THE BLOG

Intrapreneurship Presents Solutions for MENA's Large Public Sector

Last year, as many conferences described the unemployment challenges in the Middle East and North Africa region, I asked Dr. Bessma Momani about her thoughts on how intrapreneurship may help tackle the jobs problem in the MENA region -- and its somewhat bloated public sector.

We co-authored a version for CIGI Online and welcome more discussion on the longer version.

Large, educated labor pools have contributed to a bloated public sector throughout the Middle East and North Africa (MENA). According to the Organisation for Economic Cooperation and Development (OECD), the World Bank (WB), and the International Monetary Fund (IMF), MENA public sectors employ between 14 percent and 40 percent of all workers in the region. The public sector has historically served as a political solution to the economic problem of unemployment. Entrepreneurship programs that support small to medium enterprises through financial and technical support are one long-term solution for addressing excess labor capacity, but they require investment in the private sector and can offer little in the short term. In the meantime, MENA fiscal budgets have increased and public sector employees are retiring, collecting ever-dwindling pensions even as life expectancies increase.

The future of the MENA region requires a creative solution to transition public sector employees into the private sector in order to promote balanced economic growth. The private sector cannot create employment opportunities in the short term without intermediary forces -- such as foreign investment, regulatory reform, and skills development -- so a medium-term approach is needed to draw down public sector employment. We propose an approach known as "intrapreneurship," which has produced continued gains for both the private and public realms. Canada, the U.S., and Egypt offer examples of successful intrapreneurship examples.


What Is Intrapreneurship?

Intrapreneurship is characterized by the "start up" style of management, characterized by flexibility, innovation, and risk-taking. The objective is to circumvent bureaucracy and fast-track private sector development by harnessing or taking advantage of new opportunities and new processes or designs.

Intrapreneurs work from within an institution, providing their expertise to that institution rather to an external party. The success of Google, LinkedIn and Dreamworks, for example, is due in large part to their ability to embrace intrapreneurship: offering time and resources to employees who demonstrate creativity and initiative. Intrapreneurs can enhance efficiency and productivity in large organizations (Forbes, 2012).  For instance, intrapreneurs within the Sony Corporation worked to produce sponsored search engines via Yahoo, Scion17 free Internet radio, and, most impressively, the Sony Playstation.

Many global non-profits hold contests to invest in innovation and the talent behind it. Emerging market economies, such as India and Brazil, are key competitors. However, the 2012 Ashoka contest, co-sponsored by the International Finance Corporation (IFC), provides a telling example of the need for Arab countries to enhance their participation in intrapreneurial practices: as of December 15, only 1 of 77 contest entries were from the Arab world.

Both the U.S. Department of Justice (DOJ) and the U.S. Government Accountability Office (GAO) promote a culture of intrapreneurship within their organizations. DOJ and GAO operate "Employee Suggestion" programs whereby ideas that promote institutional efficiency are recognized by the organizations' leadership. The GAO has two mentoring programs that give budding intrapreneurs the opportunity to explore ideas and receive critical feedback. The first matches seasoned employees with newer employees for a period of eight to eleven months. The second allows employees to speak to seasoned employees in a series of online sessions. In both, increased dialogue is facilitated and employees enhance their skills and knowledge base.

Intrapreneurship thus rewards both the individual and the institution; even if employees enter the private sector, the institution can claim success in "spawning" new business entities. Multiply this scenario across several institutions over ten years and the result is a generation that has contributed its talent to both the public and private sector.

At the macro level, then, intrapraneurship benefits the larger organizational culture by increasing employee satisfaction and productivity. And once employees -- including civil servants -- realize they can pursue ideas within a supportive environment, they often do so in novel and innovative ways.

There are four key benefits to facilitating intrapreneurship within the MENA public sector in particular:

1) Intrapreneurship Aids the Transition out of Public Service
Intrapreneurship provides a desirable alternative for those in the public service who face early retirement. The cost of investing in public sector intrapreneurship initiatives can offset the cost of the benefits civil servants collect upon retirement.

2) The Stigma of the Entrepreneur May Not Extend to the Intrapreneur
Jumpstarting entrepreneurship in MENA is a region-wide challenge. There is a pronounced stigma to being an entrepreneur in the MENA region. In countries like Egypt, "failed" entrepreneurs can face criminal charges. Also, a large segment of the population is over the age of forty and believes that it has entered a stage of life in which it is too late to assume entrepreneurial risk. Finally, even if donor-supported initiatives like the Middle East Partnership Initiative or Jordan's ICT group promote entrepreneurship, those who are "guaranteed" public sector employment are unlikely to leave their safeguarded jobs.

But the stigma against entrepreneurs may not extend to intrapreneurs once certain conditions are met. First, given that many MENA countries are also emerging market economies, intrapreneurial programs must be born from within so that institutions can claim ownership of the program even as they receive support from outside partners such as multinational corporations. Secondly, the problem for intrapreneurs is that their ideas, while cost-saving, their "enterprising" ideas may appear to challenge the conventional notions of the public sector and thus achieve little traction.  Therefore, implementing an intrapreneurial program within institutions can allow participants to fully contribute to these institutions without managerial or bureaucratic obstacles.

3) Intrapreneurship Promotes Skills Sharing at Universities
In 2012, Saudi Arabia ranked 12 out of 183 economies in the "Ease of Doing Business Index", achieved in part by the country's ability to harness the entrepreneurial efforts of its Dhahran Techno-Valley.

Saudi's government-university initiative highlights how multinational corporations can partner with universities via intrapreneurial practices.  Other examples include King Abdullah Bin Abdulaziz Science Park (also in Saudi Arabia), the Centre of Excellence for Applied Research and Training in the UAE, and the Qatar Science & Technology Park.

Skills sharing at universities can use personnel structures already in place for employees who wish to pursue professional development opportunities. Mid-level career U.S. GAO employees have accumulated much specialized knowledge this way. Although it may not qualify them for senior management positions, they can use their new-found expertise to serve as adjunct faculty at universities. Similarly, teaching outlets in the MENA countries can bridge the mentoring gap - a key issue among university students seeking professional counseling - and provide an opportunity for civil servants to capitalize on their on-the-job training.

4) Intrapreneurship Can Help Latent Labor ForcesWomen and Youth to Excel Growth
The final reason for MENA's public sector to embrace intrapreneurship relates to two groups that are crucial to increasing growth in MENA economies: women and youth.

MENA women today are more educated than in previous generations. Women in Egypt and Tunisia, for example, attend school longer than men, but are often restricted from entering the formal economy. Women make up 14% of #Jordan's workforce, among lowest rates in the world, according to Minister Reem Abu Hassan. Consequently, many women disengage from the work force once they marry or settle for small home-operated businesses.

In contrast to countries like Japan that are facing aging populations, 42 to 49 percent of Saudi Arabia's population will be under the age of 30 by 2030.  

If women and youth in MENA are not tapped as a potential resource, many Gulf Cooperation Council (GCC) countries -- such as Oman, which has a shortage of scientists and engineers -- will have to continue importing skilled expatriate labor.  

Moreover, countries that do not have plans in place to handle growing youth populations will face major social, economic and political difficulties as the generational gap widens.

Unlocking Potential -- Intrepreneurship in MENA

Intrapreneurs will be crucial to modernizing economies throughout the MENA region. Some GCC countries offer promising examples.

In 2011, Ernst & Young Financial Services partnered with Endeavor -- a global not-for-profit organization -- to launch its Intrapreneur Program. The program allows Ernst & Young's top-performing managers to carry out six-week placements at companies within their home countries that are also emerging market economies. As such, many of these emerging market economies fall within the Middle East (Egypt, Jordan, and Lebanon).

According to Amr Shady, participant of Endeavor Egypt:

Participants in the Program have a skill set that we -- as entrepreneurs in the Middle East -- don't have. Their knowledge and experience can help us navigate the threats and risks we face each day, while enabling us to pursue the growth opportunities that will transform our companies and countries.

Indeed, when employees explore inventive opportunities, they bring fresh perspectives to business challenges. For MENA, this approach is key to maintaining sound entrepreneurial practices, both in the public and private sectors.