Choose ONE of the management processes encountered during the course: Starting, Organising, Planning and Changing. Select a business organisation of your choice and explain how and how well it undertakes your chosen process. In this essay I am going to explain the concept of intrapreneurship, contemplated within the management process of starting, and I will study its implication to the creation of the mobile operator Giffgaff; the role of the parent company and the innovative nature of Giffgaff will also be examined.
Intrapreneurship, also referred as corporate entrepreneurship, is a key concept in this era of fierce market competition. The start-up philosophy applied to established companies positively promotes change and innovation by developing new ideas, procedures or products; this combination constitutes a motor for growth for existing firms and an essential strategy for success, as organisations need to adapt to the continuous changes of the markets to survive.
Nevertheless, it is far from easy to implement entrepreneurial activities; the process presents some challenges and many ventures often fail in their way to success (Bridge et al. 2009) This is not the situation for Giffgaff, a case of a successful intrapreneurial venture based on an unusual business model within the telecom sector. Giffgaff is a UK based MVNO (Mobile Virtual Network Operator), powered and owned by Telefonica O2 UK; however, it operates as a completely separate subsidiary company.
It was founded in 2009 by Gav Thompson, head of brand strategy for O2, who established the company under the principles of mutual giving and fairness. What makes Giffgaff unique and innovative in its sector is not only its competitive prices but the way in which the business model is conceived: it is run by its members, who get involved in the strategy of the company, participating on everything from sales, marketing, customer service to product innovation. In return, customers are rewarded a remuneration redeemable for cash or airtime.
The creation of Giffgaff represents an example of corporate entrepreneurship activity that resulted in the successful launching of a start-up company under the parenting of O2 (Greaves 2012) In essence, intrapreneurship can be seen as a case of entrepreneurship, where ‘ideas are turn into realities’, given within an existing organisation (Pinchot, 1985), with the subsequent advantages derived from the ability to adapt to change and to pursue new opportunities, combined with the stability and existing supporting resources of the proven firm (Wickham 2006, p. 93). It is strongly linked to the concept of innovation (Pinchot 1985; Bridge et al. 2008, p. 296-297) together with the ultimate purpose to redefine and renew the organisation and markets (Covin and Miles 1999). Hence, organisations must be prepared to face uncertainty, to break rules, to defy its own status quo in order to allow the innovative process to take place; organisations need to be flexible and combat the rigid bureaucracy rules that hold back new ideas, new approaches and new methodologies (Houdayer, cited in Symonds 2010).
Managers must fight challenges derived from the attachment of management to existing rules that limit intrapreneurship, taking measures aimed at facilitating the new venture’s strategy; they must delegate some of their power to intrapreneurs, overcome resistance to change, at the same time that they guarantee adequate rewards to the intrapreneur (Wickham 2006, p. 295). Intrapreneurship should be rooted in the culture of an organisation in order to allow its employees to develop the flexibility, dynamism and creativity characteristic of the entrepreneurial thinking within the proven company (Bridge et al. 2009, p. 15-320). Telefonica O2’s corporate culture encourages communication between employees and welcomes new ideas to develop innovative concepts and strategies, being the opportunities for the organisation spotted by individuals within it (Gibson 2010). The intrapreneurial mentality is a key factor to facilitate the creation of new ventures such as Giffgaff. The role of the parent company is vital in the formation and development of the new venture and in its potential success or fail; it must be ready to challenge the way it is doing business, to take risks and to step into the unknown, and Telefonica O2 did it.
Gav Thompson spotted a gap in the market for those users who where not attracted by traditional mobile operators, dissatisfied about expensive tariffs, lack of transparency and poor customer service of market leaders within the sector; he identified the opportunity to set up a new business form that, through innovation, would deliver a service characterised by two main principles: being fair, open and transparent; and guarantee price-competitiveness thanks to the absence of call centres, costly advertising or retail channels, keeping the costs low and passing the savings to the customers (Thompson, 2010).
This was the first step in the intrapreneurial process; however, ideas have to become commercial solutions introduced into the market. Finding the resources within an established and financially secure company has some advantages compared to lone start-ups: the project was approved by O2 executive board, who recognised its potential value, and Giffgaff received the necessary funding from its parent company having also the option to share O2’s infrastructure to operate, as Hearn (2010), one of Giffgaff 35 employees explained to their community.
To develop the venture, Giffgaff launched a testing solution before launching the brand; in the beta phase the first innovative approaches could be observed, as the customers helped to shape the service giving their opinions and voting decisions concerning the business model. Currently Giffgaff works with a crow-sourced customer service executed by the members of the community, who also generate some of the marketing campaigns and suggest part of the product innovations that have been implemented.
Giffgaff innovative strategy places the community at the heart of the organisation and for the first time customers are encouraged to take actions, to decide important details of the service that will be deliver, to participate in the business design (Fairman 2011). As Whitnall (2012) states, Giffgaff can be considered as a social pioneer in its sector, it means a fresh way to look at the way business is managed; represents an innovation itself, defying traditional ways in which business operates, included the one of its parent company, although it certainly does not comprise a threat for O2 share of the market due to their different target ustomers. Nevertheless, the business model presents some weaknesses. Their reliance on a very specific niche market (young, savvy people willing to handle all their mobile operations online) excludes great part of the mobile industry audience; running on its parent company network is a potential risk of negative impact on the brand, as it could be seen after some O2 network failures, resulting in Giffgaff reputation being damaged (Ray 2011); another challenge could the one derived from the difficult to control all the customer-generated content in the community, with possibly thousands of comments publish each day.
It can be concluded that by means of an innovative approach within an established firm like O2, the studied company has signify a breakthrough entrance into the competitive mobile operator sector. Promoting intrapreneurship within their organisation, Telefonica O2 UK succeed in the implementation of the start-up company by adopting a risk-taking attitude and developing a venture which was radically different from its core business.
However, the business model also presents some disadvantages that could be studied in order to improve the organisation performance in the future. References Bridge, S. , O’Neill, K. , Martin, F. (2008). Understanding enterprise: entrepreneurship and small business (3rd ed. ). Basingstoke: Palgrave Macmillan. Covin, J. G. , Miles, M. P. (1999). Corporate entrepreneurship and the pursuit of competitive advantage. Entrepreneurship Theory and Practice. 23, no. 3.
Retrieved November 5, 2012 from http://web. ebscohost. com. ezproxy. sussex. ac. uk/ehost/pdfviewer/pdfviewer? sid=cb585307-74e0-46e7-9ae8-b938daa01f89%40sessionmgr14&vid=2&hid=16 Fairman, M. (June 29, 2011). Mike Fairman, Giffgaff: Call time on the call centre. Retrieved October 25, 2012 from http://www. prweek. com/uk/news/1075929/Mike-Fairman-Giffgaff-Call-time-call-centre Gibson, R. (December 15, 2010). The democracy of innovation. Retrieved November 10, 2012, from Telefonica website: