Venturing Insights #16 - It's all about Tools Pt.1
Mastering the Innovation Toolkit: A deep dive into the Tools for Corporate Venturing
Previously on Open Road Ventures: In the last episode of Venturing Insights, part of the short series “It’s all about” we discovered what is Strategy for Corporate Venturing and Open Innovation. If you missed it, you can catch up here!
Welcome back to the "It’s all about" short series! So far, we’ve dived deep into how knowledge, culture, and strategy fuel (corporate) innovation.
Now let’s shift our focus to the practical side of things—the tools that turn innovation visions and strategies into groundbreaking realities.
Let’s assume you are an Innovation Ninja. You understood the need to have an innovation strategy, you have defined your innovation capabilities, your innovation goals, you have clarified your innovation portfolio, mapped your innovation ecosystem and so at the end of the day you have also answered to the 3 main questions for your innovation strategy:
How will innovation create value for customers?
How will the company capture a share of this value?
What types of innovations should the company focus on?
Now it’s the time to translate this high-level, (probably fancy) presentation, in a set of concrete actions.
The question is no longer if you should capture innovation value, but how to do it effectively.
Today, Corporate Venturing provides an expansive toolkit for companies to foster incremental or disruptive innovations and tailor their strategies to diverse needs: from accelerators and incubators to corporate venture capital, start-up acquisitions, hackathons, and strategic partnerships. Each tool takes a unique path to meet different goals—whether through direct or indirect financial investments, strategic alliances, or product and service development, with or without equity stakes and so on.
Step 1: Knowing the Tools
"Give me six hours to chop down a tree and I will spend the first four sharpening the axe." — Abraham Lincoln
The first step to leveraging these tools effectively is knowing what’s out there.
Drawing inspiration from Bundl’s insightful list of tools, along with a few additional strategies that I find particularly relevant, I've compiled a comprehensive overview.
It's important to note that many of these tools are often used in combination to maximize their impact, while some can even be further split into more specialized subcategories. This expanded toolkit will help you know the most suitable approaches to execute your innovation strategy, ensuring that you are well-equipped to drive disruptive growth and maintain a competitive edge.
1. Corporate Venture Capital (CVC)
What it is: Corporations make direct equity investments in startups that align with their strategic interests.
Why it matters: Provides early access to emerging technologies, offers potential financial returns, and fosters long-term strategic partnerships.
Example: Google Ventures, which invests in a wide array of startups across various sectors.
2. Mergers & Acquisitions (M&A)
What they are: Established companies purchase startups or younger firms to gain access to new technologies, products, talents or markets.
Why they matter: Enables rapid expansion, access to new customer bases, and acquisition of innovative capabilities.
Example: Facebook’s acquisition of Instagram, which expanded its influence in social media.
3. Corporate Accelerators
What they are: Structured programs offering startups mentorship, resources, and expertise to accelerate product development, typically over a few months.
Why they matter: Helps startups bring products to market faster while allowing corporations to nurture innovation aligned with their strategies.
Example: Microsoft Accelerator, which helps tech startups scale globally.
3b. Corporate Accelerator Partnerships
What they are: Corporate accelerators run in collaboration with external organizations that bring program expertise.
Why they matter: Combines corporate resources with specialized external knowledge to drive startup success.
Example: The Disney Accelerator powered by Techstars, which helped Jaunt VR showcase at its demo day.
4. Corporate Incubators
What they are: Programs designed to nurture startups from the idea stage to market-ready products, offering mentoring and support.
Why they matter: Encourages internal and external innovation, aligning new ventures with corporate strategic goals.
Example: Samsung’s C-Lab, which birthed innovations like the "S-Ray" portable speaker.
4b. In-House Incubators (Intrapreneurship Programs)
What they are: Internal teams within a corporation work like a startup, rapidly prototyping and testing new products or services.
Why they matter: They cultivate a culture of innovation, help retain talent, and fast-track ideas to market.
Example: Google’s Area 120 incubator, designed to nurture ideas from employees and turn them into standalone ventures.
5. Venture Development Studios (Startup Studios, Company Builders, Venture Builders)
What they are: Structures that systematically create and launch startups using shared resources, expertise, and processes.
Why they matter: Allows corporations to diversify innovation efforts with controlled risk, creating new ventures aligned with corporate strategies.
Example: Rocket Internet, known for building and scaling internet-based companies worldwide.
6. Strategic Partnerships
What they are: Alliances between corporations and startups or other entities to co-develop products, services, or technologies.
Why they matter: Leverages the strengths of both partners, expanding market reach and accelerating innovation.
Example: Adidas and Spotify’s collaboration to create Adidas Go, an app that uses Spotify’s music data to enhance running experiences.
7. Hackathons
What they are: Intense, short-term events where teams of developers and innovators collaborate to solve specific challenges or create new products.
Why they matter: Promotes rapid idea generation, cross-functional collaboration, and uncovers fresh solutions to complex problems.
Example: Facebook’s Hackathons, which have led to features like the "Like" button and "Chat."
8. Sharing Resources
What they are: Corporations provide startups with access to resources like office space, technology, and expertise.
Why they matter: Strengthens ties between corporations and startups, giving corporates insight into entrepreneurial ecosystems while providing startups with crucial support.
Example: IBM’s Global Entrepreneur Program, which offers startups access to IBM’s cloud services and technical support.
9. Entrepreneur-In-Residence (EIR)
What it is: A temporary role within a corporation, usually in the venture arm, where experienced entrepreneurs explore new business opportunities.
Why it matters: Brings entrepreneurial thinking into the corporate environment, bridging the gap between startups and established companies.
Example: Penn’s Entrepreneurs-in-residence. These EIRs offer invaluable guidance and support to student teams.
10. Innovation Contests (or Challenge Prize)
What they are: Competitions inviting employees to propose innovative solutions to specific challenges.
Why they matter: They encourage widespread participation, bring diverse ideas to the surface, and spark a competitive spirit.
Example: Adobe’s Kickbox Program, which provides resources and a structured process for idea development.
11. Scouting Mission
What it is: Corporations appoint individuals or teams to search for innovation opportunities that align with their strategic goals.
Why it matters: Keeps corporations at the forefront of emerging trends and technologies, allowing them to act quickly on new opportunities.
Example: Intel Capital’s global scouting for emerging technologies in the tech sector.
12. Corporate University Partnerships
What they are: Collaborations between corporate R&D departments and university researchers to find promising ideas for further development and investigation.
Why they matter: They enhance corporate reputation, contribute to social good, and explore long-term innovation opportunities.
Example: Lamborghini, partnered with MIT for the electric supercar of the future
13. Licensing
What it is: Licensing is a strategic venturing tool that allows companies to monetize their intellectual property (IP) by granting others the right to use, produce, or sell their innovations under specific conditions.
Why it matters: It enables companies to leverage their intellectual property (IP) in ways that can significantly amplify their market reach, revenue streams, and innovation potential
Example: Dolby licenses its audio compression and enhancement technologies to consumer electronics manufacturers, cinema equipment makers, and content creators.
14. Innovation Labs
What they are: Dedicated teams or departments focused on experimenting with new technologies and business models.
Why they matter: They keep your company ahead of tech trends, test new concepts quickly, and lower innovation risks.
Example: IBM’s Research Labs, where groundbreaking technology development happens across industries.
15. Corporate Venturing Alliances:
What they are: Alliances between multiple corporations to co-invest in or co-develop new ventures, spreading risk and pooling resources.
Why they matter: These alliances allow companies to tackle larger or more complex innovation challenges than they could alone.
Example: The Airbus-Boeing-Rolls Royce partnership in developing new aviation technologies.
16. Crowdfunding as a Venturing Tool:
What it is: Corporations use crowdfunding platforms to test new products or services and gauge market interest.
Why it matters: This tool allows for market validation before large-scale investment and can engage a community of early adopters.
Example: Sony launching a crowdfunding platform to launch new, innovative products like the FES Watch.
17. Digital Platforms for Open Innovation:
What they are: Online platforms where companies can crowdsource ideas, technologies, or even partnerships from a global community.
Why they matter: These platforms democratize innovation, allowing companies to tap into a vast pool of external talent and ideas.
Example: InnoCentive (now WazokuCrowd), a platform where organizations post challenges and receive solutions from a global network of innovators.
18. Crowdsourcing
What it is: Gathering ideas, services, or content from a large group of people, usually via the internet.
Why it matters: It generates diverse ideas, boosts engagement with customers and communities, and saves costs.
Example: The Lego Ideas Platform, where fans submit and vote on new product concepts.
Conclusion Part 1
In this first part of our deep dive into Corporate Venturing tools, we've explored the diverse toolkit available to Innovation Ninjas like yourself. By understanding these tools, from corporate venture capital and mergers & acquisitions to hackathons and corporate university partnerships, you're better equipped to turn your strategic innovation plans into actionable reality.
This knowledge is just the beginning. In our next post, we’ll uncover the most widely adopted tools and guide you on how to select the right ones for your specific innovation strategy. Stay tuned as we continue this journey to mastering the art of corporate venturing.
Remember, innovation isn’t a one-size-fits-all game. Tailor your approach to fit your unique goals, resources, and environment. Embrace experimentation, encourage collaboration, and keep your strategies flexible.
Stay tuned for the next chapter in the "It’s all about" series, where we’ll explore how to build and nurture effective innovation ecosystems. Until then, keep pushing boundaries, stay inspired, and continue driving innovation forward.
One last thing…
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As usual… a soundtrack for you: