How to scale corporate innovation

It’s increasingly rare to find organizations that aren’t ‘doing’ innovation to some extent. They may have a co-working space or an accelerator facility. Perhaps they run intrapreneurship programs or have a corporate VC.

Indeed, a recent report highlighted just how common such strategies are. Europe’s Corporate Startup Stars examined innovation activities across Europe and found that 52% of large companies have an accelerator program, with each program having an average of 19 starts in. A further 32% of big companies work with external accelerators.

It went on to reveal that 87% of companies had procured from a startup in the last year, with the average corporate working with 10 startups per year. A considerable number were also found to have invested in startups, with 71% doing so via a corporate VC.

“Data shows that firms in Europe are finally finding mechanisms for meaningful and successful corporate-startup collaboration,” the authors say. “We believe that the ability to collaborate across differences in size and culture is an increasingly important source of competitive advantage, and expect to see corporate-startup collaboration continue to gather pace in the years ahead.”

The report singled out 36 companies for their innovation successes, and especially for their ability to work well with startups. SAP were identified as the best in Europe, with Telefonica and Virgin in 2nd and 3rd places respectively.

The German software giant came out on top because of their dedication to open procurement and willingness to create a level playing field for startups and corporates alike. Telefonica, meanwhile, were selected in large part due to the successful integration of startups from their OpenFuture accelerator into the core workings of the company, whilst Virgin were lauded for the entrepreneurial culture they’ve built at the company.

“We see a shift from acceleration-only activities towards broader commercial engagement,” the authors say. “We also predict that companies aspiring to be at the forefront of innovation will dedicate a more generous budget to procuring from and co-developing with startups. Finally, we estimate that investment and acquisitions may increase as a result of commercial engagements and strategic considerations rather than being driven by financial returns.”

Making innovation work

This matters as often innovation is not a key part of the strategy of an organization. It’s too often the preserve of one (or even several) department/s, and as such has a haphazard air to it. Not only does this make it very hard for these innovation projects to unify behind a common strategy, it also makes it very hard for startups to know who to deal with, and what form those engagements should take.

Perhaps the worst form of this is the ‘innovation theater’ that many organizations engage in. They may run set piece events, such as a hackathon, or have an incubator/accelerator program, but these are largely stand alone endeavors that are not a core part of the strategy. They make it look as though the organization is ‘doing’ innovation, without these efforts making any difference to the performance of the organization.

Build it and they shall come

A recent study of incubators and accelerators in Germany, the United Kingdom and the United States highlighted this point nicely. It found that they often flattered to deceive in terms of benefit to either the host organization or the startups that participated in them.

The study found that sponsors would often fall into the trap of believing that simply building the accelerator was enough to deliver value. It underlines the difficulties inherent in innovating effectively with startups, and the importance of ensuring that your innovation efforts follow a key strategic path. The results of companies like SAP highlight the results that can be achieved if you manage things in the right way.