With existing business models in many different industries, e.g., automotive, telco, retail, reaching maturity and providing little or no growth, and startups disrupting them with their new solutions, corporations find themselves more than ever in need for creating new businesses. But few corporations are able to consistently create from scratch new, big businesses that use innovative technologies and employ novel business models. For reasons explained here, it is slowly becoming apparent to corporations that the innovation model that is based solely on the efforts of corporate R&D organizations is no longer sufficient for addressing the long-term growth goals they need to achieve. To address these issues, achieve their growth goals, and avoid being disrupted corporations are accelerating their investments, acquisitions, and partnerships with startups in order to access and take advantage of their innovations. However, they must now develop new skills to enable them to select and grow these startup-centric efforts into their next-generation core businesses.
This is the fourth in a series about corporate innovation co-authored with Steve Blank. Steve and I are working on what we hope will become a book about the new model for corporate entrepreneurship. Read part one on The Evolution of Corporate R&D, part two on Innovation Outposts in Silicon Valley, and part three The 6 Decisions to Make Before Setting up an Innovation Outpost.
In our last post, we addressed the six key questions that senior management should address to determine if an Innovation Outpost makes sense for a company. If the answer is yes, here’s a step-by-step guide to help set one up.
This is the third in a series on the changing models of corporate innovation co-authored with Steve Blank. Steve and I are working on what we hope will become a book about the new model for corporate entrepreneurship. Read part one on the Evolution of Corporate R&D and part two on Innovation Outposts in Silicon Valley.
Corporate Leadership’s Innovation Outpost Decision Process
Today, large companies are creating Innovation Outposts in Innovation Clusters like Silicon Valley in order to tap into the clusters’ innovation ecosystems. These corporate Innovation Outposts monitor Silicon Valley for new innovative technologies and/or companies (as emerging threats or potential tools for disruption) and then take advantage of these innovations by creating new products or investing in startups.
This is the second in a series on the changing models of corporate innovation co-authored with Steve Blank. Steve and I are working on what we hope will become a book about the new model for corporate entrepreneurship. Read part one on the Evolution of Corporate R&D.
Innovation and R&D Outposts
For decades, large companies (see Figure 1 below) have set up R&D labs outside their corporate headquarters, often in foreign countries, in spite of having a large home market with lots local R&D talent. IBM’s research center in Zurich, GM’s research center in Israel, Toyota in the U.S are examples.
These remote R&D labs offered companies four benefits.
- They enabled companies to comply with local government laws – for example, to allow foreign subsidiaries to transfer manufacturing technology from the U.S. parent company while providing technical services for foreign customers
- They improved their penetration of local and regional markets by adapting their products to the country or region
- They helped to globalize their innovation cycle and tap foreign expertise and resources
- They let companies develop products to launch in world markets simultaneously
I first met Steve Blank when he started his enterprise software company Epiphany. Steve has spent 21 years as a Silicon Valley entrepreneur in eight startups and the last 13 years as an educator – currently teaching entrepreneurship at Stanford, Berkeley, Columbia and NYU. Steve and I are working on what we hope will become a book about the new model for corporate entrepreneurship. His insights about how corporations are adopting Lean Startup will be at the core of this series of four co-authored blog posts.
The last 40 years have seen an explosive adoption of new technologies (social media, telecom, life sciences, etc.) and the emergence of new industries, markets and customers. Not only are the number of new technologies and entrants growing, but also increasing is the rate at which technology is disrupting existing companies. As a result, while companies are facing continuous disruption, current corporate organizational strategies and structures have failed to keep pace with the rapid pace of innovation.