The Myth of Corporate Innovation

Innovate or die.

Disruption is what keeps C-executives awake at night. We live in a world where being big no longer means being safe.

This applies to tech, too. Remember Digital Equipment, Compaq?

Corporates are scared and are trying to anticipate what could kill them. They try to understand and connect to the startup world to anticipate this. Is it working?

First of all, we might ask, why are corporates not doing it? They have money, resources, market knowledge and unparalleled capacity to execute. However, at the core, they can no longer innovate.

Why?

Being naive is key

Innovation is about starting fresh with an open mind. If you know too much about a market you will naturally avoid things that did not work in the past. With less ‘market knowledge’, the approach will be naive and you won’t refrain from exploring all possible options. It’s that naive approach that leads to innovation.

The right people/culture

Having the right people is key. What else is new?

The corporate world is less and less appealing to young talents. Young, bright talents foster an innovative culture and challenge the status quo. That culture doesn’t mix well with the rigid corporate world. If you want to change the world, it’s because the world in which you live in is not the one you want. So, why not join the large corporations? Well, they created this world…

Are you constrained?

Without strong limits, you’ll never think out of the box. Being constrained forces difficult choices in a short period of time, or else… The time perception is not the same. Acting on things is a matter of minutes/hours for a startup versus a matter of months/years for a corporate. It’s often because startups are in a life/death situation that they come up with bold visions and crazy solutions. Corporate can’t create such framework. There can always be tomorrow for them.

Can you kill yourself?

Innovation means putting your cash cow at risk to reinvent yourself. If a corporation wants to innovate, it needs to occur on what matters; on the core business. If it does not, it will become a useless initiative sucking insignificant amount of money, making the executives feel good about innovation. It won’t do anything to change the corporation. Very few had the audacity to do it. Apple is probably the one that first comes to mind.

Don’t pretend

The innovation initiative and the naming of a Chief Digital Officer is probably the worst thing that happened for corporate in the past years. Why make “digital” a segment of the company? Why name someone? Why name someone that has no power? Digital is everywhere, it’s not an initiative. It concerns everyone.

If you centralize the decision making, innovation will never occur. It needs to be a bottom-up as much as a top-down approach.

The right decision does not exist

Innovation is about being ambitious. Big ideas are complicated. The path is uncertain. Making the right decision is not easy, and more often a decision is to decide to know, nothing more. In the corporate world decisions are slow, but more importantly debated to the bone to guarantee the path forward and to cover the one involved. If you cannot accept being wrong and trying things without being singled out if it fails, it won’t work.

I could keep on going, but you get my point. I do believe corporate cannot innovate anymore. This has nothing to do with how well corporation understands technology. NASA has been disrupted by Space X! In a matter of years, Space X built better rockets, developed a bigger ambition, and is now the clear leading player in the space segment.

This incapacity has led corporates now attempting to understand innovation from the startup perspective. Is it working? Have startups changed the corporate culture and helped corporations innovate?

Corporates are spending money on accelerators and incubators in order to get closer to startups. Many of them even create their own accelerator. They are trying to understand startups by watching them and by trying to see what they could learn and leverage.

In all honesty, corporate accelerators are really bad ideas. For one, corporates cannot accelerate something they fundamentally do not understand.

Corporates believe that offering corporate access to the startup is a valid value proposition. It is, only if you refrain from steering the startup to do what the corporation wants. As soon as the corporate influences the startup vision and product, the startup is dead. Airbnb would never have existed if they had joined the Marriot accelerator (not sure it even exists).

That’s the bright side. The dark side is that corporates have understood that this startup connection is vain and are simply leveraging it for PR purposes.

Corporates really have just 3 options.

M&A

If a startup is doing something really core and essential to the corporate, the only option is to purchase the startup. If a technology can affect the core business, the corporate is best positioned to execute on it and leverage it.

Become a customer

If the product is not core business but useful, just become a customer. It seems simple but it’s not. Most corporate processes are often too complex for young startups. If one of the decision points is to work with established products, it won’t work. I’ve been asked in the past if my startup was stable. Hell no, it’s as unstable as it gets. If you pass the stable criteria, most corporates will ask for a proof of concept. That is a big waste of time, and time for a startup is the difference between life and death. Corporates need to buy, even for a small tiny project and make up their own mind.

Don’t bother

The last option is to walk away. Talking to startups and having finger food at cocktails won’t do much. A startup is not a small corporate, it’s something completely different. Startups are unstructured, experimental, moody, crazy, fun, fragile. There is not much a corporate can learn, it’s too far away from a cultural perspective.

Is there hope?

Yes, corporations can innovate. They have great people inside who are dying to become intrapreneurs. If corporations can give them enough freedom to behave like a startup, there is a chance. Find intrapreneurs, give them freedom, make sure they are completely removed from their previous responsibilities and treat them like a startup. Give them short-term objectives, little money, and run sprints. Invest in the project like an investor would, get them outside of the building, have them mixup with other startups, and kill it fast if it does not perform.