Nurturing Corporate Venture Incubation
A few weeks ago, Amiel Cornel of Strategos, who I met at the Intrapreneurship Conference 2014 wrote a great piece on nurturing corporate venture incubation and I would like to highlight a few comments. The full post can be found here.
Amiel discussed how incubators often fail to foster intelligence, the life-blood of intrapreneurial activity, focusing too much on applying traditional new product development (NPD) practices.
Successful corporate incubators, funded to pursue projects laden with more market risk than the company’s NPD approach, is designed to foster a playful and collaborative artisanal environment where teams grow intelligence of three kinds; They perfect tools and their dexterity in the use of those tools (technical intelligence), mobilize and engage other innovators and stakeholders (social intelligence), and acquire market intelligence, the ultimate arbiter of success.
The Learning Loop in Venture Incubation
Source: Amiel Mark Kornel
These companies are investing in one or more of three complementary assets to spin the learning loop faster: incubation ecosystems, incubation catalysts and incubation platforms. Some initiatives are purely homegrown, others are developed and managed in partnership with innovation solution providers and consultancies, and yet others are licensed entirely from 3rd parties.
Over the past decade, corporate incubators have begun to experiment with open innovation contests to crowdsource ideas and solve problems, and with so-called hackathons to foster collaboration and rapidly prototype solutions. They introduce more diverse perspectives and “out-of-the-box” thinking by mobilizing an ecosystem of contributors from both inside and outside the corporation. And just as importantly, they create a playful, fail-safe environment for innovation. Examples include Starbucks’ online consumer panels, Philips’ digital acceleration lab in Eindhoven, Mastercards’ use of hakathons, Kraft’s use of crowdsourcing external innovations and Warner Bros’ use of Kickstarter to test generic market acceptance of a new film.
Some bold incubators embed external contributors on their teams as catalysts to accelerate learning. These sources of constructive disruption typically are entrepreneurs or investors who bring diverse and fresh perspectives. Insiders rarely can provide this boost. According to a 2010 Nielsen study of 30 global consumer-goods firms, incubation programs located at corporate headquarters reported fewer breakthrough innovations – less than half the rate –than companies whose incubators were kept at arms-length and fewer than even those companies with no incubators at all.
Apparently, even well intentioned senior managers of the core business unintentionally inhibit blue-sky innovation. Corporate executives just can’t inspire and challenge in-house innovators as much as entrepreneurs with first-hand experience in exploring new markets.
Amiel cites Techstars and the Academy for Corporate Entrepreneurship as two organisations helping to boost corporate incubation efforts using startup methods.
Amiel goes on to explain that many tools used in corporate incubators for diverse tasks like software development, system engineering, chemical synthesis, microprocessor development and simulation, media management, and packaging design are no different from those used in traditional NPD. In addition, though, a growing cadre of vendors tout specialized tools and services that support such core incubator activities as collaborative ideation, data mining, rapid prototyping, and business modeling. These specialized tools and techniques tuned to the company’s innovation context should form the infrastructure of a corporate venture incubator.
Corporate commitment to incubators (sometimes called accelerators) has waxed and waned over the years with economic and technology cycles. Despite the best intentions, results have too often fallen short of the promise. Will the latest wave also disappoint? By funding incubators buffered from the day-to-day exigencies of the core business and equipped with platforms, ecosystems, and catalysts to support learning, corporate innovation may finally benefit more predictably from the deeper intelligence of their intrapreneurial teams.