Long past is the time where innovation happened in the secret R&D lab. Today, new corporate innovation tools seem to be created on an almost daily basis. We can read about established multinational companies engaging in hackathons, startup studios, innovation labs, corporate incubators, accelerators, corporate venture capital or crowdsourcing, just to name a few. And almost at the same speed, if not even faster, we see consulting companies, like BCG Digital Venture, McKinsey Digital or WeFound, selling these new tools as services to established companies.
Executives in companies who are actually responsible for delivering innovation are often overwhelmed by these developments, and ask for guidance and clarity. But when looking for clear and simple definitions, they quickly realize that academics, companies and last but not least consulting companies are using these terms differently and according to their own objectives, obviously.
And while, of course, definitions would help to bring some light and transparency into this opaque jungle of new corporate innovation tools, ultimately it would not change a great deal. Companies are free to use these terms in whatever way they want, and sometimes only to create more confusion.
So, instead of crafting lengthy definitions when thinking about choosing, testing and/or implementing new corporate innovation tools in your company, we propose to ask a couple of simple yet fundamental questions regarding your innovation objectives that will help you find the right tool for your business:
What is the direction of your innovation efforts, inside-out or outside-in?
The first fundamental question is whether you want to bring innovative ideas from inside your company to the outside world, or whether you are trying to bring outside innovations into your company.
A number of the new corporate innovation tools have been created in the spirit of opening up the company to innovative ideas which have been or are created outside the company. For example, corporate accelerator programmes are limited-duration programmes, sponsored by large firms, providing support to external startups with at least a working prototype, seeking to scale their business through mentorship, access to company-specific resources and to relevant stakeholders. Here the direction is clearly outside-in. The overall objective of these corporate accelerator programmes is to support corporate innovation by either complementing their products and services with technology, products or services developed by the start-up, or by evangelizing the start-ups to use the corporate products and services.
Corporate incubator programmes, on the other hand, are typically programmes supporting companies’ own employees in developing their ideas, especially in the initial stages. These are a highly flexible combination of business development processes designed to nurture and grow new and small projects by supporting them through the early stages of development.
And while the direction of innovation effort seems to be clear in the case of corporate accelerators vs. corporate incubators, for other tools like for example hackathons, this question is not as obvious. Some companies use hackathons as a way to bring innovative ideas inside the company by sponsoring open hackathon events, attracting outside talent to join the event, bring and build their ideas during the event. But large companies like for example Bosch also run so-called internal hackathons for certain, potentially more IP critical topics, with only their own employees brought in from various divisions and regions. With almost 400.000 employees at least, companies like Bosch have a large talent pool to tap into.
What is the search focus of your innovation effort, narrow or broad?
A second crucial question to ask is whether your search focus is rather narrow and focused, for example on innovative ideas which are closely related to the core business of a company, or whether you are looking far and wide. A lot of corporate innovation efforts tend to look rather narrow and close to the existing core business. In the case of a corporate accelerator programme, for example, startups might be admitted because it fits the corporate accelerator’s strategy or theme (mobility, retail or the like). The obvious advantage is a closer link to the industry or business model of the corporate sponsor, the potential disadvantage is that a narrow focus just reinforces the already narrow interest and therefore risks to miss out on non-obvious, game-changing innovation from outside the industry’s definitions or strategic logic.
Among the above-mentioned tools, corporate hackathons and corporate crowdsourcing tend to be rather strategic and narrow in focus, corporate venture capital broader and incubation/acceleration somewhere in the middle. But as mentioned, this differs from one company to the other, and it is good to ask specific questions about these innovation tools’ search focus.
Whose resources are deployed for the innovation tool?
The third and last critical question is where the resources to deploy and run the innovation tool come from. Any of the above-mentioned tools can in principle be developed and implemented one hundred percent by the company itself or with the help of partners and contractors. In case of a corporate incubator programme, for example, a company can decide to create and furnish a dedicated space by themselves, recruit a sufficient number of mentors from within the ranks of the company and have employees run the mandatory course and workshops. On the other hand, today a company can readily buy all these elements from professional service firms.
Since innovation is such a crucial element of a company’s survival, this question should not be taken lightly. And even if a company decides to outsource large parts of the tasks involved in any of these new corporate innovation tools, we fundamentally believe that it is important to build up enough competence so that they can actually shape and steer the direction of their efforts, because the importance of innovation will not go away but rather grow.
When looking at the deployed resources, corporate innovation studios are often an interesting case. Like corporate incubators, they focus on innovative ideas from within the company. However, once an idea is selected, corporate innovation studios then deploy dedicated resources and personnel to test and accelerate these ideas (internal resources and sometimes external resources), while typically in corporate incubators the people who had the idea also test and accelerate them.
To get the bang for your buck, do not get hung up with definitions
Answering these three questions will help you navigate the crowded landscape of new corporate innovation tools and define the right programme for your specific needs. There is plenty of literature and also help from consulting companies on any of these tools. But without some introspection on your corporate innovation objectives, you risk chasing the newest trends and not getting the bang for your buck.
Feature photo credit: Olivier Le Moal – stock.adobe.com.