Throughout history innovation has always differentiated enterprises that have succeeded versus those that didn’t. From the wheel to the electric bulb to the Apples and the Ubers of the world today, the evolution of innovation has had a rapid turnover.
The boom of the startup world over the last decade has pushed the limits of innovation in terms of the speed and reach. Product lifecycles are much shorter and with agile / sprint development methodologies enterprises are constantly challenged by much more nimble start-ups. Of course enterprises have not just sat on their backs and let the Davids run them over. And thus was born corporate innovation in its startup avatar.
Acquire to hire, does it work?
One method employed by enterprises over time is to acquire start-ups and integrate their product/solution into their own. A recent report by Tracxn indicates that in 2016, of the 185 acquisitions in India in the first 3 quarters, a staggering 142 (76%) was by large enterprises.
However on a very conservative basis it is estimated that post acquisitions founders spend about 80% of their time in dealing with the internal bureaucracy and only a miserly 20% on the actual product development. Kind of defeats the purpose, don’t you think?
… what about DIY?
So what are enterprises doing to stay ahead? A number of things – the most optical one being redoing their offices to look like cool Silicon Valley based start-ups, and letting employees to come to work in shorts and t-shirts. Obviously that is not enough.
The next thing enterprises are doing is to put together internal innovation teams. Very often this team is put together by pulling out employees from strategy, product, marketing and digital teams from their regular jobs and bringing them together to innovate. Even in the best run companies only 1 out of 4 innovation initiatives achieve long term success. Failures are often concealed or covered up which causes future innovation initiatives to not learn from failures and this only worsens the track record.
Given this seemingly wide divide between the need to innovate and results, enterprises are increasingly looking at ways to partner with start-ups in multiple modes. The Startup-Corporate collaboration report by Imaginatik and Mass Challenge shows that 82 per cent of corporations today deem partnerships with startups as “somewhat important” to “very important”. The same report also suggests that 23 per cent of them called interactions with startups as “mission critical”. And 67 per cent of the corporations say that they would prefer to work with early stage startups. On the other hand, 99 per cent of startups say that partnership with corporations is “somewhat important”.
And the benefits come in for both parties. While corporates get to drive their businesses with technology or product innovation, entrepreneurs look at corporations as potential customers/partners, a medium to market their product and also gain access to mentors from within the corporate who come in with years and years of experience.
Corporations open doors for Innovation
A number of corporations have embraced the Open Innovation model by running Corporate Accelerators. Samsung, Lego, GE, Coca Cola, NASA are some of the big names that have successfully incorporated start-ups within their ecosystems either by running their own accelerators or partnering with other accelerators and incubators to run cohort-based programs. Here is a list of over 70 active corporate accelerator programs either being run by themselves or with an external partner.
Corporate innovation programs are clearly the way ahead for enterprises to rapidly embrace innovation at the speed of the startup. All around the world this is becoming the next gen of collaborative platforms that is driving innovation.
Oh, did you want to know more about corporate accelerators? We’ll be back…