Innovation has become a marketplace all on its own, with an increasing number of larger companies acquiring smaller startups as a means of strategic growth. For instance, Uber acquired bike rental startup JUMP Bikes back in April. While the acquisition might initially seem mismatched, there was a potential for JUMP to eventually chip away at Uber’s mobility market share.
From a corporate point of view, it is easier to buy than build. These startups likely already have an established market presence and a customer base that overlaps with that of the legacy company. Furthermore, with disruptive technologies wiping out established industry players, some leaders may think: Why not acquire the disruptor before it has a chance to disrupt me?
That said, there are ways other than a traditional merger or acquisition to spur innovation and institutionalize entrepreneurship. As a company leader, your specific approach may vary depending on your industry. However, I've found the following tips are a good place to start:
1. Consider a corporate accelerator.
Accelerators can give you access to the minds of entrepreneurs and how they tackle issues in their respective spaces. If everyone is talking about cybersecurity, the Internet of Things, etc., you get a first look at what’s on the horizon. You also gain the chance to peek behind the entrepreneurial curtain and study how a startup’s culture functions and supports the business.
Oftentimes, the companies investing in corporate accelerators are already investing in innovation — either by way of innovation centers or innovation processes. Accelerators function by increasing the pace of innovation. They also open the door to potential partnerships with early-stage startups that may benefit the corporation.
To ensure accelerator participants fit within your line of business and increase your success, enter into an accelerator with a clear strategy in mind. Then, establish a champion liaison team to engage with the startups regularly; I suggest once a week, though frequency may vary. As accelerators mature and your team spends time in entrepreneurial ecosystems, you may bring a more motivated approach to internal innovation.
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2. Accept the inevitability of risk.
Some level of risk will always accompany innovation, but that doesn’t mean failure is guaranteed. The key is to define the level of risk you’re willing to take. That can vary depending on the type of innovation a company is after. Is it core innovation, in which you make an incremental change to something already in the marketplace? Or will it be leap innovation, aimed at solving a new problem entirely?
Ask yourself whether it’s more dangerous to play it “safe” in an existing market or to take a chance by creating a new, uncontested one. First movers can charge a premium; that being said, you might want to start small at first, and as you get some wins, begin moving toward riskier decisions.
Incorporate design thinking into your innovation processes. Define the problem, then develop a minimum viable product or proof of concept. You don’t want to bet the ranch on an untested idea, so scale the ones that are winners and scrap the rest.
3. Make a conscious shift in culture.
Disruption and innovation occur when you adopt an entrepreneurial mindset. This isn’t about starting and running a company, but rather mandating a complete culture shift on a companywide level. I like to define the entrepreneurial mindset under this framework: Learn fast, focus on the customer above all else, and maintain an almost constant state of action.
Realistically speaking, companies will never eliminate fear; and as I mentioned above, a healthy level of risk is actually very important. However, company leaders can create a culture with less fear by clearly communicating that it’s OK to try and fail — if you can learn from that failure and apply those lessons to your next endeavor.
Secondly, it’s critical to tune into customers’ deepest wants and needs. What
Finally, how many times have you left a meeting without any next steps? It’s this kind of inaction that so often holds you back from innovation. By being in a constant state of doing, companies will naturally eliminate the analysis paralysis.
Entrepreneurs have a lot to teach you and your corporation when it comes to innovation. The secret to unlocking that potential is to discover how institutional entrepreneurship fits within your organization and establish relationships from there.