Corporations want to innovate, but issues such as tighter R&D budgets and organizational bureaucracy can make tapping outside sources - startups - look easier than doing it in-house.
For long-term success, corporate innovators need to cultivate habits of curiosity, deliberate observation, diverse information seeking and engagement with other creative people, as well as nurture habits of taking ‘little bets’ via creative play, prototyping, learning and pivoting.
All this is easier said than done.
The tightening up of long-term R&D budgets, increasing digital disruption, organizational bureaucracy, and the bias of prior success are making it harder for large enterprises to innovate on their own. It’s driving them to tap new sources of innovation startups.
With innovation strategy usually covering product, service, platform, structure, process, business model, network, channel, customer engagement and brand, corporate innovators needs to consider these 10 steps before launching a startup-focused action plan.
1. Develop an innovation culture. Before a corporation decides to build their Corporate Venture Capital (CVC) policy they need to develop internal capabilities and a startup culture. In an increasingly competitive and globalized economy, it is only ‘unrelenting innovation’ that can help companies sustain a long-term advantage.
2. Be part of the startup community. A number of startup communities have flourished around the world that meet for grassroots events, such as Mobile Monday, Startup Week, Open Coffee Club, Creative Sundays and Startup Weekend. These meetups draw startups and other professionals who meet regularly to discuss industry trends, propose solutions and network on promoting innovative ideas. These events are active sources for engagement with entrepreneurs, and have drawn sponsorships and participation from large firms such as Microsoft, Google and Adobe.
3. Scout through a hackathon. Hack Days or hackathons are time-defined problem-solving engagements to solve specific technical, business or social issues. Hackathons reveal new insights into problem solving, promote emerging technical solutions and give large companies a chance to develop ideas into working products.
4. Host a competition. Some large technology giants have launched their own startup challenges to attract and cultivate the best talent from around the world, such as the Intel Global Challenge which attracted 20,000 young innovators and entrepreneurs from 60 countries.
5. Think of your company’s employees as a massive focus group. This creates of treasure chest of invaluable insights for early stage startups to tap into and learn from. Leverage the company’s expertise for brainstorm sessions or focus groups for your startups . It’ll often prove to be rewarding and enjoyable for both sides, while helping your portfolio company better understand the dynamics, industry, or workflow of their customers.
6. Benchmark and understanding what other CVCs have done. Deploy a research team to observe and analyze if you have to.
7. Develop your accelerator program or innovation lab. This is where you cultivate few very early stage startups. Investment may not be priority but mentorship, guidance and access to market could be key giveaways. Launching an accelerator is a promising way for large companies to better understand and leverage emerging technologies in areas such as SMAC (social, mobile, analytics, and cloud).
8. Relocate your CVC team at another incubator or coworking space to get the friction and build experience. In addition to accelerators run by corporations or investors, there are longer-term incubators for early-stage startups run by government organizations and universities. These incubators serve as good platforms for corporate engagement with startups via investment and mentorship.
9. Create your own fund structure. Deploy money slowly as you learn the market and the scene.
10. Develop your own CVC model that works for you. Even though this may come with time, it is an option that can be done right with the right fund management team.
Choosing how to work with startups and which collaboration model is right for your business can be tricky. In order to continue the fostering of innovation across MENA, The Cribb has launched a Corporate Venture Program to help support corporations get in touch with exciting startups.