Managing innovation with startups to generate real business impact
How to build a successful innovation with startups program making sure you generate real value for your business.
Corporate Entrepreneurship, Open Innovation with startups or Ecosystem innovation strategies are currently witnessing significant developments in strategy and innovation management. According to some experts this is a must, given the unprecedented pace of change, ambiguity and disruption we currently live in. This approach stems from the Open Innovation principles and the wealth of entrepreneurial initiatives we currently find in most sectors as BCG already explained in 2016 and Xavier Ferràs (in Spanish) described sublimely in his article in March 2019.
Working innovation with startups and entrepreneurs or universities can be interesting and inspiring, and fun as well. In some cases, companies do this to foster a more agile spirit whereas other companies use it as a means to seek out new ideas, whilst others do so in order to promote their RSC program and acquire relevant content to communicate. Nevertheless, even today, few companies use it to really develop their strategy and foster their business growth. According to our vision, an ecosystem strategy or program must have a clear business purpose. How can we ensure this?
Ensuring business focus for your initiatives
Defining the right focus according to your strategy is a must and will help you to obtain relevant results in any Innovation with startups initiative you undertake. You should start by understanding what is relevant and where to play in accordance with your strategy. This will help you to fix your focus. Are you a customer-oriented company or a technology driven one? Where do you see your main business opportunities and challenges? How do you want to fuel your growth? Are any external players or business models challenging your survival?
Sometimes, companies invest in very different types of startups without a clear link to their business. One Beverages & Spirits company has built a portfolio of startups based on idea novelty and the “WOW factor” and invested in initiatives ranging from a retail concept, an e-commerce platform, a chemical IP… towards a new parking management solution. If you want to take a pure VC perspective and build a corporate venturing portfolio following a financial investment criterion this approach could prove useful. However, if you link exploration areas with the relevant strategic challenges you are facing, your business stands more to benefit and develop from any initiative that contributes to its profitability and sustainability.
Spending time to figure out which strategic challenge or challenges you have chosen for a startup call or corporate entrepreneurship program is critical to ensure success.
With one of our healthcare clients we spent some weeks reviewing strategy, talking with management and finding relevant business insights before launching a startups program. Once launched, we had very clear criteria as to what was relevant and what wasn’t when it came to contributing to the development of the strategy.
When defining challenges do not be obsessed by technology. Technology, and most likely digital technology, is probably changing your business as it is in payment, healthcare or insurance industries. But from your perspective you should look for entrepreneurs offering solutions to your strategic challenge “regardless of” the technology they use. Do not be obsessed with finding, for example, blockchain solutions or AI applications.
One of our education customers was exploring the impact of different technologies on their business model. We worked together giving priority to their customer and identify relevant pain-points. This was the basis for a successful ecosystem exploration to understand which possible partners could offer a “technology solution” to their customer needs. We ended up with digital solutions and partners to improve very concrete parts of their customer journey and experience. Unless you are in a very early stage, exploring solutions addressing customer needs rather than technologies will deliver higher returns to your initiatives.
Spend time to map out, scout and understand your ecosystem
Once you have defined the challenges you want to explore, allocate time to scout the whole ecosystem. Do not just go for the most proactive partner you could find or the one you found by surfing the internet or connecting with a university.
Exploring the ecosystem takes time and seems quite “intuitive”. Most managers are not used to spending time to explore or open their scope. This might be “unproductive or lack focus”. However, this is not like asking your procurement team to find a supplier. We recommend you find an expert in this field or allocate someone to the task. This is very time consuming and you need to allocate time and energy to identifying and understanding what “is going on in this wild, grey and fuzzy world”.
You need to invest in exploring and networking with other people who could be interesting and understand how to find a possible fit between the startup solution and your business model.
The connection factor is critical. For example, why is Israel considered a successful Startup Nation? Internationally, there are giant corporations with endless budgets and resources, but in an ecosystem such as Israel, everyone knows everyone. If you look at the corporate side as well, when you understand the innovation models of some large companies, such as 3M, you will discover a secret weapon named “talk, talk and talk”. Informal connection is key.
And do not forget, you should look for startups, but not just startups. There could also be other relevant types of players out there. This is about exploring a large ecosystem of other companies, CVC, entrepreneurs, hubs, incubators, accelerators, research centers, universities, VC, investors and other institutions and people or experts that could connect with your challenge at some point.
There are methodologies for mapping and exploring an ecosystem -ie. using enablers, connectors or hubs- and you should have a clear procedure in order to understand quickly whether a startup is relevant to your challenge or not. For one of our consumer goods clients we explored over 100 options, narrowed them down to a short list of 10 relevant options after some weeks of systematic validation, many conversations and some long meetings. At the end our client had a clear understanding of the relevance of each finalist startup and clear details to decide which was the best option in a fact-based way.
Then… prototype, co-create and swiftly validate.
The third part of the process starts when you select which partners could help you to work on the strategic challenges you identified initially. Here you really need to involve your internal teams as well as to gain speed. And methodologies such as Lean Startup can help you.
The idea is to be agile in your developments. Try and learn fast. “Fail often, but soon”. Go for a prototype or MVP you could validate as soon as possible.
Use co-creation methodology to involve different relevant stakeholders, including users, customers and consumers in the refinement and validation of your solution. Co-creation is a very strong approach to improve your MVP and refine it by integrating different angles, from technical to user, and obviously the business one!
This phase should also allow you to involve your internal teams directly in the process. They can take the opportunity to provide feedback and ensure that your detailed corporate requirements are included in the development. Take advantage of your passionate champions. For sure your organisation has some. This is also a great opportunity to help change your culture and way of working. Connecting your team members with entrepreneurs is an excellent way to put into practice agile and lean methodologies in a very practical way and work on a concrete challenge. For a healthcare company we organised an innovation with startups process in which some mixed teams between entrepreneurs and corporate members worked to improve startups solutions, test them and build a business case attractive for both parties.
At Connociam we worked with several companies and institutions to organize and manage innovation with startups, Ecosystem and Corporate Entrepreneurship programs, especially in food, healthcare, service and technology sectors. Already in 2011, we supported Accio, a regional government agency supporting innovation, to launch and manage the Empenta program together with ESADE Business School. This successful program to accelerate startups and connect them with partners ran for several years.
The Connociam approach to Innovation with satrtups and Ecosystem Innovation Strategies has proven that it ensures a sustainable and profitable path to business growth, allowing companies to explore new opportunities in a competitive landscape changing at a dramatic pace and driven by complexity and disruption. Our approach helps you to align your entrepreneurial and innovation efforts with your corporate strategy in order to generate positive business impact and manage the entire process.