A startup solution to the corporate innovation conundrum

Santam - Innovations Season 2 Final - 2 (1)

A startup solution to the corporate innovation conundrum

We all wish our large institutions would do more, faster. We want them to be innovative, but we rarely consider how gargantuan a challenge this is: to disrupt and innovate often risks their stability. There are ways around it, however, and we are helping with a few of them.

 

The bigger they are, the harder they dig their heels in:

 

The world, needless to say, has become pretty disruptive. The changes are being driven by the up-starts, the start-ups and the ‘fed ups’. In the middle of the pack we have people like us, the unhappy global citizens and the millennial mindsets. And somewhere, looming over all of this from far, far at the back are our corporations, being dragged along with the charge, rather than leading it. Watching it happen.

 

The larger an organisation grows the less agile it becomes. To maintain their balance, they are grounded in systems and anchored in place with red tape. Bureaucracy, HR, cost-forecasting and predictability are their glue. Which is exactly how we like it. After all, we rely on them for so much. To be stable, reliable. Dependable. We want them to be around tomorrow. We need them to be.

 

So, the question really is, how do big companies innovate to stay relevant, without risking it all? The fad of having big marketing events where innovation is displayed is waning. No longer is it enough for corporates to put their names on banners over a big stage that showcases ideas, which is the only time anyone will ever see either of them in the same room again. They have tried to plant their own internal innovation departments which rarely works, because it is grown in the same soil as the rest of the organisation. They have tried buying smaller, more innovative companies, but these end up like tiny corporates themselves, as the processes flow down into them, throttling their inventiveness.

 

Competitive innovation outsourcing:

 

What we all need is a space, both physical and metaphorical, where the innovative can bang heads with the incumbents. We need a meeting of the minds, where challengers and corporates can contribute to the bigger picture in the ways only they can. An environment of engagement.

 

We at the LaunchLab have seen just how well this works, and so have Nedbank, Mercedes-Benz, Santam and several others. All of these companies gave us their challenges; a problem they needed to solve in new ways. We facilitated ideas competitions, where we exposed those problems to our network, who came back with solutions none of us would have ever thought of. The winners were given some funding and incubation support to build their ideas into businesses in their own way and with minimal interference, and these businesses directly benefited the company who started the process. Both the chicken and the egg left the room energised, both physically and financially.

 

Quality in, quality out:

 

We’ve also learned, very quickly, how to enhance this strategy, making it more viable for the entire ecosystem; some of our older challenges were too marketing focused, putting our client in the space of a sponsor. We realised that the quality of the ideas are only a result of the quality of applicants, so we started actively scouting for the right challenger teams, rather than throwing out a wide net that doesn’t necessarily attract the best. We saw how well this worked when no less than four startups engaged commercially out of our Mercedes-Benz initiative. We’ve also changed how prize money is awarded, ensuring it can only be used to build the business, which has helped a lot.

 

Fire up with startups:

 

In Eric Ries’ book ‘The Startup Way’ he talks about the three phases of transformation. These are ‘critical mass’, ‘rapid scaling and deployment’ and, finally, ‘deep systems’. Phase one, critical mass, is defined as a stage of small projects, with dedicated teams, who can experiment and prove a particular hypothesis. This is where most organisations flat-out fail, and outsourcing this to smaller, hungrier, more agile groups can remove many of the risks associated with it. Reaching this critical mass is what gets you noticed by management, and gets things done, quickly moving projects into phase two and three, and finally out into the world.

 

New thinking:

 

There are other benefits that directly impact the corporates within an ecosystem like this. By incubating these rule breakers, they are exposed to a different mindset from the outside, which slowly permeates inside. Mindsets, long entrenched, are slowly changed. They learn through experience that doing things differently isn’t as scary as they thought, and that it delivers real value to their bottom line.

 

Change is scary for corporates but just as necessary as for everyone else. If you can’t get it right, let us help you design a robust program to start innovating from the outside in.

 

David Krige is an Operations Manager, all round smart guy and advocate for corporate innovation at the LaunchLab. He is excited by systems and processes, and spends his days making them more efficient.

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