Corporate innovation teams are notorious for being money sinks and run the risk of being financial drains to organizations. If you’ve ever been down the path of setting up a corporate innovation program from scratch, you’ll likely hear through the advice of others or through your own (tough) lessons learned that failure rates are high.
What the big corporate innovation challenge comes down to is the pace of the open market, which moves faster than any large entity can. That’s why in 2016, Kaleido Ideas & Logistics, a global logistics operator with offices in Spain, Portugal, Angola, South Africa, China and India, partnered up with fellow logistics companies to run a unique corporate accelerator program. RocketSpace brought together companies and startups to viability-test ideas for business experiments.
“We are highly specialized around our own R&D and have no idea about how to manage or run an accelerator properly,” explains Xoán Martinez, CEO at Kaleido Ideas and Logistics. “We knew that trying to launch a program on our own would potentially involve a steep learning curve, wasted resources, and failure as a result.”
So what exactly is the arch nemesis of corporate innovation?
This is how you outsmart it.
Step 1: Recognize that There Are Good Failures and Bad Failures
Good failures help reorient your business and streamline your path to product/market fit. Bad failures are the ones that throw your core business off its rails. Good failures prevent bad failures from happening.
But the word “failure,” itself can be jarring for individual team members who rely on their jobs, on a personal level. That’s why your organization needs to redefine what failure means. Answer a simple question: “what’s good failure, and what’s bad value?”
This is a philosophical question that returns to the roots of your business. From an interpersonal standpoint, you’ll want to involve people from multiple layers of your organization in exploring it.
Team members within your company need to have a close understanding of this distinction. That means looping in HR and thinking through the fundamental values of your culture. This is an internal conversation that Intel has had over the span of 50 years of evolution.
“At nearly 50 years old, Intel has accomplished a lot,” explains a recent article in Innovation Journal.
“We hire thousands of people every year, and then integrate them, grow their knowledge, capabilities, and productivity. Nearly 100,000 of us interact every day – like most of you, we spend more time with our coworkers on any given day than we do with our families. There is a tremendous amount of goodness in our history and how we’ve impacted the world, but as you can imagine, over 50 years we’ve also created standards and processes that can at times feel bureaucratic to some.”
The company kicked off a 3-year innovation effort, spearheaded in 2014, to run pilots and to help members of the organization get comfortable failing by doing. Pilot programs were essential to this process.
“We spent hours on end locked in a room with pictures, quotes, magazine stories, and about 12,000 Post-it notes tacked to the walls,” says the case study in Innovation Leader.
“We argued. We created. We tried things, and encouraged others to try new things as well. The combination of expertise, opinions, discussion, brainstorm, and experience meant we landed on better, more robust, and less insular ideas and solutions than we might have with a more traditional team.”
Step 2: Decide Whether External Resources > In-house Solutions
There’s no such thing as a company that isn’t innovative. There are such things as companies that don’t move from ideation to execution fast enough. As research from Gartner points out, “70% of organizations report that the rate of change has increased—and is accelerating.”
Corporations need external expertise and talent from the outside world. This knowledge base may include a mix of consultants, coaches, researchers, and startup partners that are tackling pain points that your market is facing.
Acquisitions often provide companies a linear, short distance to intellectual property. That’s likely why, according to research from CB Insights, corporates and corporate VCs participated in nearly 26% of all U.S. deals in Q1 2017.
But acquisitions are deep commitments and present opportunity for risk. What if the startup team that joins your core company isn’t a fit? What happens if the product loses steam due to a competitor gaining market share?
Companies need a proof of concept of a partnership before committing to one.
Step 3: Move from Ideation to Execution by Launching a Pilot
Make sure that the partnership, acquisition, investment—whatever—is going to be successful by launching a pilot program first. This pilot program should be:
- Set a focused, achievable milestone
- Set a budget around $5K-$10K
- Operationalize a production plan
- Measure success based on what you’ve learned
Iterate from there.
For more helpful tips for structuring a corporate innovation pilot, check out these resources:
- A guide to setting up startup/corporate partnerships
- An overview of the 3 traits that enterprises of the future share in common
- A webinar that discusses how to launch a pilot in advance of a partnership
Looking for tips tailored to your unique corporate innovation practice? Reach out to our corporate innovation services team for resources tailored to you.
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