Large, established companies are trying on various programs to foster new innovations in an attempt to find the best way to change course for their big ships.
These established companies are struggling to keep up with fast-paced, venture-backed startups that are changing customer expectations – and often causing business model disruption for traditional businesses. To combat this ever-growing threat, corporations are stepping up their investments in innovation and deploying a variety of strategies, as outlined in the following table.
As founder of Crowd Companies, an Innovation Council, we work directly with these innovation teams and have been able to observe and document these types of programs. Often, companies are combining strategies and deploying multiple efforts at any given time. In our upcoming research report on the topic of corporate innovation, we will document how the top companies are leading the charge.
To provide some context for this new corporate innovation, note that we discovered companies are not just investing in incremental product features or enhancements; they are investing in new business models or altering the customer experience beyond the core product.
The Ten Types of Corporate Innovation Programs:
| Strategy | Description | Example |
| 1: Dedicated Innovation Team | Corporations often start with staffing an innovation team within the company of full time employees dedicated to developing the strategy, managing, and activating innovation programs. These leaders are experts at internal communications, and are change agents. | MasterCard, Hallmark, and BMW have innovation teams dedicated to new business ideas. |
| 2: Innovation Center of Excellence | Innovation can’t happen in a single group; without broader institutional digestion, new ideas will falter and fall. Some corporations are setting up cross-functional, multi-disciplinary groups to share knowledge throughout the company. | Various retailers and consumer packaged goods companies enable this. |
| 3: 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. | Adobe’s Kickbox program is widely recognized as the leading program; we’ve documented it here. |
| 4: Open Innovation: Hosted Accelerator or Corporate Incubator | Hosted inside a corporate office, large corporations invite startups to embed at their physical locations and provide them funding, corporate support, and other perks. This brings innovative startups inside a large company for everything from overnight hackathons to long-term programs. Other variations include online open-innovation programs that request – and often reward – ideas from the crowd. | Allianz Digital Labs in Munich hosts startups, and GE Garages enables startups to partner. |
| 5: Innovation Tours | Frequently inspiration comes from outside, not within. Corporate leaders tour innovative organizations, companies, and regions to discover trends in various industries, learn from speakers, meet partners, and be inspired as they immerse themselves in innovation culture. | European-based WDHB and Nexxworks tour executives in Silicon Valley and beyond –I’m a frequent speaker at their events. |
| 6: Innovation Outpost | A dedicated physical office, such as in Silicon Valley or wherever innovation happens in their market, staffed with corporate innovation professionals whose job is to sense what’s occurring in a market, connect with local startups, and integrate programs back into the corporate HQ. Some of them host partners, events, and startups, thereby spreading the function to Internal Accelerator programs. An Innovation Outpost is typically managed by employees – unlike an External Accelerator, which is run by a third party. | Swisscom, Vodafone, and Nestle have opened Silicon Valley outposts. Read Evangelos Simoudis’ blog for insights. |
| 7: External Accelerator | 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 by third parties – unlike Innovation Outposts, which are managed by employees. | Plug and Play, Singularity University, Rocketspace, Runway, 500 Startups, Betaworks, and more. |
| 8: Technology Education, University Partnership | Corporations can tap into new 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. | General Assembly, Galvanize, and most tech- or business-focused universities. |
| 9: Investment | Many corporations place bets among the startup ecosystem, with both small amounts for early-stage startups and larger amounts of corporate funding that yields market data, creates opportunities for follow-on investments, and blocks competitors. | Intel Capital is a leader in direct corporate investments. |
| 10: Acquisition | Rather than build innovation from the inside, many corporations acquire successful startups and then integrate. While often expensive, the startup is often already successful, and the acquisition can help the startup scale further. | As one example, Dollar Shave Club was purchased by Unilever for a reported $1B. |
Above, we published a full report on this topic in March, 2017, embedded above.
In summary, corporations don’t have a one-size-fits-all approach to helping their company activate new ways of doing business. They will deploy multiple forms, at different times, with varying degrees of success.
What’s very interesting is that a majority of these examples are “outside-in” innovation, where companies are drawing knowledge, resources, or expertise from groups outside their own company.
Because most of these programs rely on external innovations, organizational alignment is key to helping companies digest market changes.
Stay tuned for further insights as we prepare to publish our report on corporate innovation this fall, and please leave a comment if we’ve left out a strategy – or need to modify an existing one.
Update: Additional tips from Savannah Peterson
(Photo from Pexels)
Fantastic summary Jeremiah. In my previous role as Director Innovation at AMP Australia, we built out an innovation eco-system that encompassed many of the above elements. The reason why you need to strategize this way is that innovation is not a complex problem, it is a complex SYSTEM and there is no single solution- you need to move many pieces in tandem, from learning (Outside-in) to culture (inside-out), from risk-taking, intrapreneurship and small bets to risk management, strategic focus and partnerships, from reliability and consistent customer experience to experimentation and iteration and failure ( Or learning as I like to call it!), from delivering for today and rewarding those investing for tomorrow. These are not “or” but “and” reuirements – a tension that leaders need to learn to handle with fluidity, and picking the right combinations of the elements that fit with the dials you have to move in your specific organisation.
Great overview guys! I was wondering if strategic partnerships with other companies could be seen as a seperate category. Like companies investing in co-creation with other companies. Crowdsourcing could be seen as a variation of this. Happy to hear your thoughts or any examples.
Jeroen, Good question, I could see some of these elements fitting under different categories (Crowdsourcing under Open Innovation) and (Investment under 9), I suppose this could be spelled out as one single additional category. Let me give it some more thought. Thank you.
Well said, from an experienced practitioner, Thank you Annalie. Please let me know if I should be interviewing you for our report.
I wonder if you would distinguish between direct investments (like having your own VC fund) and indirect investments (like investing in a VC fund, or even partnering with a fund as an advisor)?
Great summary . I would challenge by addins some new types of initiatives that we see happening here in Europe with internal open spaces such as FabLab or creativity open spaces .
This trend is also coming from the effectuation theory .
What do you think ?
The 10 innovation types fall broadly into the category ‘management led’ or ‘top-down’. An alternative approach is that directors and managers deliberately foster a climate/culture in which innovation is encouraged by each and every employee, A climate/culture in which employees are empowered to innovate in dialogue with clients and other stakeholders. Innovation then takes place bottom-up (through clients and employees) rather than top-down through management initiatives. This requires a commitment from directors and managers that clients and employees know better which innovations are beneficial than they do.
What you describe are the consequences of innovation. The processes, strategies, the techniques. Which is where everyone gets lost when they try and replicate these without the understanding of where they come from. I can guarantee that 95% of people who did these wouldn’t get the same results as the originator. Now, with that missing ingredient. ..amazing things happen