Many companies start their innovation and digital transformation endeavors with an internal team focused on reducing costs, improving customer care and increasing revenue. Executives should recognize that not all the ideas will come from internal resources and they can successfully expand the scope of their innovation activities. Transformation projects almost always mature over a few years and in order to maintain momentum, the innovation teams can reach out externally to a broader ecosystem that includes universities, research institutions, VC funds and startups. Hackathons for grad students and entrepreneurs or crowdsourcing for innovators are further avenues to gather ideas from the external market.
The objective to go outside is to bring in emerging technologies and integrate them into the company’s digital solution set. In many cases, the technology solutions out there are further advanced than most of the ideas swirling around inside companies. These activities can also extend beyond just technology to include all innovative concepts and ideas.
Establishing an externally focused new ventures team is opening a company up to a broader ecosystem that will inevitably create more moving parts. But keep in mind, it’s unfair to expect an internal group of people with a career in the industry to suddenly transform and be super creative about future problem solving and creating new innovation. There should be a formalized system and strategic alignment must happen at a senior leadership level in order to create the right swim lanes for the team. Good pre-planning is required to manage the flow of ideas and a process for decision-making to select useful solutions. It’s absolutely critical to have KPIs; and the one KPI that trumps all the others is value creation. If you can’t come up with a crisp calculation of value, you’ve wasted your time. It’s also smart to have internal sponsors owning the innovation as new venture teams can often feel pressure to have to “sell” their new stuff back to the mother ship. We want to create a “pull” situation rather than a push situation with internal sponsors. This approach also helps make the adoption process easier.
The next wave of opportunity is for different companies to put their assets together and share or restructure their business models. Industries are getting compressed now and there is an overbuild of capacity, be it processing plants or retail outlets. The strategy here should be to consider consolidation options for both services and resources. Similarly, the new ventures group of one company may well be totally capable of offering their services to other companies, saving not only on the overheads, but potentially multiplying the efforts behind venture investments. The result is an ever-increasing ecosystem where instead of replication, leaders work together in a networked business model.
Many players have recognized that collaboration outside the fence is key and working with a broader ecosystem enables scaling beyond what they originally thought possible. There are many smart people who could do fantastic things with better capital and support from a larger ecosystem.
This is like leveraging a thousand brains whilst paying for only a few.
VCI Transformation Forum, Notes and Insights, September 30, 2020
The VCI Transformation Forum seeks to share questions and insights between members about the ways and means to lead large scale transformations, the potential impacts of emerging technology, and on maneuvers that ensure strategic stability and 10X growth. Models of innovation are susceptible to exponential change as people’s behaviors, technology, global politics and economics further shape the world. As such, we believe it is the opportune moment for more engagement, dialog, and consultation.