FOSTER: A model for corporate innovation

Markets are changing. With customer preferences shifting fast and the application of technology providing novel opportunities, innovative startups are competing with and even outperforming yesterday’s industry leaders. To stay competitive, corporate entrepreneurship has become a must for most businesses.

In the current business environment, corporate entrepreneurship often takes the shape of a CEO’s flagship programme, to show that the company is ready to compete. But how can you increase your chance of success and ensure that every blind angle, barrier and curveball is covered? Are companies equipped to foster innovation from within?

This model provides a simple framework to check the current state of corporate entrepreneurship in your business and some easy steps to help you get started.

WHO NEEDS THIS MODEL?

As the former CEO of Home Depot and Chrysler Robert Nardelli once remarked

“There’s only a fine line between entrepreneurship and insubordination.”

And this mantra still holds true. To increase the chance of success it is vital to break free of corporate constraints, and for that, we’ve created this model, nicknamed Foster. It helps companies foster entrepreneurship within organisations by creating a pipeline for more competitive value propositions with the end goal of launching new or improved revenue streams. The model explores the five most critical elements for any entrepreneurial programme. Elements that have already been tested with companies like 3M, Google, Nespresso and General Mills. The model can be used as a framework or a checklist for anyone planning to get successful with a corporate intrapreneurship intervention.

THE MODEL

The model covers five critical factors in corporate entrepreneurship.

These are

• the right mix of incentives
• openness towards new ideas
• support from the top
• room for experimentation
• realistic time allocation and incentives that encourage employees to innovate.

1. FREE MARKET INCENTIVES

You get what you pay for. Employees often choose jobs based on job security. They trade market premiums for job security. And in this, the first dilemma is found: why engage in risky entrepreneurial behaviour at all?

The answer is simple: Incentives.

To create space for entrepreneurial behaviours companies have to create an incentive structure. To what extent will the company reward employees for entrepreneurial action and the success of a project? What KPI does the employee need to reach to gain those incentives?

The leading entrepreneurial companies bet for success by encouraging employees to take a risk. Numerous studies have identified reward and resource availability as strong determinants of entrepreneurial behaviour for middle- and first-level managers.

2. OPEN INNOVATION

Break down the silos. Hiding the innovation lab in a secluded corner of the company does not always produce the best and most valuable innovation. Because the open flow of information and ideas within the company and from outside the organisation is crucial for supporting and promoting entrepreneurial innovation. And mixing external startups (entrepreneurs) with corporate scale, resources and job safety is known to produce successful outcomes.

Take the example of Publicis Groupe, who opened the Foundry to nurture innovative startups, and also allow innovators to mix with Publicis Groupe’s employees who served client accounts. The free flow of ideas allowed them to match client problems with new technologies thereby creating more commercial opportunities for all parties involved.

3. SUPPORT FROM THE TOP

Few things are certain in a corporate environment. But one of them is that nothing will happen without support from management. Dispersed and focused entrepreneurship programmes alike require direct and explicit support from the top. Support expressed with attention, praise and resource allocation has a direct positive correlation with an organisation’s ability to produce results.

4. T SHAPE — EXPERIMENTATION

The T shape-experimentation relates to the extent to which an organisation can accept failure. How much freedom can managers expect to make risky decisions? How much oversight is required from top management to make things happen?

A noteworthy example is General Mills. They created a position for a Retail Experimentation Strategist who was expected to lead in-field experimentation and then validate learnings from that to build corporate retail muscle.

Research suggests that entrepreneurial opportunities often are best recognised by those with the discretion to decide how they perform their work, and by those encouraged to engage in experimentation.

5. REAL-TIME ALLOCATION

Companies 3M and Google are famous for giving employees time to collaborate on innovative projects that support long term corporate goals. The most innovative companies allow their employees to spend between 10–20% of their time on developing new products and services. These can then be pitched inside the company where they compete for funding and development. The allocation of time for innovation is one of the most important factors for generating intrapreneurial innovation.

How to get started: Diagnose and plan ahead.

Assessing the current state of corporate entrepreneurship should always be the foundation to get a new programme started, and it will improve the chances of successful execution. Use the FOSTER model as a checklist and I further recommend using scientifically validated screeners such as Donald F. Kuratko, Jeffrey S. Hornsby, Jeffrey G. Covin from Kelley School of Business, Indiana University and Bloch School of Management, University of Missouri, Kansas City

These scholars have tested and calibrated a questionnaire for quantitative entrepreneurship assessment. Once the current situation is mapped in your company, you can plan the necessary interventions and milestones to reach the entrepreneurial KPIs.

If you are interested in corporate entrepreneurship programmes or if you have any comments you’re welcome to reach out to me at Krzysztof.waligorski@manyone.com. You can usually find me at Manyone’s Frankfurt or London office, but I’m also available online.

Krzysztof Waligorski is a Senior Service Designer at Manyone. He works with strategy and global multi-category experience across Europe, ME and APAC.

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