I’ve visited many a region that’s interested in creating its own “Silicon Beach/Mountain/Cliff/Island/Plane/Desert,” and that is truly wonderful. Along the way, I’m often asked what makes Silicon Valley successful.
The elusive recipe need not be hidden in a vault or passed down from Nana to her next of kin. Here’s a tried-and-true recipe that was handed down generation to generation in Silicon Valley for 60-plus years. Yes, it’s a family secret, but I’ll share it with you now.
- A culture that embraces failure. Only 5% of startups win, but they win big. Yet embracing the other 95% is required for persistent innovation.
- Ample education in technology & entrepreneurship. Successful tech regions have multiple colleges and a culture of continual learning.
- Plentiful Venture Capital — not just Gov money. Free-market VCs are needed to bolster the community, as govs can create friction for startups.
- Successful entrepreneurs re-invest — not retire. Once a CEO cashes out, he or she mentors others and invests funds back into the ecosystem.
- Density of population to foster serendipity. Most innovation happens in urban areas, fostering a frequent intersection of people and ideas.
- Attractive quality of life. Talented workers can work anywhere, so attract them with diverse culture, temperate weather, and quality lifestyle.
First, place all ingredients in one large bowl, and use a mixer to stir vigorously on high for three years — lumps are OK.
Then, pre-heat oven on low, place ingredients on a greased pan, and bake for five years. Remove from oven and let cool for 10 years as it rises.
Any dish becomes bland if served the same way, so add flavor from a diverse set of founders and workers who span genders, races, and more.
As a garnish, whisk in some tech bloggers, sprinkle in some eccentric founders, and grind in a fresh industry analyst or two.
Serve warm, serve generous, and enjoy the sweet taste of innovation with those around you.
Congratulations, you’ve just baked your own Silicon Valley.
In our research on corporate innovation, we found the most advanced companies allow competitors to innovate in their own buildings.
Johnson & Johnson Innovation, JLABS enables outside innovation inside the company. As a result, they’re improving the entire industry, including efforts of competitors, in order to positively impact society as a whole.
Above: Crowd Companies’ Carl Bohlin addresses the council on our tour to JLABs in SF.
At its nine sites within North America, JLABS gives startups the tools they need to level the playing field against large, corporate R&D teams. Half of each JLABS space is a common area with state-of-the-art equipment for use, while the other half is comprised of individual labs that help companies get started. JLABS is all new space, not old storage or “leftover” labs, and the facilities are separate and distinct from Johnson & Johnson corporate with no Janssen scientists working there.
The Crowd Companies team was privileged to tour one of the JLABS sites earlier this year, bearing witness to how Johnson & Johnson Innovation is breaking the mold in a big way. During our tour, dinner, and discussion at JLABS in South San Francisco , we found that the culture as a whole is diametrically opposite normal business behavior by inviting anyone into their space in order to innovate and advance specific medicines, medical devices and consumer & digital health solutions.
The concept of JLABS sprouted from a need when JLABS leader Melinda Richter suffered a near fatal medical emergency while traveling internationally, see her TED talk. She made a promise that, if she survived, she would do something to enhance medical efficiency and bring solutions to patients faster and better. From there, JLABS was born and sold to executives. It is now thriving under Richter’s leadership.
JLABS provides their space and tools onsite with no vested interest. Startups and innovators onsite have complete privacy to work without any sharing of IP. Security cameras are not even allowed to be directed where work is being conducted, and participants are encouraged to clean whiteboards after using. If it is presented with an idea of potential, Johnson & Johnson Innovation often pursues deeper partnerships that allow it to shape the ultimate innovation or product at a later date.
JLABS measures its success based on internal financial metrics, quality of innovators coming in, quality of science and technology being developed, development milestones reached, the number of people using its space, and education programs run.
Crowd Companies identifies the JLABS approach to innovation as an advanced program, as it not only benefits the company but also the entire industry. “Common tides raise all boats” in innovation, and Johnson & Johnson Innovation understands that their scientists will only be pushed further toward greatness if up against the best minds, with adequate resources, in the industry.
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.