1. Company Description

Tesco PLC, founded in 1919, is one of the largest multinational grocery retailers in the world. The firm has its headquarters in Welwyn Garden City, Hertfordshire, has operations in the UK, Ireland, Poland and Thailand, accounting for around 450,000 employees worldwide (Chen, 2022). Well known for supermarkets and hypermarkets, Tesco has also diversified into banking, telecommunications and convenience stores. Traditionally regarded as a pioneer in the retail space, the company was one of the first to implement Clubcard, a loyalty scheme that allowed customers to exchange points for money-off vouchers, and has initiated a long-running partnership with Nike to explore tailor-made clothes and shoes for customers (Tesco Labs, 2025).

Tesco is the market leader, but it has suffered major setbacks over the last few years, from pressure by discount chains such as Aldi and Lidl, rising costs and grocery shopping pattern changes. This has led company to turn its focus towards improving innovation capabilities in-house. Tesco’s new initiative, "Tesco Labs", is an example of a medium positioned to encourage innovation, particularly in digital services and customer experience (Retail connections, 2017). But critics suggest that the retailer's organisational structure is reducing the potential for all of this to bear fruit. This analysis assesses the intrapreneurial architecture to be found in the firm on the basis of the Structure Pillar of the Corporate Entrepreneurship Audit (CEA) tool, emphasising the role that the organizational design of Tesco plays in either enabling innovation or snugly bolting it down.

2. Analysis of the Structure Pillar

The Structure Pillar focuses on five dimensions of interest, decentralization, reward, time, boundary, and communication and serves as a foundational lens through which to assess the intrapreneurial talent of an organization. The table below provides the summary of the audit results for Tesco followed by the rationale for each rating.

Table: Structure Pillar Audit Results

• Dimension
• Rating 
• Justification
• Decentralization

Tesco has a hybrid structure that gives regional divisions a measure of autonomy, although final decisions remain with the top management unit.

Rewards

Tesco compares performance through those bonuses, but innovation itself is not well-rewarded at all — especially not for risky, disruptive ideas.

Time Availability

Innovation takes a back seat, as the majority of employees work on operational tasks that revolve around the structured routines of the company.

Boundaries

Cross-functional collaboration is encouraged, but sometimes divisions like R&D and IT work in silos and don not get to share any innovative ideas across teams.

Communication

Tesco provide open communication channels such as internal platforms or collaborative tools to facilitate the exchange of ideas between departments. However, there is room for improvement

Decentralization

Tesco has a hybrid organizational structure in which decision-making is decentralized at the regional level for everyday business operations. Every division ownership has its own management team that can run local piloting projects, and some divisions (like Tesco Bank) have the identity of significant independence from the parent in innovation projects (Abdelazim, 2022). But high or large-scale projects require approval from the central management team. This kind of hybrid model can also create friction in a slow innovation cycle, as in the case of Tesco, whose mobile payment solutions were stuck in approval purgatory. Unlike tech giants like Google, whose decentralized structure allows teams the freedom to quickly innovate, but led by a successful "20% time" policy (Smith, 2023).

Rewards 

Tesco rewards system mainly deals with performance means, such as increase in sales and decrease in costs. What this does is create an atmosphere of efficiency, but it does not properly reward change or high-risk, potentially disruptive thinking. Tesco today encourages short-term focus on things like hitting quarterly targets rather than long-term innovation in its incentive programs (Azan and Karimah, 2022). In addition to this, no one ever wants to fail, and failing at innovation is not exactly encouraged or rewarded in the corporate culture of most organizations, unlike that of a company like 3M offering a framework to reward those who learned from failure. Ferry (2021) stresses that critical to intrapreneurship is failure without punishment and therefore Tesco’s reward system fails to place full balance upon failure without punishment (Rose, 2022).

Time Availability

In Tesco, time allocated for innovation is minimal. Employees are invited to floating ideas in internal channels, but day-to-day demands provide no space for new lines of projects. Such an absence of dedicated "innovation time" is a far cry from organizations such as 3M, which is well-known for the 15% of employees' time that it allows itself to play around in the studio (Rudd, 2023). If Tesco has not allocated time for innovation, then its workers tend to focus on operational work leading to less out of the box and disruptive innovations from within the organisation.

Boundaries & Communication 

Some areas where Tesco has done a good job are in shifting the company mindset toward breaking down silos. Using platforms like Slack and internal social networks, the company promotes the flow of ideas among departments. In addition, hackathons and innovation workshops are created so that employees work together to solve a problem. Yet silos still exist, especially the R&D, marketing and IT teams. The fragmentation numbs the free flow of information and ideas (Stanikzai and Ali, 2024). Though they preach open communication, there are still silos that can get in the way of breaking down the silos of the company.

Recommendations for Improvement

• Introduce "10% Time" for Employees: Inspired by successful examples from other companies, Tesco could dedicate certain percentages of employees' time to passion projects. It would spur innovation and give staff a chance to work on ideas which may not directly relate to their current function but could have big plays for the business in years to come.
• Revise the Reward System: Tesco needs to do more to reward radical innovation and this means changing incentives not just for innovation success but for learning from failure because learning is a form of winning. Tesco could move to a model where learning from failure is celebrated, creating a more risk-tolerant culture.
• Leverage Internal Platforms for Collaboration: Tesco already uses digital platforms like Slack, however, these tools can be enhanced further by embedding features that support ideation and collaboration. More specifically, spaces to test new ideas and a structured feedback loops across teams may lead to a more collaborative and transparent innovative ecosystem