Innovations can’t happen in a vacuum. A great deal of research has established the fact that truly original ideas can only flourish with the support of an open innovation ecosystem. While some companies have been lucky enough to stumble into that kind of environment, others have found it necessary to make their own luck.
However, the creation of a productive innovation ecosystem doesn’t happen overnight. It takes much more than a C-level innovation sponsor or a single product launch – it takes time and a careful strategic plan. A corporate incubator deserves to be your first stage in that plan.
University-Based Innovation Ecosystems
A growing trend among innovation leaders is to locate their research divisions close to academic hubs. A good example is Tech Square in Atlanta, which supports innovation research by 12 Fortune 500 companies and hundreds of tech startups.
All of these businesses surround the mid-town campus of Georgia Tech, where advances in robotics are announced with stunning regularity. This kind of innovation ecosystem has also grown up around MIT’s extension in Cambridge and Baker Square in Pittsburgh, near Carnegie Mellon’s AI research hub.
Corporations don’t have to move to one of these cities to spur successful innovation. Instead, they can simulate this type of environment to incubate creative new ventures internally.
5 Principles of a Corporate-Based Innovation Ecosystem
In his book, The Corporate Startup, Tendayi Viki identifies five basic principles that will guide corporate leaders in establishing their own innovation ecosystems.
Create an “innovation thesis” that spells out specific strategic objectives for the innovative projects. This thesis should establish the underlying logic behind your development, but it should also set down boundaries for what will be outside the scope of the business.
Plan out a portfolio of innovations, broken down along three horizons: immediate, near future and long term. Immediate innovations will be related to your core business, near future innovations will be based on adjacent capabilities, and long term innovations will be transformational ideas that lead you in new directions.
Choose a framework for managing the entire process as your teams move from idea search to execution of a working prototype. There are many frameworks you can choose from, but all involve three basic stages: idea creation, testing and scaling.
Measure the effectiveness of what you’ve accomplished using accounting practices; these metrics are essential for measuring the success of your innovative ideas at a practical level. Reporting, governance and global KPIs can answer how innovative projects perform within the context of the corporate financial outlook.
The final stage is to codify the best practices in bringing all of your innovations to life. This will guide innovation teams in iterating and refining each proposal from initial business model validation to the point where it is ready to scale up in production.
The Next Step
When you bring all of these principles together, you have the outline of a corporate venture ecosystem. The next step is to create a corporate incubator in collaboration with local entrepreneurs. It helps build out your innovation ecosystem by supporting business partners who complement your company’s area of expertise.
As your firm acquires advanced knowledge of disruptive business models and technologies, your partners benefit by collapsing the time to market. The end result for your company is new revenues and new markets at a much lower investment and risk profile.