How to get employees to be more entrepreneurial

April 15, 2014, 6:44 PM UTC
Think big.

FORTUNE — Organizational change has never been easy, but in the past it was a little more straightforward. Fifty years ago, companies followed a basic blueprint. They had heroic leaders — a CEO and an elite top layer of management — who had tremendous authority and made all the important decisions. When they wanted to make a change, they set a direction and it cascaded down through the firm.

Today things are different. As companies compete more on speed, agility, and innovation, decision-making needs to get pushed down. Sure, there remain some old-school companies that rely solely on top-down leadership. But in an increasing number of firms, leadership is shared across the organization, often in teams. Command and control is out; collaboration and teamwork are in.

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These are positive developments, but they don’t make organizational change any easier to pull off. The key for managers is to create an environment where teams and individuals — even those lower in the organization — have the latitude and autonomy to recommend and try out new ideas, be it a new environmental initiative, a new technology, or a way to seize some new opportunity in a different market. The goal is an entrepreneurial workforce at all levels of the company. Here are some ways to achieve that:

Think beyond the official job title.

Managers tend to put employees into neat little boxes according to their place on the corporate organizational chart. But these boxes make it hard for someone lower down in the organization, without an official title, to vet and test a new idea. There’s a prevailing attitude of: “We need a formal manager to do that.” To combat that tendency when assigning people to projects, consider who has the passion, knowledge, and networks to succeed — independent of that person’s title. If this is not politically possible, then think about creating two-person teams or small groups that include people with the necessary expertise.

Create opportunities for employees to network.

Companywide creativity and innovation are dependent on employees connecting with each other both formally and informally. Good managers provide opportunities for this to happen. W. L. Gore, the consumer manufacturing company, and Google (GOOG) do this well. From day one, all new hires there are expected to create a network within the company and to figure out how things work. That way, when they encounter a problem down the road, they can easily call upon people throughout the company to help solve it.

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Seek ideas from unexpected places.

The notion that teams and firms have rigid boundaries that can’t be crossed is outdated. In the quest for innovation and new ideas, employees must look across functions, industries, and sectors. Consider the example of British Airways. Hamish Taylor, who was once the company’s head of brand management, continually asked BA managers to challenge old assumptions and seek experts everywhere. “When seeking to create beds in first-class cabins, BA approached a yacht designer who knew how to create luxury furnishings in a confined space. When looking to improve queues, it approached the Disney Corporation (DIS), which had perfected queuing systems in its theme parks. The lesson is: Cross boundaries and update mental models to create organizational change and encourage employees to do the same.

Don’t be inclusive just for the sake of it.

Sometimes in a misguided attempt to get people involved in new projects and initiatives, leaders have employees vote on a strategy or participate in an electronic brainstorming session. It’s a nice idea, but it often backfires because of gaps in knowledge. Before trying to pull on the collective intelligence of employees, make sure they all understand the problem your company is trying to solve. What are the firm’s key goals? How big is the market? What is your competition doing? What does your customer want? People also need to get a handle on the technological and financial constraints in order to weigh in effectively and find new ways to move forward.

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Don’t assume employees will revolt at the idea of a top-down decision.

If for example, there is a need to move quickly due to a clear and short window of opportunity, or to weed out an unproductive project, some authoritative decision-making may be in order. In fact, employees may welcome some quick action if the rationale is clear. Top leaders can also create simple rules and synthesize bottom-up ideas into strategies to help guide the entrepreneurial actions they are encouraging.

The new competitive landscape will be filled with firms that learn this delicate balance between top-down and bottom-up, looking in and looking out, providing autonomy but avoiding chaos.

Deborah Ancona
 is the Seley Distinguished Professor of Management of Organization Studies at the MIT Sloan School of Management and the director of the MIT Leadership Center.