Innovation — Behind The Buzz at SXSW
If your past week was anything like mine, you’ve finally recovered from what was an engaging, disruptive, innovative, gamified, agile, buzzword-filled week of networking, brunching, coffee chatting, and the occasional partying with like-minded tech+media individuals from around the world at South by Southwest Interactive (SXSW). My weekend kicked off Friday morning with a flight out of LAX on a private chartered “Festival Shuttle” where in proper SXSW style, a group of Type A Millennials from tech startups, venture capital, and the entertainment world, were “networking” 40,000 feet in the air on a 3-hour flight to Austin.
To the average observer, a large portion of the SXSW crowd would be deemed my peers — especially by my parents or people outside the tech scene. A sea of tech+media people representing the next big innovation to come out of a startup company or cutting edge enterprise brand. As an insider, I knew it went much deeper than that. I wanted to know what the real substance was behind the buzzwords and how we all came together so serendipitously.
My goal for the week was to try to comprehend and more clearly define what it meant for a startup company or enterprise brand to be “innovative” at 2017’s SXSW. Innovation was the most overused word of the weekend — naturally it was mentioned in nearly every talk I attended, but even more surprisingly in places like job titles on business cards, applicant resumes, and company pitch decks.
Google defines innovation as “making changes in something established, especially by introducing new methods, ideas, or products.” Disclaimer: My company, Sidebench is most definitely in the business of selling innovation. What that means is a topic for another post, but it’s definitely part of the reason I’m so exposed to the term’s overuse. Similar to an Accenture Interactive, OMD Ignition Factory, or BCG Digital Ventures, not only are we pitching it, we’re meeting with and consulting leaders of innovation across industry verticals from early stage startups to Fortune 500 enterprise companies. Hopefully, you can see why I would be interested in being able to more clearly define what innovation means and ensure I can defend its overuse. In this article, I’ll explore two major groups of innovators (startups and enterprise companies) and dig deeper into the classifications of roles within the larger organizations.
How do startups identify and create innovation?
Today, your average aspiring entrepreneur wants nothing more than to launch an innovative, establishment-disrupting startup that revolutionizes the on-demand, virtual, or augmented world we view as reality. Entrepreneurs and — I’ll argue — their Corporate Innovation counterparts, simply seek out ways in which they can capitalize on opportunities for innovation. Where are entrepreneurs finding these opportunities? Being on the ground, talking to customers, being customers of existing solutions, questioning established business processes,etc.; the list goes on. All things that seem to come rather naturally to a disciplined startup team that’s read 0 to 1, The Lean Startup, and watched Sam Altman’s Startup Class on YouTube.
We, as startups, can typically find or poke holes in the status quo and make an attempt at doing something disruptive. We take a look at a cross segment of a particular market’s leaders, spend a few sleepless nights on industry research, make comparison charts, and break down how these companies connect with and monetize their customer base. From there we start to imagine what would we do completely differently if this were our company and in theory we had access to command a similar market share. Where and how would we utilize technology to optimize business processes and what types of economies of scale would we recognize that could lead to massive revenue opportunities?
Founding an innovative startup sounds so easy!
Unfortunately, many startups fall flat due to the pitfalls of finding market fit to gain traction, developing defensible IP, or getting on a path to revenue before they run out of gas (among a number of other reasons that I won’t list here). There are also those who may have been onto something, but were displaced by a larger company who beat them to critical mass in the market by adding said “innovation” to their already existing platform and massive user base (RIP Meerkat). The latter scenario is the potential bridge between the startup and enterprise world in which both can either come together to grow or compete against one another for market share.
Let’s look at how this situation plays out and the roles of those at enterprise companies fostering those connections.
How are enterprise companies working with (or even in some cases against) these industry disruptors? Who takes on this unique role in a large established company?
Traditionally, if you met with VPs of Finance at Fortune 500 companies, their roles would all basically comprise of the same tasks: define benchmarks for financial performance, monitor and analyze monthly budgets/expenses, oversee operations of the finance and accounting departments, and prepare financial reports for a CFO. Conversely, at SXSW, after meeting with more than a dozen folks whose LinkedIn tagline (and/or in some cases official title even) included “innovation”, it was still somewhat difficult for me to define what exactly their specific role was. Here’s how I’ve broken down the various flavors of Corporate Innovation:
- Corporate Venture is an investment & acquisition focused innovation strategy targeting startups and technologies that can align with larger corporate initiatives or even potentially pose a threat to the acquiring company’s market share. Corporate funds are deployed by an internal team who’s responsible for due diligence and capital deployment like a traditional venture fund.
- Corporate Incubators or Labs are typically either run by internal staff or follow a model like Techstars’ many joint ventures with companies like Target, Cedars Sinai, Honda, or McDonald’s. These companies utilize Techstars’ infrastructure and startup knowhow to foster an entrepreneurial community around their brand.
- Internal Corporate Innovation strategies are often the least publicized, but at times can be the most effective for fostering innovation within specific business units. These individuals are tasked with developing new intellectual property, capitalizing on emerging technology trends, and in some cases modeling “enterprise” versions of what startups are already doing in market. They’re often constrained by existing resources, talent, and perspective that those within the company already live and breathe.
What does a leadership role in innovation actually mean?
No matter who I spoke with at SXSW, members of each of the three groups were seemingly representative of today’s primary flavors of the corporate innovation model. Connecting with and being “in the know” about disruptive technology and the startup companies driving it has become the substance or “role” of what a leader of innovation does within a larger corporate structure. The more I thought about it while trying to define this role, I realized that understanding how new emerging platforms and technologies will impact their industries is actually a very specific skill set. It’s not akin to knowing your way around a balance sheet or financial report, but it’s a skillset that is often derived from someone that has both startup and enterprise experience in order to identify synergies from both sides.
Startups have their perspective, plus new ideas and creative solutioning. Enterprise companies have their perspective, plus capital, market share, and established infrastructure. Thus the role of a leader in innovation boils down to identifying and aligning said parties to create synergies that fuel growth.
So in Conclusion…
After a week of decompression and following up on all the conversations I had at SXSW, the term innovation, as overused and cliché as it’s become, is now a pillar of success for companies both small and large in order to stay competitive in our dynamic technology-driven world. Additionally, for those with a leadership role in innovation, while perhaps not grounded in a traditional job description, their focus has become more important than ever before in today’s landscape. In closing, after witnessing this in action at SXSW, not only are our leaders of innovation able to keenly identify and take action on innovative opportunities, they’re able to pull these synergies out of private parties, panel presentations, coffee chats, and culture-driven networking brunches.
— Jay Chang, Partner & Head of Product at Sidebench
Jay is a Partner & Head of Product at Sidebench, an LA based Corporate Innovation Lab, and an advisor to the USC Blackstone Launchpad Incubator. He’s also an avid foodie, chef, & Instagrammer publishing as @BehindTheKnife on Instagram. At Sidebench, he’s worked with with enterprise companies like Red Bull, Pabst Blue Ribbon, Sony, NBC, Cedars Sinai, Oakley, Facebook, and Andreessen Horowitz. Jay graduated from the University of Southern California with a BS in Business Entrepreneurship focused on technical entrepreneurship and marketing. Throughout his multidisciplinary product focused professional career, he’s developed a deep understanding of user first experiences and business case driven approach to technology consulting.