The majority of the larger organizations these days want to jump on the innovation bandwagon as their related space accelerates with the fresh inflow of innovative solutions from startups. Yet those ready to make this important step cannot seem to approach the task with necessary clarity when it comes to the “how” of that step.
Based on the experience and work we had with corporates in NOMU VC, the common difficulties corporates experience are:
- Selecting a starting point: not being sure where to start and therefore stretching time too long in making a decision;
- Visibility: unable to review all possible options available to achieve the desired outcome;
- Urgency: realisation they cannot innovate from within as fast as they need to;
- Controlling the risk: the need to de-risk as much as possible to maintain profitability often means considering the proven business models from Europe and the US (analysing which requires significant time investment);
- Clarity: lack of understanding of the studio model and the wish to see a clear strategy on how studio will start with ideas and how team will validate them.
In the past years, the main innovation routes available to the corporates expanded and now came to be:
- Classic M&A
- CVC and external VC investments
- Internal innovation programmes (often focused on micro improvements and cultural change)
- Working with external studios to get closer to a desired state of competitiveness on the market or open up new geographies/products
We are going to double click on the latter, but before that, let us have a look at some of the reasons why corporations had not wildly succeeded till now in their innovation efforts:
Priority on the agenda and managing change
It is a given that the buy-in from all stakeholders is necessary for any innovation efforts to be successful. As we enter the unfamiliar waters of active venture building, the resistance can be strong and, with that, corporations tend to lean towards the “known” options of classic investments. Maintaining BAU is a core priority for many organizations, especially public ones, as a part of the obligation to their stakeholders. The threat of disturbing the business as usual can be viewed as significant considering the processes that need to change and the heavy lift of change management initiatives that need to follow. The question still remains what will happen in case of an unsuccessful change, and are we ready for the change internally? How will our culture change with a new solution? For the lucky few, continuing on BAU is not an option, which in essence forces the company to change for the better as the only option available. Studios allow the corporates to keep BAU separate from all new modus operandi, offering a smoother implementation internally down the line if necessary. Some products can explore new markets, new lines, some, however, are aimed at improving the work of people already within the organization.
Studios bring invaluable resources of not just people who specialize in a particular niche, but also the worked through a framework that was implemented dozens of times before and therefore was perfected. Having this solid frame lets studios stay on track and on time, adjusting the country or industry-specific particles of their operations on the go and pivoting quickly. Studios are naturally excelling in the unknown waters and are not afraid to ask difficult questions and dig towards the truth and solutions that will eliminate (or substantially reduce) the pain the organization is experiencing. This external view paired with a proven flow keeps the success of ideas up and helps both parties (studios and corporates) to concentrate on the most viable ideas.
As we discussed previously, studios can work on both internal ideas and external ideas and can have an internal studio setup supplemented by an external one to marry the best of both worlds. With corporates, the flexibility is there to select either of the options or to meet halfway.
- Discovery call: an introduction call to get familiar with baseline expectations and outcomes we are after, suggesting the way forward;
- Discovery stage: here the goal is to understand the ecosystem of a corporate and discover gaps, inefficiencies and opportunities for future ventures;
- Ideation stage: the goal is to build the POCs and validate feasibility and business case for further step.
- Validation stage launching the selected ventures and iterating rapidly through feedback and testing
- Incubation stage: the objective is to scale up the solution, transform the organisation and increase value impact.
The (example) outcomes for each stage are: