5 effective tools to implement for disruptive innovation
We know that the only way for business models to stay relevant in a rapidly-changing world is through the implementation of innovative strategies and product offerings. In a recent interview, CEO of Isobar — a global digital experience agency — Geoff Cubitt, said that ‘companies that invest more in digital transformation actually outperform their peers over time.’ He went on to explain that ‘these companies are more prepared for disruption, better able to monetise new digital channels and better able to build a bigger user base. What’s more, this phenomenon exists regardless of industry.’
So the question isn’t whether or not to go the innovation route. The question, rather, is how to go about it. There is no one tactic that will have the same guaranteed successful outcome when applied to corporations across the board, as they all have different structures, different products or services, different streams fo revenue and different budgets. Fortunately, there are a number of ways to go about disruptive innovation that, if chosen wisely, can help businesses to evolve and to reach, or even exceed, their goals. Here are six of the most popular ways to go about transformation in the corporate-venturing space.
1. Corporate venture capital
Probably the most well-known tool when it comes to corporate-venturing, corporate venture capital refers to the investment of funds by large companies and conglomerates into smaller external startup companies or venture builders. A notable example of this, dating back to 2016, was when automotive giant, Ford, aimed to have a ride-sharing service with fully-autonomous vehicles on the road by 2021. In order to achieve this, they made investments into four startups with experience in areas pertaining to the development of self-driving cars, such as artificial intelligence, light detection and high-resolution 3D mapping.
2. Strategic partnerships
Often, when two established corporations come together, they make magic! Strategic partnerships allow each brand or company to leverage its existing market stronghold, and by coming together can open them both — or all — up to new consumers, allowing for mutual growth. In 2015, international clothing manufacturer and retailer, H&M, joined forces with haute couture fashion house, Balmain, to launch runway looks at more affordable prices. The much-anticipated line was quickly sold out, giving an enormous sales boost to already-popular H&M, while bringing Balmain into the digital age and to a much wider audience.
3. Mergers and acquisitions
As the name suggests, mergers and acquisitions are when a large, established corporations buy younger companies or startups as well as any of their commercial-ready products. The reason why they are successful is that they give the buyers access to new markets and technologies that can serve to help them attain, or retain market dominance. Possibly one of the biggest media mergers to date was when Disney purchased 21st Century Fox last year for $71.3 billion. And what did they get for that enormous figure? A huge number of movies and TV shows, a filming studio, a handful of TV networks as well as stakes streaming site, Hulu.
4. Incubators
Not unlike the type used for infants, incubators — at least in the corporate-venturing space — are a way for smaller companies and startups to get the protection and nurturing they need until they are able to make it on their own in the big, bad business world. Entrepreneurs get the support and backing of a larger corporation while, in return, giving the company access to a new, untapped customer base. Y Combinator is world-renowned as one of the biggest incubators and is behind the success of many internationally-recognised brands, such as Dropbox, Airbnb, Weebly and Reddit.
5. Venture builders
It’s important, even for the biggest legacy organisation, to admit when you are out of your depth. Venture builders offer startups as a service and have teams who are experienced in growing new businesses from the ideation stage often through to launch. US-based venture-building company Obvious Corp are a good example of one and played a hand in the success of many household names, including Twitter and Apple by utilising technologies and strategies to solve systemic problems in a way that is both profitable and scalable. By putting capital and trust into venture-building experts, it allows for world-class innovation to take place and for markets to be well and truly disrupted.
