An aspiring entrepreneur typically quits a day job before launching a start-up company. It is a risk that many corporate employees in India are embracing as the start-up craze spreads across the country. In a September 2007 report on the rise of the Indian executive, Boyden World Corp., a global executive search firm, lists first-generation entrepreneurs who have moved out of corporate jobs as among those most active on the country’s entrepreneurial scene.
Employers increasingly affected by this loss of talent are, in turn, seeking new methods to retain people bitten by the entrepreneurial bug. They are providing financial, legal and operational support to employees, termed “intrapreneurs”, who pursue new business ideas within the firms they work for.
It is a trend that has been successfully adopted by some of the world’s largest technology corporations, such as Intel Inc., Microsoft Corp. and Yahoo Inc.
Anil Paranjape, Intel’s Entrepreneur in Residence, has built a retail automation process which can help neighbourhood stores compete with big retailers. Intel has launched a pilot project in Mumbai to test Paranjape’s point-of-sale device. The company had launched an in-house incubator, New Business Initiatives (NBI), in the US nine years ago. This year, Intel will set up an NBI incubator in India.
Intel’s WiMAX and Visual Computing business units started out at the in-house incubator, New Business Initiatives (NBI), that was set up nine years ago in the US. This year, Intel will set up an NBI incubator in India, only the second such facility globally. “The focus of NBI is to incubate internal ventures until they are ready to graduate into an existing Intel business unit or emerge as a totally new business,” says Munier Shah, investment director, Intel New Business Initiatives.
Closer home, OnMobile Global, a mobile value-added services firm incubated within Infosys Technologies Ltd, the country’s second largest software services exporter, closed its initial public offer of equity shares in January 2008. When OnMobile was launched as an independent start-up more than seven years ago, Infosys provided the infrastructure and manpower support for a minority stake of 15%. “Although we do not as yet have another idea such as OnMobile to incubate, we are open to evaluating good business plans from employees,” says V. Balakrishnan, chief financial officer, Infosys Technologies Ltd, who feels supporting the entrepreneurial drive of employees is a good way to drive innovation and retain talented employees.
Such examples of “intrapreneurship” are a growing trend across different industry sectors. “There are talented individuals in large corporations waiting to be unleashed, and companies would do good by spotting them to drive innovation,” says Bhupendra Sharma, director and senior strategy consultant at the boutique consultancy firm, Erehwon Innovation Consulting Pvt. Ltd, who has worked with firms such as Mahindra and Mahindra Ltd, Tata Motors Ltd and Marico Industries Ltd to build innovation teams led by intrapreneurs.
Vijay Gaikwad (extreme right), who heads Zensar Technologies’ Technology Innovation Group, has built Solution BluePrint, a tool which automates the software engineering process. On the far left is Satish Joshi, delivery head for Zensar’s financial services vertical, who is taking Solution BluePrint to the market; in the centre is Ganesh Natarajan, deputy chairman and managing director, Zensar
In the technology sector, companies are adopting various models of intrapreneurship, ranging from the Entrepreneur in Residence programme at Intel India to innovation teams that build products at Microsoft Corp.’s India Development Center in Hyderabad.
Firms are also launching separate units to leverage intellectual property developed in-house, as in the case of Sasken Communications Technology Ltd, a Bangalore-based firm, which has partnered with venture capital outfit IDG Ventures India to set up a new start-up unit, ConnectM. The seven-month-old firm is building software products for use in the industrial and aerospace sectors, and was initially staffed by a team of Sasken employees.
With the parent company focused solely on developing software applications for mobile and landline communication, intellectual property (IP) with applications for other sectors ran the risk of being underutilized within Sasken. “I realized that we needed to build commercial applications for such IP and also motivate employees who had worked on these ideas,” says Rajiv C. Mody, chairman and CEO, Sasken, who mooted the idea of a separate company that could raise funds from an external investor to take such ideas to market.
Sasken Communications Technology has formed a new start-up unit, ConnectM, in partnership with venture capital outfit IDG Ventures India. ConnectM now has a team of 42 members; some of them are Sasken employees. Those who seeded the idea now hold an equity stake in the start-up. Sasken’s Rajiv Mody (left) and IDG Ventures India’s Sudhir Sethi with the ConnectM team
ConnectM has built a team of 42 members in less than a year of operations, with employees who seeded the idea now holding an equity stake in the start-up. “We have received proposals from at least nine or 10 companies which are keen to partner with IDG Ventures to set up such intrapreneur-led projects,” says Sudhir Sethi, founder, chairman and managing director, IDG Ventures, which invested half of the $6 million (about Rs24 crore today) seed capital used to set up ConnectM.
Sixteen years of designing microprocessors at the world’s largest silicon chip maker, Intel, had left Anil Paranjape restless. It was 2005, and start-ups were back in business after the dot-com meltdown. And Paranjape was keen to learn what it takes to set up a new business. But he had one factor to consider: He had just become a father—not the best of times to quit a well-set career in search of the unknown. So, instead, he traded his job as a senior design engineer for a position within Intel at the NBI facility in the US.
A year after sifting through ideas, Paranjape stumbled upon an incubation plan for an IT-enabled services project for small retailers in India. It was the moment he had been waiting for; he packed his bags and moved to India in mid-2006. As an Entrepreneur in Residence, he set about building a retail automation project that neighbourhood kirana stores could use to compete with retail majors. Early this year, Intel launched a pilot project, installing the point-of-sale (POS) device at small retail outlets in Mumbai.
Apart from inventory management and billing, this POS device also helps vendors display digital signage for localized advertisements and offer loyalty coupons based on shopping history. It took about $200,000 of seed capital to build the prototype, with Paranjape driving the development and marketing work as a hands-on intrapreneur. “Being part of a large corporation such as Intel helped open doors while I was trying to build marketing relationships with large consumer product companies and technology vendors,” says Paranjape. He will not, however, receive any founders stock or equity, as would an entrepreneur who builds a stand-alone business.
Srini Koppolu, vice-president and managing director, Microsoft India Development Center, leads a structured incubation group. The centre has developed the Microsoft BizTalk RFID, a device management and event processing platform that defines the standard for the way radio frequency identification (RFID) tags will be utilized by the end consumer
“Every time a person steps out from a corporation to build a business on his own, his risk quotient increases, and so does the financial reward if the project proves to be successful,” says Srini Koppolu, vice-president and managing director, Microsoft India Development Center, who leads a structured incubation group at the IDC centre in Hyderabad.
At the end of 2007, a core team of developers from this group developed a Radio Frequency Identification (RFID) software product that is now being tested in real-time situations in a retail company. RFID is an automatic identification method, relying on storing and remotely retrieving data using devices called tags or transponders. “This product will standardize the RFID market as Windows once did in the personal computer market,” says Koppolu, who has a 50-member team to work on this project.
As a move to drive grass root-level innovation in India, Koppolu has built a system where employees with ideas get an opportunity to pitch them to a panel and, if these are accepted, get support to build a business prototype.
“People constantly have ideas that may not be related directly to the work they are assigned; the challenge for employers today is to find a way to tap into such ideas,” says Koppolu, who believes these are the ideas that will launch new business streams away from the existing operations of a company.
Only those ideas that have the potential to grow into a $100 billion business actually get incubated within Microsoft. “Intrapreneurs have the opportunity to build businesses with mega scale that can actually alter an ecosystem. It is difficult for small start-ups to be able to build that level of scalability,” says Koppolu.
India-based firms, too, are encouraging intrapreneurship as they search for that unique competitive advantage in a crowded marketplace. At Pune-based Zensar Technologies, Vijay Gaikwad, who heads the Technology Innovation Group, has built a tool called the Solution BluePrint, which automates the software engineering process. “This has moved Zensar closer to creating an in-house IP in areas such as frameworks that process innovation,” says Ganesh Natarajan, deputy chairman and managing director, Zensar.
Gaikwad, who first mooted the idea of a blueprint for software engineering, three years ago, found support among his employers. They assigned an 18-member team to work with him in developing the tool. Gaikwad has also built upgradations to the system that is now used on multiple platforms, ranging from proprietary systems like Microsoft to open source platforms like Java. “Currently, it is used by over 4,000 developers within Zensar, but we believe this is patentable technology that can be taken to market,” says Gaikwad.
“Once a company unleashes energy through intrapreneurship, they must find a way to fit such ideas into the mainstream strategy,” says Erehwon’s Sharma, who feels that unless such ideas are well-integrated, intrapreneurs tend to lose motivation—and often quit.
Retaining employees is one of the prime drivers of intrapreneurship at another software services multinational, ThoughtWorks Inc. At its development centre, the firm allows employees who have pitched ideas on the “innovation hot seat” to take a couple of months off from regular projects and work on them.
Sometimes, such ideas are also incubated while engineers remain on mainstream projects, as in the case of Vivek Singh. When assigned to work on a project for an insurance retailer in the UK, Singh found the tools available in the market to test the software code he was writing either too expensive, or designed for programming languages not in current usage. So, the engineer built his own testing tool, which works on all Windows applications. “This is an example of pragmatic innovation that we encourage and incubate,” says Matthew T. Simon, chief people officer, ThoughtWorks, who feels that intrapreneurship is also vital if companies are to build a competitive advantage and cut the flab within large firms.