entrepreneurship doesn’t mean just boldly (and blindly) going where no staffer or executive has gone before. “You have [people at] desktop companies wanting to go into genetic engineering, and it’s not going to work,” says Gunther McGrath.

It’s also not going to work if the programs that come out of staffer ideas aren’t run properly. These programs often get started out of research and development, but they need to be run as a profit-and-loss center, says Denny Deleo, general partner of Pittsford, N.Y.–based venture capital firm Trillium Group and former Kodak executive who headed up the company’s venture program. “At Kodak, the process got started because the senior management felt there was a gap in their future revenue, and they were going to try to fill that gap by generating some candidates and planting some seed corn that would grow into new businesses,” he says.

But before managers—and staffers—embark on any type of entrepreneurship, it’s important to realize that some failures may (and, some experts say, should) pile up along the way. “An entrepreneur has to fail,” says Kiesner. “I teach failure. If you’re not stumbling and failing, you’re not doing what you’re capable of.”

“The key is learning to fail in an intelligent way,” says Gunther McGrath. “Keep your costs contained until you’ve validated your assumptions, [and] make it permissible to really extract lessons from failure and talk about them.”

Deleo doesn’t necessarily believe that failure is the best way to get going—especially for larger companies, where failure makes for good business and juicy stories for the business press. “I would argue you should be very careful about your early starts and try to make them successes, even if modest,” he says. “Instead of trying to hit a home run, if you can hit a few singles, people will say, ‘Ooh, that’s a very good start.’”

one size doesn’t fit all Not all staffers are made alike—and they shouldn’t be forced to behave like entrepreneurs if it’s not their way. Gunther McGrath recommends dividing your portfolio into three basic categories: core business that you “have to keep healthy”; the next big platform; and, finally, things that are uncertain because of technological, capacity or market dimensions. Then align your staffers’ skills and preferences with each of those areas.

Independence days

At Aflac—yes, the one with the duck commercials—it’s all about an entrepreneurial spirit. Each of the company’s 67,000+ salespeople is trained to think of her job as owning her own business. “When they first come to the company, they go through a series of training that takes them from sales skill to product knowledge, everything through to goal-setting and how to become a business owner,” says Kimberly Reynolds, senior manager of training development.

That training continues as they advance into managerial roles. Entrepreneurship has been at the heart of the company’s mission since the get-go. “It’s what the founders had in mind,” says Reynolds. “They were entrepreneurs themselves back in ’55.”

Reynolds says the push toward entrepreneurship—and a company-wide program of goal-oriented rewards throughout careers—helps keep staffers at Aflac for the long haul. “They see over time that they have really built something that is their own,” she says.

As for Consorte, though he’s no longer with the firm, it remains one of his clients at his Rego Park, N.Y.–based marketing agencies, Integrated Direct LLC and Integrated Interactive LLC. And he’s put lessons learned at his old company to work today, especially in helping his own employees make a little entrepreneurial magic. “If it benefits me, it should benefit them,” says Consorte.

Adds Gunther McGrath: “Companies are realizing you can’t shrink your way to greatness. You have to grow.”

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jenna schnuer is a freelance writer based in New York. Email Jenna at editor@executivetravelmag.com.