As startups are increasingly outperforming their corporate counterparts, it is essential for established companies to embrace the corporate innovation model. A considerable amount of enterprises are proactively thinking about innovation through internal R&D, corporate innovation teams, in-house innovation labs, and external accelerator programs. So, what is corporate innovation?
The History of Corporate Innovation
Corporations have traditionally been built upon one immensely successful product, and subsequently expanding their enterprise on that existing business unit. R&D departments were solely focused on improving existing products by identifying supporting business models.
However, what was previously successful has now been upturned by an influx of disruptive startups. While corporations have shown to be weak at identifying disruptive opportunities, startups thrive in reimagining the outdated. In the current environment, corporations must rethink and reinvent their business models, incorporating internally generated success with externally generated innovation.
How Corporate Innovation Works
Corporate innovation can be defined as the process of enterprises implementing new innovation opportunities into existing business models. Established companies who engage in corporate innovation typically have a dedicated team towards innovation efforts.
In a study of 26 corporate partners conducted by Plug and Play Tech Center, a majority have an innovation team of over 20 people. Their main objective is to implement proof of concepts (POCs) and pilots across the company. This can be done in multiple ways, primarily through R&D within the company and by working with corporate accelerators to leverage their startup network.
Considering one of the main intents of corporate innovation is to strategically implement a new technology, one clear process is sourcing for startups. Common ways to source for startups include external accelerators, internal corporate innovation programs, and corporate venture arms (CVCs).
The innovation team must closely evaluate a startup by analyzing a concise set of criteria. Two major questions to consider include:
Who are their main competitors?
Which business units do they want to work with?
If the startup proves to be a good fit, the innovation team will run a POC or pilot. This allows startups to test their product in a safe environment before fully integrating with the corporation’s business model. The innovation team is responsible for evaluating the startups during this testing period and determining if they are equipped to move forward.
Why Corporate Innovation Is Important
Corporations have historically proven to be immensely successful at advancing existing business models. However, they often fail to identify new disruptive opportunities for growth and expansion. On the other hand, startups are great at re-envisioning how an industry can operate and grow. Innovation is crucial to a corporation’s success by giving a competitive edge in penetrating markets faster. By creating a mutually beneficial relationship with startups and entrepreneurs, corporations can ensure a long-standing successful business for generations to come.