Each year, Mind the Bridge analyses how Fortune 500/Forbes 2000 companies interact with startups and scaleups and select 50 companies that do it best (Corporate Startup Stars) and companies that are about to be the best (Innovation Challengers).
In the past months, we had meaningful conversations through interviews and Open Innovation Bootcamps with Chief Innovation Officers and leaders in the Open Innovation world involved in different industries, including Energy&Gas, Software Development, Insurance, Logistics, Food Production, Financial Services, and Automotive.
The focus of the conversations was to outline the characteristics of a successful intrapreneurship program, and thus understand why certain programs fail, and analyze success stories from real-world examples.
What are the Metrics of the most Successful Programs?
According to our data and among the corporations that applied, 60% of the Corporate Startup Stars and 25% of Innovation Challengers make a medium to long-term commitment, running the programs for 5 years, at least.
When looking at the employee engagement data, 30% of Corporate Startup Stars and 10% of the Innovation Challengers run intrapreneurship programs that involve between 15 to 35% of the headcount.
Finally, the percentage of projects implemented compared to those submitted by employees averages around 10% for Corporate Startup Stars and 5% for Innovation Challengers. These numbers provide a good indication of the metrics a well-thought-out intrapreneurship program should follow.
However, the open innovation industry is still looking for the best model, if there is one. The success of intrapreneurship programs depends on more complex parameters including a company’s:
- Cultural propensity towards innovation.
- Risk aversion.
- Openness towards new ideas coming from the external environment.
Because of this, it’s worthwhile understanding how they empirically work by outlining some examples.
The Common Denominator: Strategic Alignment
Although methods and metrics might differ, according to our data and conversations, one common denominator for a successful intrapreneurship program is strategic alignment. Once that’s been guaranteed, the different projects might take longer, some companies may focus more on some specific metrics and technologies, but there is at least a reasonable basis for a positive value-added contribution. Depending on the internal organization and culture, there are different implementation methods to ensure strategic alignment.
Method 1: Defining the strategic areas in advance
The leanest one is probably defining the strategic areas and criteria at the very beginning before candidates even think about projects. This guarantees alignment from the start, minimizing the risk to bring limited strategic value. A German software development company applies this method by defining areas a priori and setting a numeric requirement of approximately 80% of projects falling into one of these areas. The remaining 20% function as a variance that allows harnessing the benefits of “crazy creativity”, which at times is the one bringing the most disruptive innovations.
Method 2: Separating Innovation from other Functions
A second method involves separating innovation from other functions, in particular R&D, to facilitate the definition of its role in the business strategy. Following this logic, one of the biggest food producers worldwide separated its innovation unit from R&D to have a clear picture of the value. In this case, the innovation entity focuses on the production of ideas, whereas R&D on idea implementation. This enables the company to assess innovation for what it is asked to bring to the table: valuable disruptive ideas.
Method 3: Outside-in Exploration
A third method concerns an outside-in exploration, which entails exploring innovation hubs to figure out how corporations (should) work with startups. The goal of this exploration is to bring back home a methodology to work with agile teams of the intrapreneurship program by understanding:
- How a startup can implement a plan to optimize efficiency.
- What a startup has to do to make the most out of the collaboration with corporations.
- What a corporation can do in terms of providing support through resources and expertise.
- How a corporation should outline the strategic areas, that is, selecting the most promising verticals.
Understanding more the needs of such intrapreneurship startups by answering these questions will help to make sure it is align with the mother company
A global financial services provider took this avenue. The company decided to organize a business trip to dive into the Silicon Valley ecosystem and understand how they could solve inefficiencies in the management and implementation of innovation projects. While in the valley, they also chose to focus on topics including Security, Blockchain, AI, and Robotic Automation.
Assessing the Ideas
Strategic alignment represents the bare minimum. After that, a well-thought-out evaluation process for further development can come a long way in helping both the management in monitoring the projects and employees in focusing step by step on each phase. The same German software development company mentioned before uses this approach by following the same evaluation process. After checking the strategic alignment, projects are assessed through four main criteria with key questions to be considered. These criteria are, namely:
- Team: do they have the skills they might need? Can they work together?
- Testability: can they see if it works before launching/releasing? Is the testing set-up sufficiently reliable?
- Market: does it have a market or need they answer to?
- Environment: why is this project a good fit and not others? Should we include it as a simple functionality improvement? Is this faster to develop internally or externally?
- Resources: is it financially justifiable considering the budget allocated for the program? Does the company show a good probability of financial stability? Can the company provide any further assistance in terms of skills or know-how (e.g. dedicating some of the time of a more senior person)?
During the conversations, we identified two main challenges that top management faces with intrapreneurship programs.
Finding the Most Relevant Participants
Selecting the most suitable members to scale up projects selected through the intrapreneurship program is the first difficulty. To overcome this, during our conversations participants agreed on the following steps:
- Find a person who is passionate about a topic (and thus define the topic/focus too).
- Couple that person with experts (Product Managers, Researchers, UX Designers).
- Include the Market Development team in the group.
Reward system design
Designing the appropriate reward system to incentivize employees to work on their projects represents the second challenge. The interviewee mentioned they do not provide any direct financial reward to employees (e.g. bonus). However, the conversations highlighted how employees can make either a career improvement by showing their management skills on their own ideas. According to some of our interlocutors, regardless of the success of the projects, proactive and impactful participation in the program may allow employees to make a career leap of up to five years. This enables them to gain unparalleled visibility by demonstrating skills they otherwise couldn’t showcase.
In this article, we outlined the main topics related to intrapreneurship programs. We opened the discussion by showing some of the KPIs that the leaders in innovation consider and their values. We then outlined a generic model which considers two main factors to run an intrapreneurship program successfully, namely, strategic alignment and ideas assessment design. We ended up shedding some light on the main challenges companies face when setting up the team to make promising projects scale after they have gone through the program.
Intrapreneurship programs are a powerful tool, not only to leverage employees’ potential but, more importantly, also to spread an innovation culture in an organization. Such wide and long-term goals require complex and evolving methods.
In case you missed our last Bootcamp, check out the article “How to Measure CVC Returns” in collaboration with Sifted. If you want to take part in the next conversation on Open Innovation approaches, you can join our next Bootcamp in Barcelona Summit that will take place on May 31st. Scaleup summits are a unique opportunity to gather innovation leaders together and get them to share best practices on the most popular innovation topics.
Maroane Abdallaoui, Director of Innovation & Spain office
David Songhorian, Innovation Advisor
Mind the Bridge