By Helen Beckett
All large enterprises worth their salt are tinkering with business experimentation, either through programmes of intrapreneurship, by teaming up with external entrepreneurs or, most likely, a combination of both. Innovation and how to access it is an ongoing theme at the board, and the process of business experimentation provides the means to tap into new ideas, technologies and models.
There are a variety of avenues to access external innovation. A new generation of accelerators offer a wonderful opportunity for corporates to team up with the brightest minds and ideas on university campuses or start-up ventures. Compared to traditional incubators, which call for significant capital investment in physical premises and staff, accelerators offer a lighter touch alternative based on funding and mentoring support.
UK innovation charity Nesta does a great job of describing the accelerator landscape and different models in its report A Look Inside Accelerators. Digital networks are the conduit for collaboration and discussion between start-up personnel and corporate sponsors, topped up with regular dinner dates. The quality of intellectual property is, however, in no way diminished, plus there’s the added collateral of exposure to entrepreneurial thinking.
Critically, accelerators offer corporates a way to access innovation, talent and thinking much further down the food chain, before start-ups ever get to market. ‘Corporate venturing’, as it is also known, opens up business experimentation to the many, rather than the few who can afford the high premium of purchasing the proven start-up on the commercial market.
No wonder then, that corporate accelerators are taking off, especially in sectors such as financial services where the fintech explosion means disruption lurks round every corner. Accelerators are a convenient and cost-effective vehicle that every incumbent bank wants to jump on.
According to this Forbes article: “Since 2010, 69 companies have launched accelerators around the world.” Over 50 of these have taken place in the past three years and, according to the data, 2013 was the clear start of a ‘gold rush’ with double-digit accelerator launches.
And it is also logical that leading universities in the innovation and digital space, such as MIT Sloan, are offering custom packages of business experimentation to corporate clients. As MIT Professor Christian Catalini explains, and Nesta corroborates, a whole ecosystem is growing around the trade and exchange of new commodity of innovation.
From the brokers who introduce corporates and start-ups to each other, and relevant networks, to the investors who manage high-risk funds, a broad ecosystem is emerging. And this ecosystem makes the ‘First Friday’ physical meet-ups of the dot-com boom, which matched start-ups with VCs, look distinctly two-dimensional. Nesta identifies three archetypes based on the focus of the accelerator: ecosystem builder, investor and matchmaker. These work together to reduce the risk of early failure and to maximise value for the corporate clients.
Related Article: Academic Experimentation Provides Inspiration for Enterprise
Bill Cogan, partner at Ignition Law, a practice that specialises in representing start-ups in corporate venturing, describes the emergence of innovation brokers and consultancies. “There’s a reason why a company [is] large and successful – it is basically doing the right things. But its networks typically mirror its demographic, and it needs introductions to the right kind of innovators to realise its value proposition and ambitions.”
The matchmaking process that Cogan describes is not unlike football scouting by Premier League clubs when it comes to the acquisition of talent and raw material. “Staff talent and recruitment is an issue [for large enterprises]. If you align yourself to innovative start-ups and market yourself as such, then you will attract the best new hires.”
He argues that due diligence at the contract stage has a big part to play in the eventual success – or not – of the accelerator. Defining upfront the relationship and what is expected in return for funds, IP and mentoring is crucial. If the start-up becomes too subservient to the sponsor’s wishes and direction, it may end up a one-trick pony with limited future appeal to a wider market. This, in turn, may limit the value for the corporate sponsor.
When prospecting for a start-up partner, the enterprise needs to be clear about what they want to achieve. Is it the solution to an existing problem or more of a prospecting relationship? Or an R&D project? Also, there needs to be some thinking around what happens when the solution is developed: is that the end game or is there a strategy required about taking it to market?
Accelerators are just one facet of the big and emerging discipline of business experimentation. I’ll be looking at the process and value of intrapreneurship in my next blog, and also investigating how to grow a culture that supports business experimentation without distracting from strategic business goals.
About the Author
Helen Beckett is the Community Manager of the Business Value Exchange. She has been a writer and editor for over 20 years and takes a particular interest in the challenges facing the CIO in today’s business climate.
Source: BVE
