Our recent research on Corporate Innovation Programs (download the high level version) found that companies are attempting to act more nimble and agile by deploying a combination of these innovation programs. Frequency varies, and budgets are skewed around Startup Acquisition, being the bulk of the investment. Corporations are taking pages from startups, to emulate the culture of a fast-moving smaller company.
This list is structured in a logical way: The items listed on the top are happening inside of the company, while the items towards the bottom happen outside of the company. This is not a list that you should automatically approach as a checklist as the order of deployment will vary. For example, some companies have corporate development teams only, that solely exist to acquire startups –rarely to derive innovation from internal teams.
- Dedicated Innovation Team
Corporations often start by staffing an innovation team within the company, which is comprised
￼of both full- and part-time employees dedicated to developing strategy, managing, and activating innovation programs. These leaders are experts at internal communications and are proven change agents. Centralized teams deploy on behalf of the business units, and often act as a governing body when deployed on a global/cross-functional scale to manage multiple innovation team strategies.
- Innovation Center of Excellence
Innovation Centers of Excellence (CoE) enable innovation across multiple departments within the
￼company, and members serving on the CoE are also responsible for senior leadership within various corporate groups. Common departments included in the CoE are marketing/digital, PR, legal, HR, IT, and product. The goal of the CoE is to standardize and scale innovation across the company, providing guidance to efforts that do not yet have dedicated teams or leadership.
- Intrapreneur Program
Rather than rely solely on external programs, internal employees — dubbed “intrapreneurs” — are
￼given a platform and resources to innovate. These programs invest in employees’ ideas and passions to unlock everything from customer experience improvements to product enhancements and full-blown internal startups that are then launched from within the company.
- Open Innovation (Hackathon or Internal Incubator)
Hosted inside a corporate office, large corporations invite startups to embed at their physical locations
￼and “incubate” them with funding, corporate support, and other perks. This can also take the form of overnight hackathons, demo days, and online open-innovation programs/contests that request — and often reward — ideas from the crowd.
- Innovation Excursions
Frequently, inspiration comes from outside, not within. Corporate leaders tour innovative
￼organizations, companies, and regions (in Silicon Valley and other relevant tech hubs) to discover trends in various industries, learn from speakers, meet partners, and be inspired as they immerse themselves in innovation culture.
- Innovation Outpost
An innovation outpost is a dedicated physical office, in Silicon Valley or wherever innovation
￼happens in a corporation’s key market(s), staffed with professionals whose job is to sense current trends and disruptive technologies, connect with local startups, and integrate programs back into corporate headquarters. Some innovation outposts are host to partners, events, and startups, thereby overlapping into internal accelerator territory. An innovation outpost is typically managed by employees, unlike an external accelerator, which is run by a third party.
- Technology Education / University Partnership
Through an educational partnership, corporations can tap into new university graduates, early-stage
￼projects and companies, and the network of an established educational institution. In addition to traditional universities, there are new private versions opening up that are dedicated solely to technology training, like Galvanize and General Assembly.
- Accelerator Partnership
Corporations partner with third-party accelerators to provide sponsorship and/or funding in
￼exchange for relationships with startups and integration opportunities. Corporate innovation professionals often embed themselves in accelerator offices, fostering relationships with local startups. These external accelerators are run entirely by vendors (investors, advisors, etc.), unlike innovation outposts, which are managed by employees.
- Startup Investment
Corporations place bets among the startup ecosystem, with both small investments for early-stage
￼startups and larger amounts of corporate funding that yield market data, create opportunities for follow-on investments, and block competitors. Intel Capital is a recognized leader in corporate investing, raising $1.28 billion in funds and making 1,094 investments in 769 tech companies to date.
- Startup Acquisition
Rather than build innovation from the inside, corporations acquire successful startups and integrate. While expensive, the startup is often already successful, and the acquisition can help the startup
scale further. According to recent studies cited by Global Corporate Venturing, only 5% of corporate venture capital (CVC)-financed startups are acquired by the backing parent corporations.3 A new study from MassChallenge also reveals that 23% of corporations see working with startups as “mission critical,” and 67% say they want to work with earlier-stage startups.
Which program is best for every company? We didn’t find a silver bullet for all, as it varies on the innovation goals and culture. For example, some cultures are open to employee feedback, and thus an intranpreneurship program makes more sense. However, in some cases, working with outside companies is easiest, so partnering through accelerators or investing in startups is more sensible. Want to know more? Download the report.
Though there are many ways to approach innovation, the majority of companies focus on building innovation teams or “Innovation centers of excellence,” as well as fostering internal education, before moving toward external deployments.
In Crowd Companies’ recent report, The Corporate Innovation Imperative (download here), we identify 10 types of innovation programs corporations pursue when looking to evolve their business models, customer experiences, operations, or products and services. More on the 10 programs can be found here. We discovered that corporations often excel in one program initially, then add programs to their innovation portfolio as they mature and are able to justify related expenditures.
And, where do they begin? With their own teams. Through our survey, we found that dedicated innovation teams (79%), innovation “centers of excellence” (61%), and technology education / university partnerships (54%) are the most commonly deployed corporate innovation programs (see figure below). This shows that companies are first focusing internally on building the right teams, getting governance and processes in place, and educating current and new employees on emerging technologies before spending time and resources on rolling out external programs or investing in the startup scene.
Frequency of Corporate Innovation Programs
One way corporations are focusing on building strong teams is by involving cross-departmental constituents in their efforts. This smooths the path to internal acceptance and adoption as advocates are in every corner of the organization.
Much of the success of innovation teams depends on internal alignment among tangential departments, like legal and marketing, to move from ideation through implementation. Verizon recommends bringing new ideas and developments to lawyers early, who can help obtain and protect intellectual property rights in a fast-changing global legal landscape. Innovation teams should also have their own marketing and PR resources, as Mastercard Labs does, to socialize ideas internally and externally, when appropriate, pick up sponsorship, build momentum, and identify pilot customers. Mastercard Labs also produces its own 60-second “pitch” videos for each idea that makes it to prototype, as an easy way to promote viral sharing within the company.
How is your company approaching corporate innovation? Are you looking to build teams and foster education before looking outward to bolster innovation?
By Jeremiah Owyang, with co-contributor Ryan Brinks
Corporations are approaching innovation processes and methods in different manners, we’ve seen catalogs of over 70 examples. Here’s a sample of the most common methods that we’ve commonly heard in our interviews from our recent report on the Corporate Innovation Imperative (download). Feel free to leave comments below with a design process or method that you feel if valuable, and explain why.
In summary, here’s the most commonly discussed and adopted versions, both in a high-level table below, then summaries below with a diagram
Guide to Innovation and Design Methods
||1956 by Herbert D. Benington
||Teams work independently on each stage
||2008 by Eric Ries
||Low investment to test the market
||1969 by Herbert Simon
||Creative, unconventional solutions
||Forces exploration of ideas beyond the familiar
||2001 by the writers of the Agile Manifesto
||Can quickly and easily adapt to project changes
||2010 by Jake Knapp
||Produces a tested prototype in just one week
||1981 by Hideo Kodama
||Direct digital-design-to-prototype approach
Known for a traditional method, it’s best suited to products for which the customer’s needs and expectations are well defined, the waterfall design methodology flows sequentially through six stages of development, completing one milestone before reaching the next. Waterfall design begins by understanding the context surrounding the problem to be solved and forming boundaries within which the solution must exist. Next comes the theoretical design of the product itself, followed by prototyping and testing. The fifth stage is packaging and delivery, and the final consideration is ongoing maintenance and customer service. “Even though there are newer and sexier development processes available, most projects are still probably using some version of this approach to deliver their projects,” TechRepublic stated.
Example: Acme project leaders sit down to interview a corporate client and agree on requirements for the project. They then instruct the design team to produce plans, which are prototyped and tested. From there, designs are tweaked, the prototype refined, and more testing conducted until the product is launched. Post-deployment, customer service keeps tabs on issues and ongoing maintenance.
Rather than presume to know what customers need and want, the lean startup design methodology helps innovators focus on a disciplined management process that transforms an idea into a product by circling around and around three core principles: build, measure, and learn. This process begins by solving the problem with a basic, unrefined minimum viable product (MVP). The development team can then test the MVP internally and externally with a focused group of target customers. The feedback and learning then feed back into a new round of refinements, tests, and feedback. Soon the product is spiraling along an ever-rising and broadening helix that exposes it to better technology and more customers. “By the time that product is ready to be distributed widely, it will already have established customers,” TheLeanStartup.com states. “It will have solved real problems and offer detailed specifications for what needs to be built.”
Example: As soon as a product idea is formulated, Acme’s build team puts together a rough working MVP and passes it along for testing and exposure to a focus group of customers. Based on tests and feedback about the potential for the MVP, the build team reworks or refines the MVP and presents it for another round of testing and customer feedback. Eventually, early versions of the product gain momentum with beta testers, and their feedback defines the direction of future enhancements.
The design thinking methodology encourages exploration of unconventional solutions by forcing innovators to go beyond their instincts and experience. Design thinking starts with the challenge of defining not just any problem but the right problem, and that requires developers to leave the comfort of stereotypes and theories to confront the realities of their customers’ situations and habits. It also involves intense questioning of every perspective. To then solve the right problem, a diverse team must be disciplined enough to push past the solutions that come easily and propose many other, often more creative, possibilities. From there, the team experiments freely with the most promising ideas until a winner emerges that can ultimately be prototyped and tested. “Design thinking,” according to Fast Company, “describes a repeatable process employing unique and creative techniques which yield guaranteed results — usually results that exceed initial expectations. Extraordinary results that leapfrog the expected.”
Though more ambiguous than other methodologies, Agile represents any methodology that’s focused on creating products in a way that quickly adapts to ever-changing needs, demands, ideas, and technologies. At the core of Agile is a set of four guiding values and 12 principles. Being Agile means prioritizing individuals and interactions over processes and tools, working software over comprehensive documentation, customer collaboration over contract negotiation, and responding to change over following a plan. This is typically accomplished by breaking projects into small pieces and conducting short-term iterations that move products along one goal at a time. Between iterations, teams have the opportunity to act on feedback, re-prioritize goals, etc.
Design sprints are five-day shortcuts to solving big problems or tapping new markets through high-level idea prototyping. Developed by the minds behind Google Ventures, “the sprint gives you a superpower: You can fast-forward into the future to see your finished product and customer reactions before making any expensive commitments.” Google Ventures outlines the design sprint process by day: “On Monday, you’ll map out the problem and pick an important place to focus. On Tuesday, you’ll sketch competing solutions on paper. On Wednesday, you’ll make difficult decisions and turn your ideas into a testable hypothesis. On Thursday, you’ll hammer out a high-fidelity prototype. And on Friday, you’ll test it with real live humans.”
With the rise of 3D printing has come the emergence of rapid prototyping, which transforms digital CAD designs directly into functional prototypes or concept models. The rapid prototyping process accelerates testing, cuts out wasted time and resources, and leads to earlier detection of important product flaws or issues. It can also allow for wider experimentation of different manufacturing materials, including photopolymers, thermoplastics, metals and composites. Rapid prototyping can even engineer the tooling or molds needed for large-scale production.
Summary: Choose a design method that suits your need.
What’s most interesting is that very advanced companies like WL Gore train and educate all their employees on a common innovation framework (in this case, Lean Startup method) and encourage all teams to approach, measure, and even report up on this method. I personally care less about which method you choose, as long as it’s the right one for the business and encourages a culture of innovation beyond just pockets of labs. Lastly, we found that many agencies, consulting firms and innovation boutique companies have their own permutations of the following methods, which they rebrand and package up for their clients. Here’s a sample of a few processes that we’ve observed, feel free to leave a comment with additional versions, below.
Photo credit: pexels
Most large corporations have a wide range of customer types. It often spans many countries, languages, and cultures. To help create the right product solutions for your customers, savvy companies are activating their employees (not just the dedicated product team) to unleash innovation from all areas of the company, which results in a diverse set of product ideas.
Yesterday, I spoke at the executive track at the Inclusion Conference in SF to about a hundred Chief Diversity Officers from some of the largest corporations in the world. I was honored to be join by my fellow speakers included Allison Wiener of Clorox, Sandy Carter, Ted Childs, and Pat Waders of Linkedin. I presented three case studies on how MasterCard, Adobe, and Cisco are activating thousands of employees to generate tens of thousands of ideas, many of which go to market.
These “Intrapreneur” programs, which engage employees in their jobs to come up with new ideas, spur new forms of creativity, and generate new ideas that the product teams may not have the bandwidth to produce. Furthermore, this engages employees (esp job hopping younger folks) to quickly make a difference in their job. Over ten years ago we saw “idea” generation websites emerge at Dell, Salesforce, and Starbucks to enable employees to bring ideas forth.
Now, at companies like Adobe, we’re seeing formalized programs emerge with training, executive support, and even a cute “kickbox” which includes documents, energy bars and drinks, and a credit card with a modest amount of money to get an experiment going. By the way, Adobe has open sourced Kickbox, you can download the program and apply it to your own company.
I’ve embedded my slides from the presentation below. I’d love to hear how your company is enabling your employees from all walks of life to generate ideas –Crowd Sourcing ideas doesn’t just come from customers and partners –but also from your own employees.
Intrapreneruship programs are one of ten Corporate Innovation programs companies are launching, learn about all ten in our latest report, the Corporate Innovation Imperative. Thank you Jaimy Szymanski, Adobe, Mastercard, and Cisco for the data, and to Sandy Carter (read her book on innovation) for the invite to speak.
Corporate innovation programs are primarily measuring revenue to show success –but that’s a risk, it a small incubated program is being compared to the primary billion dollar business lines. ROI is a fallacy metric of corporate innovation. Basing program success on ROI too early, rather than dedicated innovation KPIs, will not yield an accurate representation of progress.
In our recent Crowd Companies research, “The Corporate Innovation Imperative” (available for download here), we found there is a startling chasm between what organizations are measuring around innovation and which KPIs truly indicate program success from infancy through maturity. Corporate innovators who implement realistic measurement plans that focus on innovation KPIs, not immediate ROI, find greater executive support and are given adequate time to deliver results.
Our survey data of corporate innovation leaders reveals that the most common metric attached to innovation program success is increased revenue (66%), Other top measures of success include greater customer satisfaction (54.5%) and faster time to market for new products or improvements (45.1%) (see figure below for full list of innovation metrics).
Top Innovation Success Measures
Companies should focus on measurment depending on which phase of their innovation cycle they’re at. Lookoing at the classic Agile Startup methodology put forth by Eric Reis, companies (large and small) can focus on innovation metrics (usage, renewal, referral) in addtion to raw revenues.
Though innovators report increased revenue as an indicator of success, mature corporations reveal that focusing on ROI over other growth KPIs is actually harmful to innovation, and that programs should first encourage speed to market and increased ideas cycling through the pipeline. Migros, one of our interviewees, monitors KPIs of possible yield models instead of revenue for its innovation programs, with agreed-upon guardrails like maximum accepted expenditure per year and total investment volume over a period of time. It also plans out expectations for when innovations will break even in order to set realistic measurement goals and act accordingly if and when they are or aren’t achieved.
As companies climb the ladder of maturity, they also begin to clarify which of the four innovation goals (product innovation; operations; CX; or business model) they’re setting out to achieve (see figure below) — both within each program individually and in their innovation charter for the company overall. This impacts the metrics they attach to signal progress. When pursuing a new corporate innovation program, setting clear goals that answer “why this program?” is paramount to choosing the right initiative.
Corporate Innovation Impacts Customers in Four Ways
Advanced companies build their capacity for innovation by approaching innovation goals separately at first (avoiding the trap of too-early ROI expectations), each with its individual programs and support mechanisms. Then, as the corporation matures in its efforts, its programs will strategically progress to fulfill all four innovation goals within a culture of innovation that serves as the lifeblood of the organization.
For example, each of the above innovation goals have different associated KPIs for each, for example Product Innovation will be focused on usage, revenue, and referral, Operational Innovation may focus on reduced costs, higher quality, or faster time to market, Customer Experience innovation may focus on customer satisfaction, engagement, and reduced contact center costs, and Business Model Innovation will focus on newly generated ideas, avoiding disruption or partnerships with young startups.
(Photo via pexels)
Corporate innovation leaders face many challenges when attempting to get innovation programs off the ground. Peter Schwarzenbauer, chairman of BMW (a Crowd Companies member), is quoted saying, “Innovation is a willingness not to be understood for a long period of time.”
Change agents are those whose radical, innovative ideas are not internally understood –and the culture of the company resists change that could conflict with existing business models. In our research, we tested to see if technology adoption, relationship with startups, or if understanding new trends would have been a primary cause of challenges –yet over and over, we heard that internal culture was the primary issue.
[Ironically, most Corporate Innovation leaders had more challenges with internal culture –rather than combating disruptive startups from the outside]
As part of Crowd Companies’ research for “The Corporate Innovation Imperative” (available for you to download here), we surveyed individuals responsible for innovation within their organizations. Survey results (below) show that the top innovation challenges include: fostering an internal culture of experimentation and innovation (57%); juggling competing internal agendas and goals (56%); overcoming the middle management “permafrost” layer (45%); and moving forward despite deferred commitment and delayed action (33%).
(Above graphic is from report: Corporate Innovation Imperative, download on slideshare)
Top Innovation Challenges:
Our research also included interviews with innovation leaders and strategists from large corporations. During our interviews, we uncovered two additional challenges: keeping up with startup innovations and a steering progress with a lack of clear business goals.
- Foundational culture change is required to make significant progress.
Innovators first focus on internal education as a catalyst for cultural change, from external speakers to internal workshops, first at the executive level and then targeted toward other senior leadership. Innovation excursions are also helpful in the initial stages of program development to align executives and teams around what’s possible.
- Middle management “permafrost” doesn’t support innovation.
A symptom of a culture resistant to innovation is a middle management layer that can only see short-term goals, not long-term change. As a result, they encourage employees to operate efficiently within their current roles and responsibilities by meeting consistent benchmark metrics. This doesn’t leave room for the innovators to explore new ideas. We heard this middle management layer called everything from the “frozen tundra” to the “permafrost” to the “antibodies.” It’s critical for senior leadership to embrace innovation from the top down, so middle management is empowered to support innovative employees without fear of retribution.
- Startups innovate quickly, leaving corporations playing catch-up.
Many companies are burdened with complicated processes, long production cycles, and bureaucratic red tape for moving forward with new ideas. These hindrances stand in direct contrast to the countless nimble startups swiftly prototyping and executing ideas that directly compete with slower-moving enterprises. Innovators commonly turn to educational workshops (in-house or at vendor locations) and university partnerships to speed internal innovation, as well as innovation outposts.
- Companies lack clear business goals for innovation programs.
Corporate innovation leaders, who we’ve published more data about their role here, are tasked with tying programs to business metrics and proving ROI to executives, yet they often lack the budget needed to adequately resource said programs to an extent that generates results. There is hope for innovation, though. Our survey revealed four innovation programs with more clearly defined business goals: dedicated innovation teams, innovation outposts, innovation “centers of excellence,” and startup investment programs. Mature companies are even defining innovation goals by individual program, while simultaneously laddering metrics up to overarching departmental and company KPIs.
Companies need to clear the obstacles for Corporate Innovation leaders.
The Corporate Innovation teams are often struggling with internal conflicts –more than combating external startups. When I’ve spoke to these leaders, they are willing to risk their jobs to make a change to help innovate their employer, some said “I’m banking on my employability, not my employment” as they knew they could get jobs elsewhere if it didn’t pan out. It’s key that management help offer them a road towards innovation success. Also, read Steve Blank’s list of the 13 things companies are doing to hamper innovation, or Stefan Petzov of Swisscom’s post on corporate challenges.
(Photo from Cindy Chen)