Innovation is key to success. We often see startups as hotbeds for innovation while larger companies are too mired in process, politics and regulations to innovate, preferring to simply buy startups with a good product.

But it does not have to be that way. Very large companies such as Google, Apple, GE, Lockheed-Martin and so many others make good use of intrapreneurs to innovate in a manner similar to startups, without as many risks.

Intrapreneurs share the thirst for exploration and strange waters that their entrepreneur cousins have, while also enjoying breaking the rules of the calcified organizations they work for. Back in the early ’80s, Apple’s Macintosh team took up the pirate imagery and followed the maxim “Better to be a pirate than join the Navy”. That same renegade spirit inhabit intrapreneur teams everywhere to this day.

What are intrapreneurs and why should you care?

Intrapreneurs are people inside an organization who act with the creative freedom and low red tape environment of startups. Intrapreneurs are most often used as R&D teams, but the mindset can be powerful even elsewhere in a company.

Any kind of companies can use intrapreneur groups. The idea is to create a semi-autonomous cell unaffected by the processes, politics and scrutiny of the rest of the organization. In essence, intrapreneurs give any company the best aspects of a startup. It is no wonder Lockheed-Martin maintains its Skunkworks experimental group since the ’60s despite following a very traditional manufacturing model for the rest of the company or for GE to swear by their FastWork teams to drive innovation while the rest of the company still follow rigid Six Sigma principles.

Find the right people

Not everyone can make a good intrapreneur. Most people who function well within a large company will have trouble operating as an intrapreneur, even if they believe otherwise.

The characteristics of a good intrapreneur are similar to those of a good pirate:

They crave freedom and brotherhood. Some people need to make their own way. Independence is a defining trait of an intrapreneur, but lone wolves will be a problem. You need to identify creative troublemakers with a knack for gathering like-minded people. They are your pirates.

They enjoy chaos. Good intrapreneurs focus on results, experiments and thrive on changes of plans. Routine bores them.

They’re not afraid to fight. Intrapreneurs will constantly have to justify their existence, fight for budget and even debate approaches within their group. Sparks will fly. That’s good. They need that energy.

They sail into storms laughing. Intrapreneurs will constantly face challenges, sometimes insurmountable ones. It is not enough for them to be unafraid of these challenge. They need to actually enjoy rough waters.

They deliver. For all their freedom and chaos, a pirate who does not follow the rules or does not deliver will end up marooned somewhere. Same goes for their captain: a captain who does not deliver on riches will face an abrupt change in management.

For many a manager, putting together a team of intrapreneurs will feel like gathering all the nightmare employees. Whoever will be their point of contact with the rest of the company needs to share at least some of the characteristics of intrapreneurs.

In all cases, avoid imposing the entrepreneur lifestyle to someone who doesn’t want it. Many workers today are creature of habit, order and comfort.

Give them what they need

Above all, pirates need freedom and the open sea. Your intrapreneurs are no different. You cannot force your intrapreneurs to deal with the typical processes and hierarchy of your company. They need freedom and space to operate.

Funding the team is an issue. As long as the team can deliver for the budget they are granted, they should be left alone. However funding the team in the traditional way will draw the attention of finance people. Finance requires order, has a low tolerance for the necessary chaos of the innovation process. If the intrapreneur team is in itself an experiment, then I recommend funding it off discretionary budgets.

It can be a good idea to set up the team in a different building so they are cut-off from unwanted attention and to make it very clear that the team exists in a pocket universe of sorts. It helps them focus and detach themselves from corporate habits that kill innovation. It also removes them from the scrutiny of envious co-workers, scheming executives and overzealous auditors. You do not want to attract the corporate immune response. The natural enemies of intrapreneurs are jealous people and bean-counters.

Finally they need to understand the best approaches for this kind of work. Agile thinking is highly recommended as it gives the right mindset to thrive in such an environment. Lean Startup is a lightweight exploratory process framework that fits perfectly intrapreneur teams as it mixes the chaos of exploration with just enough structure and discipline to produce valuable data and tangible results. Training in either, or better in both, does not take much time or budget. However, while these theoretical frameworks can be learned quickly, the real learning will be done in practice. Coaches are a good way to help new teams adjust to these radically different ways of working and can be a good investment to help a team pick up steam quickly.

Make them suffer a little

While it is important to give the team what they need, there can be a big difference between want and need. Intrapreneur teams do not need a nice office, brand new equipment or infinite budgets. Do not be soft on milestones either: People work better when some constraints are in play. They need to be creative to deal with these constraints and still produce what you ask of them. For having lived it a few time, I believe that the ambiance provided by squeaky chairs, second-hand tools and leaky pipes help feed the roguish adventurer vibe you will find in many startups. Think of it that way: If your people want to play pirates, they need to learn to live like pirates, scurvy and all.

It should not come as a surprise: the theory of constraints tells us that a reduced number of small limiting factors help us focus and achieve more. The key is to be able to identify constraints who will act as propulsors for the team and those who will be useless inhibitors.

Don’t pamper your intrapreneurs, but don’t torture them for no reason either. After all, you want them to succeed. Setting ridiculous deadlines and goals designed to be beyond the team’s reach, constantly shuffling the team’s composition, micromanaging the team or forcing them to multitask are not helping them in any way. These constraints only help an insecure incompetent boss feeling self-important.

Making them suffer a bit has the additional effect of deflecting attention from your intrapreneurs. Their position, even if they benefit from special treatment, will not seem enviable. Of course, your pirates won’t have it any other way.

Manage the system, not their work

It is extremely important that you do not try to manage either your intrapreneurs or their work. Let them self-organize. If needed, a training on agile thinking will teach them how.

What you need to do is create boundaries. Set some rules. Grant them a fixed budget and some milestones. Schedule regular presentations so they can show their progress. Beyond that, cut the red tape and get out of their way. Remain available in case you are needed.

These boundaries and rules create a platform to support their work. Change the platform if needed, but don’t bend those rules. Projects are expected to go over budget or to require more time. Innovation teams are usually under far more scrutiny than others and have to defend their very existence. While other groups can afford to be late or go over budget, your intrapreneur team cannot.

Again, the analogy with pirates can be useful here. Privateers for examples were pirates sanctioned by governments through letter of marque, legitimizing their activities as long as they restricted themselves to attack only enemy ships. The Republic of Pirates that thrived in Nassau in the 18th century is another example of how simple boundaries can allow highly individualistic teams to work for a common goal.

It is possible that at first your team will miss a milestone simply because they are not used to self-organizing efficiently and respect constraints. The team needs to understand that those light constraints are the price to pay for their level of freedom.

Give them clear milestones

An intrapreneurially team is not an out-of-view playground where people and money disappear to, hopefully, come out with something useful. Make sure intrapreneur are accountable for their work. “Success” in a team who’s devoted to experimentation is not necessary a functional product. Sometimes the only result will be learning quickly that an idea should be discarded.

Intrapreneur are accountable to answer three simple questions, who act as milestones. Those answers are “yes/no”, backed with explanation. A “no” to any of those questions means that this particular endeavour needs to stop right away.

It is important for the intrapreneurs to focus on one of these questions at a time, and in the right order.

Is it feasible? is the very first question to answer. The timeframe to get that answer must be kept relatively small, from two to eight weeks. “Yes” requires the team to have some sort of working proof-of-concept prototype. If after two months there is no prototype, it’s time to look elsewhere. That constrain can be adjusted but I advise to keep it tight.

Is it viable? Making a product commercially viable is the goal of a business. A process that creates diamonds from seawater in “only” 5000 years, a 3000$ disposable camera, an environmentally-friendly cleaning product using a manufacturing process with the carbon-footprint of a small country or super-silent break pads made of material that can only be mined on a asteroid can be valuable from an academic point of view, but are not viable from a business standpoint. This second questions should arrive quickly after the first.

Is it scalable? or can we turn a profit with it? Unit viability does not mean that it can be produced in enough quantity to be profitable at the business level. Scalable means different things for different businesses: an artisan bread-maker and a disposable plastic cup manufacturer will have wildly different interpretations of the word. But in both cases the question remains valid. If the business is not able to produce enough at a reasonable cost to turn a profit, then even the best of ideas is nothing but dead weight. Again, keep the time between the second and the third milestone question short.

It might sound counter-productive, but as a business you want your intrapreneurs to answer “no” to these questions. Each “no” is potentially millions of dollars saved on a product that will not be profitable. Every time they cannot answer “no” to any of those questions, then you have good potential product.

Once you get a “Yes” to each of these milestone questions, then it is time for them to build a complete prototype, so the kinks can be identified and smoothed, and potential risks clearly identified and remedied before actual production starts. The time required for this milestone will vary greatly depending of what you are building.

The time to sail is now

Intrapreneur teams are cheap and easy to set up, as they should. This means that there are very few risks in experimenting with them. Intrapreneur teams do not start perfect, and aside from Agile thinking and the Lean Startup process, there is little formal training that can teach them to run efficiently. Most of their processes will be learned by doing, so the sooner they start the better. There is no better time than the present.