How Employees, Not Entrepreneurs, Have Innovated the World

By Kaihan Krippendorff , Founder, Outthinker

The myth

 

I love entrepreneurs. They offer us a vision of possibility. They seem to break rules, chart their own paths, challenge dogmas, take risks I would shy away from—and succeed, sometimes spectacularly.

 

The entrepreneurial narrative is innately, inevitably moving. It speaks the human machine. It unifies public sentiment behind the ideas of a better world, fresh thinking, freedom, self-realization … all while also promising wealth.

 

The idea of entrepreneurship inspires us into action. Steve Jobs once said, “Your time is limited, so don’t waste it living someone else’s life. Don’t be trapped by dogma—which is living with the results of other people’s thinking. Don’t let the noise of others’ opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.”

 

I am not alone in my admiration of entrepreneurs. People most often referenced on lists of the most admired business people are invariably business founders like Richard Branson (Virgin), Steve Jobs (Apple), Warren Buffett (Berkshire Hathaway), Rupert Murdoch (News Corp), Oprah Winfrey (Harpo), Larry Page (Google), Jeff Bezos (Amazon), Steve Schwarzman (Blackstone), Bill Gates (Microsoft), Larry Ellison (Oracle), Michael Bloomberg (Bloomberg LP), and Elon Musk (Tesla, Space-X, and PayPal).

 

What jumps out from these lists—other than the under-representation of women—is the mental picture they trigger. When we think of greatness in business, we think of the entrepreneurs who quit school or a career to risk it all and start their own thing. They follow a remarkably similar narrative: they pulled together a small amount of money (far less than you would think starting a business requires); they were impassioned to solve a problem; they faced daunting hurdles but overcame them. They fought through a jungle of disbelief, self-doubt, and sometimes betrayal—and ultimately came out smiling on the other end. Victorious!

 

That core story may sound familiar to you from another discipline. It sounds a lot like the “hero’s journey,” described by mythology researcher Joseph Campbell. That journey is the heart of just about any good movie or play. No wonder we find it easy to wrap it around the narrative of successful entrepreneurs.

 

There’s just one problem with this particular storytelling. It isn’t true.

 

The well-loved entrepreneurial story, as entrepreneurial guru Michael Gerber points out in his enormously influential book and concept, The E-Myth, is far more myth than reality. The true entrepreneurial journey is far harder to generalize than we would like, and its many permutations often lead to failure. We just don’t discuss those as often. 

 

I sought to look objectively at the role entrepreneurs and employees have played in our society, seeking to test the broadly held idea that entrepreneurs are the true innovators that have shaped modern society. What I found is that employees have had a profound, and under-appreciated, impact. Arguably more profound than that of entrepreneurs.

 

The truth

 

Without employee innovators, we may not have had the internet or a personal computer or mobile phone with which to navigate it. We might live in a world without digital photographs, ATMs, or GPSs. You may prefer to not have email today, but that internal innovation too might not exist but for the passion, commitment, and struggle of employee innovators.

 

Yet we don’t hear much about these employee innovators. You can find over 50,000 books about entrepreneurship on Amazon.com but only 200 about intrapreneurship. We prefer celebrating entrepreneurs. I believe that is not because they matter more, but rather because we prefer telling the lone hero, David takes on Goliath story the entrepreneur represents.

 

I began to wonder: by focusing our attention on the lone hero, what are we missing? More to the point, does the entrepreneurial hero story really hold up against the facts? I decided to investigate.

 

I started with the list of the 30 innovations that most transformed our world in the last 30 years, selected by an eight-person panel of experts organized by Wharton Business School who considered about 1,200 innovations in their analysis.

 

My team and I then dug into the histories of these innovations. In particular, we tracked the three stages that are common to every innovation journey:

 

  1. Conception: who conceives of the idea?
  2. Development: who developed the idea into something that works?
  3. Commercialization: who brought the idea to market?

 

According to the hero narrative we like to retell, the entrepreneur conceives of the idea, develops the idea either on their own (Michael Dell in his dorm room building computers) or with a small team (Steve Jobs and Steve Wozniak in their garage), and then launches a company (Dell, Apple) to commercialize the idea. The stories of our favorite hero-entrepreneurs like Bill Gates, Elon Musk, and Richard Branson would all support this. But let’s look at the facts.

 

Our findings are illustrated in the graph below:

 

 

Who conceives of transformational ideas? Answer: Employees

 

Contrary to commonly accepted truth, only 8 of the 30 most transformative innovations were first conceived of by entrepreneurs; 22 were conceived by employees. Without the inventiveness of intrapreneurs, we might not have the internet, personal computer, mobile phone, DNA sequencing, magnetic resonance imaging, or fiber optics.

 

Who develops of transformational ideas? Answer: Corporate and Public-Sector Employees

 

Interestingly, employees within academia and governmental institutions play a major role in the development of transformative innovations, particularly in the cases in which the innovation has significant social value, as is the case for stents, AIDS treatment, or large-scale wind turbines.

 

Who commercialized the idea? Answer: Competitors

 

The popular face of innovation is that of Facebook … or Tesla, Google, Uber, or Microsoft, companies that established themselves as disruptors and took down incumbents.

 

But as it turns out, such disruptor stories are the rare exception. Only 2 of the 30 most transformative innovations were scaled by the original creators! And one of those two, Microfinance, was a model that Nobel Peace Prize Winner Muhammad Yunus scaled in order to give to the world. He has not inspired organizations all around the world to copy his innovation.

 

More than 50% of the time (16 out of 30) the innovator loses control of the innovation. Competitors take over. Then, through a battle of players seeking to commercialize the innovation, the innovation scales.

 

Olivetti, for example, invented the first PC, but very quickly its competitors caught on, with HP, Commodore, Micral, IBM, and Wang taking over. Facebook was not the first social-networking site. Barclay’s Bank, arguably the first to introduce the ATM, could not prevent competitors from picking up on its innovation. And no single organization could prevent competitors from catching on to breakthrough innovations like bar codes, fiber optics, or digital cameras.

 

The path

 

So, if we want to map out the true path of the innovations that have most impacted society, the story would have to go like this:

 

An employee (not an entrepreneur) conceives of an idea. Then a combination of employees from the public and private sectors work on building the idea. Once a solution is found that works, the competition takes over and scales the idea.

 

Employees, not entrepreneurs, are the true drivers of innovation and growth.  And their role is about to increase for those corporations able to dislodge the seven barriers employees most often cite as blocking their attempts to innovate. In our next article, we will break down those barriers and discuss what you can do to remove them.