Growth Crisis of Indian IT-Part3: 5 Benefits of ‘PASS Intrapreneurship’ for Global R&D Centers (and IT Service Providers)

I spoke about the crisis of service organizations in R&D space – especially in Indian IT context. Also wrote about innovation and new business efforts and why they are not working. Now, it is the time to see what is possible.

As mentioned, there is over-supply of senior employees and the numbers keep adding. The idea is to create “start-up capsules” within the organization.

Structure – PASS capsule:

It is a “start-up capsule”. It can truly work as start-up within the organization. The senior people in that can work as “‘entrepreneurs with some structure”. However it still uses the same brand, infrastructure etc. It is separate entity from legal stand point. The team is freed from bureaucracy.

It is not independent ship. But a lifeboat which can sail independently-close to the ship. Upon finding direction, it can rescue some more people in the mother ship.

The Key Elements:

PASS (‘P’roduct manager + ‘A’rchitect  + ‘S’ales person + ‘S’eed fund & resources) model involves all the core elements required to make the idea work. Attach a junior team.

Create a self contained capsule out of the 4 elements.

1. Product manager – Define: Owns business plan, product features and the target market segment. First role required to initiate this capsule creation. Technical people who lean more on requirements engineering and product architecture could be oriented towards this.
2. Architect – Create: The owner of product/solution delivery. The people who perform standard architect roles would straight-away fit into this.
3. Sales Person – Sell: Go-getter on the road. This role might require some searching. However large organizations with the issues I raised, always have people with good selling skills.
4. Seed fund and resources

• Funding:
  • The organization can provide the seed fund.
  • The senior employees in focus can be offered part of their current salary only. In return – they can get stock options. This ensures that there is ownership and the need for monitoring is much less
  • Overall, the cost may not be too high since employee takes only part of the salary. The energetic employees, who feels stagnated, get low risk opportunity to be entrepreneur.
• Resources
  • Such start-up teams could use the same resource pool of the organization
  • This would include infrastructure and the entry-level members.
  • With funds, there is flexibility to outsource as well
• Legal support
  • Create semi-autonomous entity
  • Support such as keeping it clean in terms of IP, business interest conflict etc.
  • Help in getting legal protection during customer acquisition phase

The advantages of this structure over current innovation management mechanisms:

• For the organization –
  • This ensures that parent company’s liabilities reduce when customers are acquired.
  • Gets to learn adjacent businesses virtually free of cost
  • Not much of innovation management needed once you create the structure. Current ways are anyway not helping much. Why not try this?
• For Employees –
  • Frees the hands of the senior members/founders.
  • The founder members have flexibility to accept high risk for high returns

This appears long and painful considering the pain of creating separate legal structures and so on. But you may not believe  – it will do wonders.  

Advantages:

1. No Fooling Around:

If employees and the organization sign up for such arrangement, it is quite clear – no one is fooling around. There is risk, but not something that would ‘kill’. At the same time, no one can just ride the ‘corporate wave’ of innovation to their promotions. There is sound platform for ‘authenticity’.

2. True Opportunity of Entrepreneurship: As capsule, they need not be bound by usual demotivators – appraisals, comparisons and bureaucracy. Gets the best of both worlds – branded company’s comfort & security  and the flexibility of start-up culture.  They truly work as entrepreneurs.

2. Opportunity with Safety: Further, they still could get parachutes – after fixed period – say 3 years, they could give up and get back to standard roles. If it succeeds, the benefits are obvious. If venture fails, employee can return into mainstream tasks.

3. Cost-effective way to fill leadership pipeline: Even if the venture fails, both employee and the organization would still win. All the valuable exposure gained by employee will be useful for the organization. Such pool of people would feed into the leadership pipeline.

4. Sales competencies – IP and Hi-Tech: By and large, R&D centric organizations love to create something. But less enthusiastic/competent on selling aspects. This model addresses the basic issues and builds selling abilities.

As I have seen, selling IP and new solutions do not have major success stories from most R&D organizations.  If the venture fails, you have people who possess both technical and selling skills. It is a killer combination for growth.

5. Building Ecosystem: The model builds a chain of suppliers for the parent organization. Also the ‘PASS CAPSULES’ establish their own network. This builds very useful ecosystem for any kind of expansion.

To Conclude…

You can influence your organizations for the approach. Depending upon the risk appetite of the organization and people, various aspects can be tuned.

I am sure it can work in Indian IT. Possibly elsewhere in the world too. I know that post-2008 crisis American companies put people on Furlough instead of large scale lay offs. It helped everyone.

This will be worth a serious and innovative try. It can make history.

Don’t you think so? Curious about your views!