The Close View

Intrapreneurial Groups

Definition: A legally established collaborative group inside an enterprise which sells its services to others.

On Tuesday morning at 9 o'clock we waited in front of the check-point of a large French car factory near Paris. We looked forward to a date with one of the most successful Intrapreneurial Group called Opteam™. A very informally dressed young woman approached us, told us her name was Shirley, asked if we were the people from the journal "VirtualGuide", and confirmed that she could offer any information we would like to have.

We were greedy to get some hands on experience with this new brand of collaborative work which is now imitated all over the country by more and more employees. The term "Intrapreneur" was coined some decades ago by Mr. John Naisbitt, who investigated important trends in the society to come. He expected the single employee to be converted into a self-employed person, a one-person enterprise. Three functions of entrepreneurship should be combined in this social innovation: the complete functional, legal, social, and financial responsibility for his/her economic decisions; the ownership of the tools and means of production; and the engagement in innovative activities for the market. While such intrapreneurial activity actually came into being, it was limited to certain branches only, and was not accepted by the majority of the employees. The exceptions were highly qualified, white-collar employees, like insurance agents, cameramen, or computer programmers. As the main objection against this kind of intrapreneurship, the unsolved problems in case of illness or inability to come to work were seen. Surprisingly enough, it was not the low sick-leave benefits, but the difficulty to continue production or provide services to the mother firm that were paramount. Apart from this, Intrapreneurs felt uneasy when dealing with complex decisions on their own.

The idea of the Intrapreneurial Group emerged in a rather natural way. It is a very simple concept: instead of having all the people working in the firm employed on a wage basis, some of them form groups which function as small-scale enterprises. It depends on the contract they have bargained with the management of the mother firm whether they use their own instruments, tools and machines or they offer their services by working with the machinery as property of the firm. In two respects the concept begins to overcome the traditional social structure of the enterprise: first, the hierarchy inside the firm is challenged; second, the status of employees as wage-earners is transformed.


The Hierarchy of a Traditional Firm

The above figure shows the traditional structure. Each point in the graph represents a person being on the wage-list of the firm. Each of them belongs to a stratum within an echelon of the hierarchy of the firm. Highest ranks are drawn at the top, lowest at the bottom of the above figure. Intrapreneuring regroups the persons. While some of them (a minority in the figure below) still remain employed as before, the majority forms (in the figure below two) Intrapreneurial Groups, enterprises inside the enterprise.


A Firm with Intrapreneurial Groups (shaded area)

The members of such a group offer certain services to their mother firm on a contractual basis. They form a special institution, an IG (Intrapreneurial Group). This means the group has legal capacity. As an economic subject, the group has the right of disposal of property; it may sell and buy whatever it wants to. The difference to the traditional firm is not only in size: in the founding phase the members share equal rights, although they may be changed later for different reasons on a voluntary basis.

After this introductory information let us come back to Shirley and to Opteam™ again. She said the day was busy, because of their high-quality work a second contract by another firm located in Japan had recently been offered. In their profession - car design - distance makes no real difference, she said. The problem was how and by whom the additional work should be done. They had to add new members to their cooperative, and they must be highly qualified.

We accompanied her to her working room. Cosy armchairs, no evidence of computers, a colorful carpet, and on three walls photos of natural structures under the microscope. The fourth wall was covered by a kind of LCD display, a huge screen. Three controllable TV cameras could look at any corner of the room. The most impressive feature was that the room was not empty. Nearly all the chairs were occupied by persons dressed like hippies. Shirley introduced them as "my team". A strange humming noise was in the air. One could see that each member of the team spoke in a low voice into a microphone he or she held in one hand. With the other hand they operated a keyboard positioned at the right arm of the chair.

The basic elements of a car - like a skeleton - were visible on the wall screen. Immediately the room became silent when a first version of an experimental design of the bodywork appeared on the wall, overlaying the skeleton of the car. The picture of the car's surface was divided into segments according to the mechanical fabrication of the parts. Several minutes passed without anyone speaking a word. Then - a skinheaded lad broke the silence. He addressed the back of the car by shouting "rear!" The color of the rear became more intensive than the rest of the car. The skinhead manipulated the keyboard and increased the shape of the rear. Flashing numbers on the right side of the screen showed the changed cost of fabrication, and the weight and amount of material needed. Most of the other people had objections to the new form and did not hold back their opinion but commented quite openly. A woman asked if she should try to redesign the prototype. Everybody seemed to agree. For a while we observed the interactive design process up to the moment when we saw a completely different shape came into being on screen. Very elegant, very professional, very speedy looking. The cost fell to a minimum, as well as the expected weight. One man in shirt-sleeves said: "It looks fine. Now let's see its performance on the road." Some keystrokes later he produced a simulation of the car apparently going through a hilly landscape. Immediately the car became surrounded by a kind of aura. Shirley explained that now the air pressure near the surface of the car could be seen. "Excellent intuition," the sleevy man shouted in excitement. "We won 10 miles per hour in speed, or in other words, a reduction of fuel intake of about 10 percent. Congratulations! Shouldn't we offer her a bonus for this result? What do you think?" In the upper left corner a colored bar and some figures appeared. Maggie uttered a proud "Thank you, folks! Enough work for today", and left the room, triumphant.

Shirley explained: "This is our voting procedure. You see in this case there is an overwhelming majority of pros for the bonus to Maggie. This is easy and fast stuff. We do not always experience such unanimity. Very often the voting procedure is a starting point for discussions. After some minutes the voting is repeated, and usually we find a qualified majority. If not, our speaker tries to settle the conflict. In case he does not succeed he decides on his own. But you see he has to use this instrument very cautiously. It can easily happen that he will not be elected for the next three month period."

You will understand that we looked forward to know how the payment of the members of the group is handled. The answer by Shirley was disarming: "The right of each of us is to earn the average fraction of the net income of our IG. So we start like egalitarian groups during the French Revolution. But we have found that in many cases an equal share is not an optimal distribution of income. Times have changed. In the last century where manual work was the bulk of all the activities, labor time was the basis of the wage. Nowadays, we experience a much higher demand for good ideas, and for creativity, than in the past. Through automation within the last decades routine work was reduced considerably, and the importance of intuition grew. For that reason we tried to replace equal payment by other mechanisms. One possibility is to use evaluation procedures from outside. This method proved to be rather tedious and inefficient: you have to select a board of experts; you have to pay them; you have to evaluate the members of the IG in monthly intervals; and you have to keep the board informed on everything that has happened in the IG. Distorted reporting will come up soon, the members will not agree, and the like. So we started to use our own judgment on the performance of our colleagues. In the beginning, the self-assessment process was experienced as a piece of cruelty to each other, and people felt guilty in evaluating others, but more and more it became a gesture of generosity of the group to increase the income of one or the other of its members. In most of the events of change in income the process is used in an upward direction. People usually tend to reward extraordinary creativity, although at a first glance they reduce their own pay. But, in the long run, they saw their own income growing as well. If the turnover is increased by innovations that are accepted by the market, or production costs are saved, their individual share becomes higher.

Reducing the payment occur less frequently, and then in case of emergency only. If some members do not cooperate, if they repeatedly make mistakes, if they are not creative enough and do not even strive for creativity, if they are lazy or drunk, their payment is reduced. To make it difficult to exert power against weak members, a two-thirds majority rule is needed for a reduction in income, if the result will be below the average payment.

The system of payment is really very flexible. If someone tends to work less hours than the full working week, it is possible, of course, if the majority does not oppose the demand. The payment will be adapted accordingly. The two-thirds majority rule applies for a complete exclusion of a member as well. Any introductory investment by the member will be paid back. Up to now we had only one case like this. One man was expelled because of sexual harassment. He went back to the mother firm, but could not regain his former position in management."

Another woman intervened: "You cannot imagine how relieved the group was after he quit. Now we meet him still at work, when we deliver our final product, but he does not have the power to command us any longer."

Shirley used her microphone, and in the upper right corner of the screen a window opened, evidently a video transmission. The camera next to Shirley showed a red light. On screen, the face of a bearded man became visible. We could not understand the conversation between Shirley and this man. She used ear-phones. After a short interaction, the man nodded and his picture disappeared.

Shirley explained that she had asked another IG via visiphone to find qualified persons. He will place the ad in the "hiring" column of the World Wide Electronic Link and will test the persons who apply for the job. Not only professional skills are tested, but social competence as well. She said that within the few years of existence of IGs, on average the level of social competence has improved, because people can now interact and decide on their social situation themselves, and there is no authority above them to whom they are responsible other than their own IG.

"Although in the beginning of our IG we had the problem of how to handle individual demands for the number and timing of working hours, this we have gradually resolved. When the members of the group became acquainted with each other, and discovered the strong and weak points of any of the others, they started to reschedule the tasks of the IG in such a way that it became more and more independent of the hours worked individually. Everyone found their place were they could serve the overall goal in the best way. The result was excellent. The service to the mother firm was improved, and tasks were performed in less time than before. The Peer Care System played an important role in this improvement. The clients of some Peer Care Groups could be integrated into our overall activities and increased the efficiency and the working climate in a favorable way."

"Still," Shirley said, "we face the difficulty of the blindness of the market. If an economic depression occurs - and our economic system still is not able to prevent it - the social climate in the IGs comes under heavy stress. When the total income of the IG is shrinking, its members have to reduce their own payment as well.

Fights between colleagues happen more often, a climate of competition takes place, and things are not always resolved in a desirable manner. I, for my person, think that in the future we should modify the system and reduce the influence of the market as an incentive for technical innovation."