Winning at Intrapreneurship: The Courage to Shut it Down
We often read about the courage needed to launch a corporate startup or new business within an existing company. What we seldom hear about is the flip side: the courage to shut down a new business initiative that is falling short of expectations.
Best practices surrounding innovation and intrapreneurship in existing companies is to create portfolios of new businesses initiatives with the understanding that not all of them will succeed. Similar to VCs who will bet on several businesses knowing that several will fail, a few will do okay, and the rare ones will make it big, the established corporations must adopt a similar approach. Successful intrapreneurial companies must maintain a portolio of well-vetted innovative ideas resulting in several corporate startups at various phases of business maturity. By following a portfolio management approach, the company recognizes that some ideas might fall short of company financial business targets and need to be shut down.
Shutting down a business that was launched with great fanfare throughout the organization takes great courage; especially if political chips had to be cashed in to receive the approval for the launch. More courage, I would argue, than the decision to launch it in the first place. After all, corporate culture is not big on admitting defeat and cutting losses. But this is precisely part of the culture shift required to develop a thriving intrapreneurial culture.
You know it is time to consider a shut down when the following signs appear:
Too many pivots
Strategic or business model pivots are a great tool to corporate entrepreneurship but can also point to a desperate leadership team that is not willing to admit that it is time to fold it in. Every pivot must be reviewed carefully to ensure the resulting business model will deliver the financial benefits expected.
Diminishing returns
In many cases what convinces a corporate intrapreneur to continue with a business plan might be the fact that sales are growing and profitability is being achieved. The question is how much effort is each additional sales revenue requiring and is the business model sufficiently scalable to meet corporate objectives.
A star is born
In some cases, the corporate startup might be progressing reasonably well but other new businesses or lines of businesses that were launched as part of your intrapreneurship portfolio might be proving to be stars and worthy of much more investment. This might have to be at the detriment of other less promising initiatives.
If you have decided to shut down a corporate startup, do it properly. Put a plan in place to properly manage the customers or early adopters that took a chance with you. Develop a strategy to find your corporate startup employees a safe place to land within the corporation. After all, they too a huge risk to join the startup in the first place.
