In this article, we share Creators’ experiences and market observations to give you a brief overview of a typical corporate innovation journey.
In today’s constantly evolving markets, the need for innovation is as important as ever. Every company wants and needs to be innovative — “able — over an extended period of time — to create value and sustain/increase the market share by making changes to product portfolio, business models and company structure”.
Innovation does not have to be big or “disruptive” — most product innovations are incremental, and this is not a bad thing (it is difficult to create disruptive solution regardless of whether you are an innovative startup or a huge corporation, in which case disrupting innovation means basically cannibalizing parts of your current businesses). Innovation does not need to involve technology, but it mostly does. Finally, innovation does not need to be a random, magical process — something many of us may feel when observing seemingly “accidental” solutions that changed the world.
The question is: Can you — as a corporation — develop a successful and repeatable innovation strategy that enables steady growth? Many corporate employees believe their companies will not be able to sustain themselves without introducing major changes to their long-term strategy (see a graph from our Corporate Innovation Report*), so we decided to analyze the typical stages of entering the innovation maturity and what a company should do to get to the next level and eventually achieve innovative excellence**.
Level 1: This Is Where We Start
If your company is at this stage, then you are aware of the need to innovate, but lack an innovation culture. Your current innovative actions most likely revolve around PR and visibility in the startup ecosystem instead of a long-term strategy. At the same time, you also may not be ready to dedicate major resources to innovation, so big actions are infeasible.
Typical innovation tools for this level concentrate on companies’ PR efforts, hackathons, sponsorship of innovation communities, sponsorship of conferences, organizing events for startups etc. The primary purpose of these activities is to put your company on an innovation map. Another great way to enrich the value of such innovation activities is to build mutually beneficial relationships such as partnering early on with existing relevant community leaders, reaching out to co-working spaces or offering office hours and/or happy hours to meet and interact with startups and innovation communities.
However, eventually, if your company wants to start an actual innovation journey, you have to lead from within. Offering — at first random — internal innovation activities (e.g. workshops, innovation sprints, intranet innovative idea exchange and more) is what corporations initially do when they realize the importance of fostering an innovative culture. With time, these activities tend to become more structured and impactful — this is when a company enters the next level.
Level 2: Innovate Internally — Educate Yourself!
You realize the need to create a real innovation platform (a structured program with defined curriculum and development stages) for employees who display the drive to become intrapreneurs — internal entrepreneurs. To accomplish this, resources are allocated typically from HR budgets. The first task here should be to understand the objectives of such internal program — Is your objective to change your culture or create new products? Do your employees have the potential to do that? How should you allocate the budget appropriately to initiate organizational change?
At this point because of the unknowns, corporations usually engage in short-term internal innovation programs, continue with PR activities, and hire external consultants to put mechanisms in place.
Such activities often serve as the first step into the corporate innovation world, but will only work if their goals are explicit and high-potential employees are given enough space (and budget) to learn during study trips and executive education workshops, but also integrate tools and methods into daily operations at the completion of the workshops.
The challenge here is to implement the teachings into company’s everyday work. Too often workshops can be treated as a “holiday from work” and not taken seriously. However, introducing change management mechanisms can be very successful if you give middle management the responsibility to implement these methods and tools as personal projects or — even better — create multidisciplinary teams and give them a budget with full responsibility.
One of our programs — Innovation Champions — is built on such experience and has displayed over and over again that bringing such teams together provides better results and creates a more lasting impact on company’s staff. (See more HERE)
Level 3: Create a Great Engagement — Experiment!
You created great internal innovation programs for your staff, but you need to improve them, connect to the larger ecosystem and create external innovation programs in addition to internal activities to create real value. At this stage, most companies resort to establishing a startup-engagement program. The most popular ones include opening co-working spaces (and placing both staff and selected startups there), support services programs (e.g. AWS program for startups, Microsoft BizSpark), accelerators and incubators (e.g. Barclays Accelerator powered by Techstars). Many of these activities are supported by deal-flow sourcing and scouting — often done externally — to ensure better outreach.
There is an interesting phenomenon we observe at this stage: at first companies tend to be closed and strict with startups — they request equity, NDAs (non-disclosure agreements), IP sharing etc. However, the more knowledge they develop about the startup and innovation ecosystem, the more open they are to seeing such relations as symmetrical — a win-win for both sides — as opposed to trying to control and head these relationships. This change illustrates the internal development of the innovative culture inside the corporate and its influence on an overall innovation management.
If done right, startup-engagement programs create the first real chance for company’s employees and external innovators to interact and learn from each other. But, according to research, such activities — including a very popular accelerator model — lie very far away from company’s core business and actual, actionable improvement of its innovative capacity. These programs provide a good “industry overview”, but tend to be insufficient in developing long-term innovation vision. Most of these interactions bring little actual value, but they are an important step on the “innovation education” ladder. To get to the next level, your company needs to actually engage with startups and innovators on a deeper level…
Level 4 Create your “Innovation Lab”
You have successfully started to interact with startups and innovation stakeholders. You know great startups in your field, run meaningful startup engagements and have your own external innovation program, e.g. an incubator or an accelerator. Still, you are struggling to take a full control of your innovation potential and create a holistic strategy towards innovation.
At this point, most companies start formalizing their engagement within the ecosystem: start strategically investing in startups and/or creating a fully structured process from scouting a startup through to a successful POC (proof of concept) process and finally integrating the technology into a product portfolio.
The key to success at this stage is to understand that different programs (internal, external, VC projects etc.) have different goals. And you will need a few different kinds of programs to create a fully viable and long-term innovation strategy. Just as it is not possible to create a pair of one-size-fits-all shoes, an accelerator program alone will not be enough. Our key tip is to put in place innovation KPIs for different programs as early on as possible and make adjustments as you deem fit. Innovation can be a science, but to achieve that, you need to know what works for your company and what does not bring value.
Level 5: Create your “Startup Factory”
Congratulations! You are almost there.
You have successful internal and external innovation programs. You know how to properly measure their success and create better value. Now it’s the time to collide the corporate and startup worlds through co-creating innovation.
Co-creation means innovation activities are joined, clearly defined in advance and given enough priority and budget. There are few great programs of this kind in the world (our Corporate Innovation Report* showcases a few of them). At CREATORS, we used our know-how to create an IDEAtion Lab — a 9-month program starting with challenge creation and ending in venture creation, where corporate employees serve as mentors and co-creators, and entrepreneurs build their startups from scratch based on defined market needs of the corporate partner.
Such models are implemented by brave corporations — real innovation trendsetters in a corporate innovation space who have substantial experience with different models of innovation and are not afraid to innovate even better. Once you have achieved this level, you are an engaged innovator with an open organizational culture and your employees feel a bit less threatened by startups, thus making room for tailored co-creation programs. This is the time to give them a chance to discuss their challenges, share them with external innovators, and create great things together.
Wherever you are on the corporate innovation spectrum, remember it is never too late to start. Simply stay calm and innovate. Good luck with your innovation journey!
*Our Corporate Innovation Report will be available soon and free of charge. To make sure you get it, fill in this short form HERE.
** Innovation stages are presented here in a linear way, but they do not have to be linear. Oftentimes, companies introduce them at similar times. Also, many of these programs are created by different employees in the organization (e.g. Innovation Team is responsible for external programs, HR team is responsible for internal programs etc.)