Technology and digital disruption continue to advance at breakneck speed, leading all industries into a future where business agility counts just as much as having an experienced C-suite.
In 1960, the average lifespan of a company on the S&P 500 Index was almost 60 years. In the fast-paced digital landscape, the average age of companies listed on the stock exchange is under 20 years old.
This means that industry cannot go it alone. More than 80% of leaders at large corporations believe innovation is critical to business growth. Today, 75% of Fortune 100 companies have an internal venture capital department, like a startup accelerator. According to Harvard Business Research, the number of corporate investments in startups tripled from 980 in 2013 to 2,795 in 2018, with their total value growing from $19 billion to $180 billion.
The future is certainly one in which corporate innovation includes strategically integrated external innovation programs; these large organizations become adept at identifying and running pilots with startups both to learn and to scale; and large organizations are built to balance the demands of innovation and operations.
So, the question is not IF innovation should be a strategic focus; but rather, HOW does innovation become a strategic priority?
What do you think is the next big thing for innovators?
The tenacity and agility of a small early-stage company coupled with the knowledge, network and resources of a large company is unstoppable .
However, the next big thing centers around the question of how to engage in meaningful external innovation initiatives.
Forging this path requires innovators to make explicit changes to organizational design, priorities, budget horizons, and culture. It raises questions of model, resources, and partnerships. It bumps into the tedious day-to-day of security, compliance, procurement, and systems integration. There is no single right answer. In fact, across the MassChallenge portfolio of 100 corporate and industry partners, there is consistently a wide variety of approaches to strategically leveraging innovation.
There are interesting parallels to the corporate sustainability space where effective organizations appear to move through the stages of organizational design from a single role to an empowered team, ultimately towards innovation as an integrated capability.
There are at least four “get to innovation” motions seen from leading innovators as they embrace the strategic shift:
- An explicit and resourced commitment to an innovation strategy that includes both incremental and transformational, internal and external innovation
- A focus on solving challenges, not procurement
- A philosophy of engagement with startups, not only scouting for tools or talent
- Organizational investment in “startup readiness” which includes culture, processes and systems that embrace and enable the new and novel
The opportunity for corporate organizations
In the startup world, we cheer on the entrepreneurs growing startups tackling really big problems for which the standard Silicon Valley venture model is not well suited.
Fusion, material science, space commercialization, biotech and other science-based, deep tech businesses require distinct time horizons, partners, capital, and teams that the typical software startups do not. This is because the process of going from idea to invention to scale-up is exponentially longer for startups focused on businesses based in science, like jet propulsion and medical devices, and therefore quick returns are not the norm.
In favor of these new frontier startups are new networks and resources that help bridge the gap from taking a research-based business from concept to the customer. From rethinking the federal SBIR grant programs, the creation of venture firms like the Engine, and uncommon co-creation partnerships, it is encouraging to see support systems beginning to surround these entrepreneurs as they navigate the road to commercialization. And this is where the opportunity lies for enterprise innovation.
There is massive opportunity for mature enterprises to deploy their knowledge, expertise, resources, capital and networks industry partners to increase the success rate of startups that are often overlooked for early-stage venture investments.
While big engagements move the needle for startups, small acts of collaboration make a BIG difference in the earliest stages of launching a business, too. Mentoring founders that have outsized risk and potential for outsized impact is a low-risk way to connect with the creativity of entrepreneurs, get in touch with the bleeding edge of business and technology, and advance new businesses. Bigger engagements could involve organizational partnerships with a startup network or an accelerator to identify and progress your innovation goals.
However you get involved, transformational innovation (innovation that creates generational impact, not just generational wealth) in industries like climate and energy, healthcare, housing, and mobility will depend on re-imagined capitalism and partnership as much individual acts of generosity.
The innovation industry and the ecosystem that surrounds us requires involvement. From all corners of business. The next generation of entrepreneurs working to disrupt the status quo and re-align how tech and business adapt to the demands of our world is happening. Without deep investment in the community that powers innovation and initiatives to increase enterprise involvement, industry will hurdle ahead with outdated approaches. And has anyone wanted to be the hurdle instead of the leaper?