Corporate Innovation Outposts – 101
What’s shaking in the Valley?
Corporate Innovation is a sword of Damocles, deciding the future of companies and shifting their strategic paradigm across the globe. On one hand corporate innovation offers strategic opportunities to companies looking to overplay the competition, but it is also the reason for numerous critical drawbacks – at least for the companies that are not rapid enough in developing and implementing it.
For large corporations that want to innovate by establishing internal or external innovation units, these are some of the best opportunities:
- In-house innovation labs
- University residence
- Community anchor
- Innovation outposts
Working in Silicon Valley and being exposed to a number of innovation outposts or “corporate innovation antennas”, I’ll share a couple of interesting points in the following. While Capgemini defines the corporate innovation outposts as “small team located in technology hub”, innovation antennas can take very different shapes, from a small 2/3 people team in a coworking space, to an extensive 60 people team with dedicated vertical research teams. The reason to establish outposts usually lies on the low cost for establishing the team, with very agile development that can easily leverage on a technical community. Despite innovation outposts being an increasing trend in Silicon Valley, I believe european companies should look at this investment with renovated interest. Why?
Well, despite Europe being extremely excellent in providing R&D centers and Hubs connected to academic research centers, Silicon Valley and the Bay Area are still dictating most of the new trends (from customer oriented applications to high-tech products or services). In addition, corporate innovation outposts offer an incredible push to innovate from the inside, as they usually involve top strategic stakeholders.
What drives European corporations here?
Establishing outposts in Silicon Valley is often related to channel innovation to decision-stakeholders in the respective HQs. Innovation outposts are created for:
- Scouting for technology (implemented via pilots, or licensing agreements)
- Connecting with corporate venture funds
- Finding new innovation models
- Forming links with universities
How is it done?
Steve Blank describes three stages of development for successful innovation outposts. The first one is the phase of networking and partnering, followed by a stage of Investing, Invention, Incubation and Acquisition. The last stage includes the development of actual products, finalizing the whole corporate innovation cycle. While this is true in general, innovation outposts are subject to various degrees of internal innovative acceleration and sometimes companies forget that all these steps are not only useful but necessary: a “big name” is not enough.
Measuring success for corporate innovation outposts
The ROI on corporate innovation outposts is hard to quantify, since corporations operate on very different levels and with highly diversified strategic objectives. In addition, companies are in very different stage of innovation development, despite being intensively pressured to find innovative solutions. Furthermore, investments are often a way for corporations to stay in touch with early stage companies that have long R&D time to product and/or are still looking to enter the growth stage.
Staying in touch with new trends in Silicon Valley has a number of different meanings: taking part in Demodays (i.e. at YCombinator and 500Startups), attend one of the gazillion events about new interesting trends in the valley (Data Science – which started a couple of years ago!, IoT, Super Quantum Computing, Fashion Tech, Insurance Tech and a long list of more obscure terms), or simply taking an Uber Pool and finding yourself talking to the tenth entrepreneur who is going to pitch you the next grand idea.
While corporate innovation is so pervasive in Silicon Valley, it takes time to filter what is useful and what isn’t, and especially to understand what are the circles that matter for the objectives of the outpost itself.
Making the difference
The success of innovation outposts is strongly correlated to the proximity between the outposts’ people to the internal decision makers in the company. These stakeholders should be identified as the CIO (Chief Innovation Officers), the Head of New Ventures, as well as the head of Corporate Development. If there are too many layers in between the people who suggest strategic change/initiative and the final decision makers, the reality won’t be as pretty as envisioned in the beginning.
“For smart companies innovation results should not be a matter of numbers of investments”. This is a direct quote of a leading innovation outpost in the Valley. This is the smart approach. But how do you define success then? And how do you measure it? (in other words, how do you justify your paycheck on the balance at the end of the year??).
If you are well trusted and have credibility to influence corporate strategic decisions, then the results might have an impact in a 5 to 10 years horizon, which is a short time span for companies that are looking at the next 50 years of technological innovation.
In my experience European CEOs have the tendency of being very close to the dynamics of corporate innovation, showing a prone attitude towards strategic investments and new market opportunities.
Unfortunately, for large corporations it is hard to instill a culture of innovation across the whole organization and for most companies that requires an extensive investment in cultural shift (which is so much harder than just establishing an office in Silicon Valley!). To avoid the use of extra resources in a suboptimal way, companies should ensure that any project started abroad is implementable, and that there is a clear understanding of what are the objectives and the roadmap for execution.
Stay tuned for more posts about corporate innovation outposts and leave a comment below!