Companies need to innovate. This is the clarion call that has been sounded throughout the ages – Innovate or Die.
Truly, we have seen examples of companies that do not see the need to innovate perish and disappear in the annals of history and even those that innovate might fail in it. This article hopes to explain the methods corporates can use to increase innovation in their respective companies.
It is often the cheapest and easiest way for companies to acquire new technology which they deem necessary. It is relatively simple as acquiring technology is definitely not as tedious as building one up from scratch. Furthermore, it is a quick and impactful way to buy complimentary technology or capability that solves specific business problems or even to enter new markets.
Another perspective towards Acquisition is the trend of acquihiring, where corporates acquire start-ups, not for the product or service, but for the sake of hiring the team. A start-up team usually has great expertise and skills towards a certain field that the corporate might want to branch towards. Or perhaps, acquihiring can be an excellent way to introduce entrepreneurs into the team, to induce a spark of innovation in their current playing field.
Cooperation between Corporates and start-ups can be both a short term transactional one and it can be a long term commitment depending on the needs of the corporates. Common cooperation includes product co-development and procurement.
Product co-development refers to the joint research and development of products/services that tackle a business problem. The success of such co-development hinges on a clear brief from the corporate side on the exact problem and what is expected, a pre-designated budget for the project and a clear time frame within where both corporate and start-up will decide whether to terminate the partnership or progress beyond the pilot phase.
Cooperation in the form of procurement from start-ups works by the introduction of new approaches and processes to specific business problems or opportunities. Such strategic partnerships can either have an immediate impact or a longer-term transformational effect. However, collaboration in such a way often requires an open collaborative mindset and a rethink and renovation of the procurement process on a fundamental level.
Open Innovation refers to the mindset towards innovation that runs contrary to the traditional secret closed door Research and Development labs of corporates. Business support from accelerators and incubators thus fulfil said roles as a 3rd party in this open innovation ecosystem.
Such business support programs, usually run by incubators and accelerators help the growth of early-stage start-ups and make them ready for investments, market entry, scaling etc. Business incubators usually offer a flexible working space with additional value-added services including a centralised legal department and/or marketing support.
Accelerator programs on the other hand focuses on start-ups within a concentrated schedule, usually intense support of a few months, often in exchange for equity. They offer the start-up an environment for them to learn, test, validate their business model and usually culminate in a demo day for investors.
Corporates can improve on driving innovation by placing their innovation team away from their main headquarters, choosing instead to place it in a separate location, particularly in an incubator or an accelerator. To reform into a flexible working environment, it is usually beneficial to be part of that working culture.
One-off events usually refers to self-contained events that often take the form of competitions and hackathons. These have the benefits of exposing employees to the entrepreneurship ecosystems and the mind-set of start-ups, provide new thought angles and perspectives of emerging business trends as well as it being a branding of associations of the corporate with the start-up community.
However, it has a high tendency of the competitions to be literally a one-off impact as the effect usually does not extend beyond the immediate. Without a proper follow-up within the company and the management team itself, there will not be any substantial change in the working culture.
Sharing of a corporate’s software, hardware and services can go a long way towards mutual co-operation between the large corporation and a start-up. The most obvious positive impact is to be able to build up an innovative corporate brand as well as building up goodwill amongst the start-up community.
Direct investments by corporates (also known as corporate venturing) is a useful way to access new markets and capabilities. It has less capital requirements than acquisitions and it concludes at a much faster speed as compared to internal Research and Development processes.
Of course, for a corporate to make better informed decisions and investments, it is always recommended to partner with stakeholders who are involved in the start-up ecosystem itself; mainly accelerators and incubators.
Mix & Match
The large corporate firm can choose one or numerous ways to innovate; with the best interest of the company in the mind. The days where innovation meant shutting a team of people in a lab are over.
It is all about agility, speed, and precision.
Let’s get working.