This is the first in a series exploring the innovation models being used to accelerate internal and external ideas in corporations.
The accelerator is designed to validate promising ideas (and invalidate the rest) over 3–6 months of rapid iteration, intense feedback and collective focus from startups, mentors (see image of mentors list from Barclays Accelerator below) and, more recently, corporations.
Corporate accelerators attract disruptive talent by sharing resources with participating startups. Considering the access to cash, customers, and global channels corporations are prepared to share, you’d think premiere startups would be lining the streets to join these programs.
That hasn’t been the case.
More often, corporations go out and find the startups. Take Disney, who in 2015 recruited Sphero (a company that had already raised $35 million in VC with $20 million in sales) and asked them to join the accelerator to help develop toys for the new Star Wars release.
Most teams join accelerators to reach $20 million in sales or be able to raise $35 million, not if they already have. It was a draw unique to corporate accelerators, access to world class decision makers like Disney CEO Bob Iger, that convinced Sphero to join the program.
Is it just Innovation Theater?
Other programs have been active for some time. Many have closed shop, and the pace at which new CA’s are deployed is slowing. As we’ve heard on season 2 of I/O Podcast, this model is often a near-future solution to a forever problem.
But the companies that have already found some success are convinced of their value.
Beyond forming new partnerships and acting as a corporate 'growth hack', Microsoft’s accelerator credits the program for promoting the agile and Lean methodologies that helped develop Windows 10. Bob Iger asked Sphero if they could make a toy for 'C3PO’s successor' inside of their accelerator. Sphero delivered an MVP within 24 hours, joined the accelerator, and developed the toy in time for the movie’s release.
Done wrong, this model is 'innovation theater'. Done well, this model creates value for customers expecting complete solutions and employees exposed to the startup workflow.
Once the decision makers decide on an accelerator they’ll need to create an environment conducive to successful startup partnerships.
Trust, transparency, and value-add must be brought to the accelerator from the corporate side if the model is to thrive. Without any of these three, capable startups will partner elsewhere.
The best applicants are asking 'who’s really in charge?', 'what type of resources will we receive?', 'what’s it gonna cost us?' and, for the most promising teams, 'why would we want to work with just one giant company, when we plan on working with many?'
Here are a few challenges to implementing this model well. For some, the costs were greater than the benefits. For others, like ING, Disney, Barclays and Microsoft, this is just the beginning.
Challenges setting up.
Challenge: Innovation takes time, but how much exactly?
Solution: Define your goals. Be clear! Some accelerators serve to brand an organization, but most expect breakthroughs. Once you decide on clear goals, speak with other accelerator founders to inform a final program length. We’ve heard from a number of mentors who aren’t ashamed to admit that the program changed drastically the second and third time around, in part because they mishandled the time needed to innovate.
A hardware company will require a longer accelerator than a software company. ING uses 6 months. Disney uses 4.
Once you’ve chosen the time frame, Daniele Dondi of ING says it’s critical to maximize the urgency throughout the program. ING found most teams were far more productive in the last month than the previous 5. His solution? More presentations:
'The key element is that the teams need to feel the sense of urgency. Even if we decide not to shorten the time frame, we for sure need more evaluation moments before the final Demo Day. We hope that with that model the team will go faster.'
Challenge: Companies aren’t venture capitalists, and that’s OK, but when a corporation finds a good fit with a growing startup it will need to develop a term sheet for a unique relationship. Why should the best startups choose you?
Solution: Decide which types of financial vehicles are appropriate for the new relationship. Some corporations are looking for acquisitions, while others (Disney) are enlisting startups to join and develop unique product lines for specific releases. There are thousands of paths to growth for promising startups. Make them excited to join.
Marketing the Market Breaker
Challenge: Your accelerator‘s image can put off potential partners.
Solution: Present your accelerator as a reflection of your brand but with room for unfamiliar voices and new ideas.
Maximize transparency. Barclays showcases demo day videos on their site. The Wells Fargo site highlights the entire process from application to success. These are simple examples, but may be the only opportunities you have to get inquiring startups excited to apply.
DIY or Partner
Challenge: Managing the day-to-day of an accelerator is a highly specialized skill. Are you prepared to handle it in-house?
Solution: Companies look outside to successful accelerator management teams to set up and adjust the programs. Disney uses TechStars. ING does manage it in-house. They are doing well on their own with great support from the board and executives.
At NMotion and speaking with accelerator founders it’s clear that the model works well for companies with focused goals and trust from the board. Your culture needs a shift in thinking, with employees thinking innovation at every corner of the organization.
Maximize touch-points between employees and program participants to make the accelerator a part of that shift.
- How long will it take teams in your space to deliver a minimum viable product? The HighTechXL team in Eindhoven allows hardware teams for several months more than Y Combinator’s software participants.
- Do we have the support of the board? At ING the board’s shift from a reluctant support in the accelerator’s first round to a full and confident support in the second resulted in a far more productive 6-month program.
- Who is responsible for designing and managing the program? Will internal stakeholders host the accelerator or should we look to outside counsel to manage the operations?