Machine organizations are structures fine-tuned to run as integrated, regulated, and highly bureaucratic bodies. Machine organizations have the same basic characteristics: (a) their operating work is routine, (b) the greatest part of it is rather simple and repetitive, and (c) their work processes are highly standardized. In a machine organization, there is little room for intrapreneurship.
Max Weber (1864-1920) elaborated the bureaucracy theory to establish a rational basis for the organization and management of large-scale organizations. For Weber, bureaucracy meant management by the office (German Büro) or position rather than by a person or patrimonial. Weber analyzed bureaucracy as the most logical and rational structure for large organizations. Bureaucracy was not rule-encumbered inefficiency as the term connote in modern parlance and characterized machine organizations.
Many international organizations are best examples of machine organizations. Most of them were created after the World War II. Their agendas and focuses expanded tremendously in recent years. This vast expansion in mandates and responsibilities necessitate a change in organizational and management practices. These organizations can not afford to be a static one anymore and they need to evolve into agile bodies with rapid deployment capabilities and multidisciplinary experts capable of handling the wide range of global issues.
Many scholars and practitioners argued that strategic intrapreneurship is the best strategy to rationalize a machine organization. Intrapreneurship can be defined by its content, and this includes dimensions based on the Schumpeterian innovation concept, a building block of entrepreneurship. The pursuit of creative solutions to challenges confronting the organization, including the development or enhancement of old and new products and services, markets, administrative techniques and technologies for performing organizational functions, as well as changes in strategy, organizing, and dealing with competitors, may be seen as innovations in the broadest sense. The increase of intrapreneurship could be a key component to the success of this form of organizations because they operate in rapidly changing industries.
Intrapreneurs refer to intra-organizational revolutionaries or entrepreneurs within established organizations. Intrapreneurs try to challenge the status quo and fight to change the system from within. They are generally driven by their internal locus of control, reinventing companies, transforming them, pushing them up to new heights, sometimes with and most of the times without the top management support.
The management of intrapreneurship within an organization is complex for many reasons. The first reason is the nature of the organizations (machine organizations, bureaucracy, large and small organizations, etc.). Entrepreneurship is a context-dependent social process through which individuals and teams create wealth by bringing together unique packages of resources to exploit marketplace opportunities.
The second reason is the creation of a viable intrapreneurial attitude. To create a viable intrapreneurial attitude, the firm must be sensitive to the nature of its rewards system. While it is true that many intrapreneurs are more challenge-oriented, that is, the true intrapreneurs is inspired by success achieved in the face of obstacles, there comes a time when even the most selfless intrapreneurs begins to ask, “What is in this for me?”. Entrepreneurship has been described at both the individual level (Mintzberg’s standpoint) as well as the organizational level with Miller and some other scholars. Mintzberg noted that a viable rewards system is only possible if the concept of entrepreneurship is associated to the individual level.
The third reason is the paradox of corporations. Intrapreneurs set corporate innovative business models and reinvent organizations. The paradox is that intrapreneurs are not always welcomed in organizations.
Various scholars proposed 10 gateways to intrapreneurship that can make a real difference in an organization’s ability to compete. These are: (a) a culture of work force empowerment, risk-taking, and action; (b) celebrating and rewarding ideas, progress, and results; (c) free-flowing customer information and internal communication; (d) management support and engagement at all levels; (e) ongoing encouragement and promotion of risk taking and new ideas; (f) developing processes for idea generation and advancement; (g) clearly defined organizational needs, vision, and direction; (h) developing better cooperation and teamwork; (i) providing resources to support new ideas; and (j) cross training and special arrangements. These gateways can be valuable to corporate executives who need to manage entrepreneurial style in their organization.
The application of these gateways requires innovative leadership competencies. Organizations whose success depends on innovation require a leadership style totally different from the one typically used by most leaders. Whereas leaders of traditional organizations succeed on their ability to artfully manipulate their environment, innovation leadership emanates from manager’s creative initiatives, intellectual preeminence, and technical or unique expertise that is of value to each individual in the group and which translates to direct benefits for all.