August 27th, 2020
If your company is at the top of its industry and regularly conquering its business goals, why should you care about how good you are at innovating?
Carley Hart, Engagement Director of Industry Solutions at Techstars, likes to reference Airbnb to point out exactly why every company should care. In 2016, Airbnb was already an industry leader in the home share market. But they heeded a warning sign that others in their position have ignored. They saw that nine out of the top ten tech companies from the ‘90s were currently either struggling or dead — a surprisingly fast fall from domination to disgrace. “Airbnb realized that you can be at the top of your game with your business model, but it doesn’t mean you are defended against future disruption. The companies that are the most innovation ready are trying to disrupt themselves all the time — to poke holes in their business models and think about what’s next,” says Carley. Airbnb launched an innovation group to make sure that they stayed relevant as the world, and their customers’ needs, changed.
“Innovation readiness” measures how well equipped a company is to capitalize on new technologies to advance its business. And Techstars is particularly good at helping companies assess exactly this. Techstars has a long track record of success at playing the middleman between corporations and startups, arming both with the know-how to benefit from each other’s strengths and quickly bring new technologies to market. Large companies in over 20 industries including insurance, robotics, retail, energy, and more have come to Techstars to tap into its worldwide network of startups and receive coaching on the skills and processes needed to work with startup founders.
Here’s how Techstars thinks about innovation and the steps it takes to help companies improve their innovation readiness.
Techstars’ first step in working with any company is to benchmark where the company stands with its innovation skills, using an assessment tool based on best practices acquired from more than a decade of facilitating partnerships between startups and corporations. Carley explains that the tool provides tangible milestones to track and measure a corporation’s growth across four key areas of innovation skills. “As we run a program with a company year over year, we go back to this initial assessment, and we're able to ascertain whether they improved in specific areas,” says Carley.
Techstars measures innovation readiness across four dimensions — Corporate Culture, Process & Tools, Internal Engagement, and External Engagement — with five levels of skill in each. Carley is quick to point out that companies start working with Techstars at all different levels, and whether they’re beginners or advanced, all see benefits from exercising their innovation muscles. “It’s like anything,” she says, “Getting better takes practice.”
Culture is the bedrock of a successful innovation program. When innovation is prioritized company-wide, the potential for using startup technologies to solve all kinds of corporate challenges is unlimited.
Execution on startup engagements also accelerates. A company that is highly advanced in this dimension, for example, has startup engagement operationalized across all areas of business and can achieve dramatic revenue growth by incorporating startup technologies. A company that’s still a beginner at innovation culture, on the other hand, still relies on existing products and minor extensions to realize revenue growth. Carley finds that getting a company to the advanced level requires identifying and defining clear startup engagement metrics and working with teams to tie startup engagement to the company’s larger strategy.
Read about how global insurer QBE is working to become the partner of choice for startups.
Corporations and startups are often inherently mismatched around process and tools — and often need support. The speed at which a four-person business and a global corporation operate and the resources they have are fundamentally different.
“Drawn out processes are how a lot of startup engagement deals die,” says Carley, “If launching a pilot takes a year of getting through corporate hurdles, for example, startup founders could have changed their business model by then.” Techstars helps corporations get more innovation ready by slimming down their processes to make them more startup friendly.
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Procurement processes, legal agreements, and contracts are key areas for improvement; steps that can be overly burdensome for entrepreneurs on a minuscule budget. Techstars also provides entrepreneurs with toolkits that teach them best practices so they, too, are prepared to work with corporations. As companies move from beginner to advanced levels in this dimension, they are developing a standard set of processes, templates, technology tools, and metrics — all designed to facilitate startup engagement.
A company at an advanced level with its Internal Engagement has aligned its business unit stakeholders, executive leaders, and executive vision, prioritizing the company’s innovation strategy, and executing well on its innovation goals.
Corporations that care deeply about innovation often have a dedicated innovation team to lead the charge when it comes to recruiting startups and implementing innovation programs. But Carley says that only gets you part of the way there. “Companies that have the best results working with startups are engaging the business units — the people who will ultimately be leveraging and integrating these new technologies. That’s how it trickles throughout the organization,” she says.
How do you build internal engagement? An Innovation Bootcamp can help.
Carley finds that raising awareness helps companies grow in this area. Techstars educates internal teams about working with startups, and also gives business unit leaders outlets to learn how entrepreneurs work — whether through roles as judges in innovation bootcamps or opportunities to attend entrepreneurial events, seminars, and more.
Lastly, without an ever-flowing pipeline of new technologies and startups into your company, your business will rely primarily on internal ideas to innovate.
Companies with high marks in External Engagement have developed a brand among the startup ecosystem and their industry as a leader for bringing startup technologies to market. For companies that are already fairly advanced in this category, Techstars can enhance their External Engagement by providing deal flow. Carley says, “Techstars gives companies deal flow and the gas to go faster,” by connecting them with its worldwide network of startups and plugging them into the startup ecosystem at a grand scale. Having easy access to the larger startup community can really speed up a company’s ability to start developing a name for itself as a supporter of new technologies.
Is a company ever done developing its innovation skills? According to Carley, companies that represent the gold standard in innovation, like Google and Apple, realize that it’s an ongoing practice. Says Carley, “Those companies have so much R&D, and they’re constantly looking toward the future. They would be the most inclined to say, ‘This doesn’t end.’”
Interested in joining the global platform for innovation? Learn more about Techstars membership and accelerator partnership opportunities.
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