Corporate innovation takes many different forms…
Corporate innovation is notoriously difficult, especially for big businesses. It can mean breaking down established processes and systems, and experimenting… Often to the point of failure. So how can companies innovate successfully? Luckily, there’s more than one way to skin a cat.
1) Dedicated innovation teams
Dedicated innovation teams are set up within a company to focus on innovation. Placing a specific marker around innovators can allow the business to allocate resources to greater effect. The members of the innovation team are free to pursue new ideas without distracting from or compromising their work within the wider organisation. Innovation teams are not necessarily confined to businesses. In 2016, the UK Cabinet Office set up the Open Innovation Team to search for partnerships to inform policy in light of digital disruption. However, creating dedicated teams can be viewed as excluding others from innovation, and could stifle rather than encourage it
2) Intrapreneur programmes
Intrapreneurs are employees within a large corporation who act like entrepreneurs. Intrapreneur programmes simply equip internal employees with the resources they need to pursue innovative ideas. It is about empowering employees so that they can – or at least feel that they can – innovate independently. Adobe, for example, created Kickbox as an internal blueprint for innovation. Employees received a cardboard box containing a six stage guide, notebooks, and most importantly a $1,000 pre paid credit card. Through Kickbox, Adobe could provide individual empowerment at scale. Kickbox is now an open source resource that any business can access.
3) Hosted accelerator/incubator programmes
In hosted accelerator/incubator programmes, businesses do not acquire promising companies but instead invite them to grow under their wing. This usually includes the provision of resources like funding, contacts and physical space to support the company’s growth. This is clearly attractive to the startup, but it also creates important connections between the host and the companies it decides to foster. In 2016, Oracle released Oracle Startup Cloud Accelerator to tap into the startup infrastructure. Following successful applications, startups are given 24 weeks of mentoring. The risk lies in supporting a startup that fails to deliver, or expending more resources than initially intended.
4) Innovation tours
During innovation tours, corporates visit another organisation or project location to see how they are structured. The organisations can include other companies, government agencies, or even academic institutions. Visitors usually receive guided tours, hear pitches and attend conferences where they can meet potential partners and be exposed to new ways of working. Ultimately, the goal is to get a fresh perspective on how their own business could be run. UK Finance, for instance, invited members to attend a study tour at Airbnb to gain ‘insight into disruptive behaviours.’
5) Innovation outposts
Innovation outposts are physical offices set up in places of strategic business importance. Outposts attempt to track trends, follow technological advances and make connections with local companies. They can range from a single representative to an entire building of staff members, but in either case must communicate effectively with the larger business. The most obvious setting for an innovation outpost is Silicon Valley, which is where Mercedes-Benz set up their own facility in 2014. The aim of the outpost was to follow the developments of other automotive and mobility companies to inform R&D – particularly concerning autonomous vehicles.
6) External accelerators
Working with a third party accelerator like Y Combinator or 500 Startups gives established companies the chance to understand and learn from startup culture. It is arguably easier than a hosted programme, because the external accelerator already has extensive contacts and resources at its disposal. Barclays partnered with Techstars to set up the Barclays Accelerator, powered by Techstars – a FinTech focused, 13 week programme where selected startups receive mentoring from leading industry professionals, access to Barclays businesses and the Bank’s broader network, the opportunity to pitch their companies to potential investors and the ability to join Techstars’ alumni network. By working with Techstars, Barclays benefits from the expertise, contacts and investment of a major accelerator provider.
7) Technology and education partnerships
Partnerships between technology companies and academia can be mutually beneficial, providing a talent pool for companies and potential resources for the academics. The collaborations can be set up between companies and research facilities, universities, individuals or relatively novel education hubs like coding schools and data camps. Investing in a university or academic research project can also help to improve the company’s image as one that accepts social responsibility. The success of these partnerships relies heavily on communication, especially when precious intellectual property is at stake.
Businesses can encourage innovation by funding a product, service, company or project that is beneficial to them. Aviva, for example, invests in InsurTech startups so that it can take advantage of the services and products they are developing and, as a result, fuel market growth. This can block competition and give access to important market data. Companies may also use investment to establish a presence in certain areas by financing a project or physical building such as a factory. Any investment, however, comes with an associated level of risk.
Rather than relying on internal development, businesses can acquire promising companies (young or otherwise). Google, an undoubted innovation expert, has made over 170 acquisitions since its launch. In theory, acquiring a company saves time and resources – but only if it is successful, relevant, and can be integrated with the parent company. Acquisitions often come in response to changing markets. In 2015, for example, German publishing giant Axel Springer bought Business Insider for $450m. The sale represented Axel Springer’s recognition that publishing was changing, and becoming digitalised. Through the acquisition, Axel Springer extended its global digital audience by 200 million.
10) Innovation Labs
Last but not least, a business can build a specific environment for innovation in the form of a lab. Labs have become increasingly popular, enabling a section of a wider company to experiment – and consequently to fail. These physical spaces thrive on new ideas, but their success rests on how well their aims and endeavours are communicated back to the core business. Last year, Arsenal launched its innovation lab in collaboration with corporate innovation specialist L Marks. The lab aims to work with businesses to improve customer experience and engagement. “The Arsenal Innovation Lab demonstrates how larger organisations can harness the agile nature of startups to future proof their operations and deliver world class experiences,” says Daniel Saunders, CEO of L Marks.
Corporate innovation can happen within or outside of a business. It can be carried out by internal employees, or contracted to third parties. It can be the sole task of dedicated labs or teams, or everyone’s responsibility. How best to innovate relies on the business itself. What problems need to be solved, who should be tasked with solving them, and in which industry or areas? Before deciding on any of the above options, businesses need to know what they want to achieve. Without a clear strategy to back it up, innovation is just a buzzword.
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