Regardless of size, scope, or industry, nearly every corporation struggles with generating new business models or products. It is their primary goal as well as their biggest challenge. It is incredibly difficult to drive and motivate an entire organization to adopt a new mindset and approach product development differently.
This is also a challenge when the organization operates following traditional operational and entrepreneurial practices and is solely relying on in-house knowledge.
As a result, many corporations look to corporate innovation opportunities to build upon their existing business models. In addition to increasing efficiencies and optimising processes, corporate innovation also helps develop ideas into sustainable business models.
Innovation coupled with creativity drives a level of adaptability for an existing product, service, or process, and exploration and R&D drive new products, services, and processes. When manifested properly, innovation offers the highest levels of value creation for any corporation or organization.
Boston Consulting Group surveyed 1,500 companies on their current innovation processes in 2015, the study revealed that the majority of companies surveyed were unsatisfied with their innovation processes. Many thought them to be too slow, too conservative, and poorly coordinated.
Corporate innovation is one possible solution. However, a process surrounding and supporting innovation alone isn’t enough. Corporations need an agile and self-organizing framework that promotes innovation and new business growth.
However, many of these efforts involve working internally through clear product development and research or working externally with other corporate accelerators to leverage their networks. The challenge is that few corporations actually have the right, scalable internal processes in place to sustain that growth over the long term.
As a result, corporations end up looking in two directions: one that focuses on existing processes, people, technologies, and ideas; and one that seeks out new ideas and possibilities through corporate entrepreneurship (CE) However, CE itself has proven to be a challenge of its own.
In this article, we will address the challenges of CE, and how corporate partnerships are a viable solution.
The Beginning of Corporate Entrepreneurship
CE as an approach to drive corporate innovation is a modern concept, the truth is corporate entrepreneurship has existed in many firms since the 1970s. The idea behind CE is to embrace various entrepreneurial activities, such as innovation, venturing, and strategy to help drive corporate innovation. Through the years, CE has gained considerable traction and interest from not only corporations and executives, but also researchers.
In short, corporate entrepreneurship is a process implemented to develop new businesses, products, services or processes inside of an existing organization with the goal of creating value and generating new revenue and customer growth through entrepreneurial thought and action. CE requires three primary components:
People: Project leaders with an action-oriented leadership style that motivates teams and encourages out-of-the-box thinking is a primary component of CE. This also sets the context for growth and innovation.
When considering existing in-house knowledge among executives and team members, organizations are limiting themselves. Depending on the organization, this knowledge could be severely outdated or based on incorrect assumptions and data. Organizations that make decisions and build business plans based upon existing in-house knowledge of their employees and teams will often fail at building new products and services.
Process: Systems and processes that support entrepreneurial thinking and action, and also adaptive action through iterations are necessary for effective CE.
For example, in regards to product development, teams make progress by adding one or small features to a product in each iteration. This approach to corporate innovation provides structure through clear product development.
Environment: A work environment that encourages entrepreneurial thought, action, learning, growth, and self-organizing teams is the third driver of CE. The environment largely influences the people and the process alike. Internal organization factors such as management support, work discretion, rewards, time availability, and organizational boundaries, all influence the performance, productivity and creativity of middle managers and their employees. Making sure that environment is beneficial to CE
Dive into the different modes of external innovation published by IoT Analytics
However, even with these three primary components, corporate entrepreneurship is still difficult to achieve, and it also comes with its own set of risks and limitations:
Many agile, self-organizing frameworks aren’t sustainable over time
Internal barriers prevent the corporation from adopting new systems and processes
It challenges traditional organizational practices
Adapting to new processes is often “blocked” by the organization’s culture and politics
McCrea & Betts (2013) have shown that organizations that adopt CE initiatives make the mistake of misaligning product development projects with existing strategies. Many also fail to align them with business needs or goals.
Furthermore, in an attempt to build a truly valuable product, or improve and optimize internal processes, organizations will often struggle by focusing only on internal ideas. As a result, this prevents organizations from accessing completely new ecosystems, such as new technologies, new markets, and thus, new opportunities.
Even if organizations were to successfully increase efficiency and optimize internal processes, this doesn’t necessarily mean they will be able to participate in all the new and fast developments available on the market.
The Solution: Corporate Partnerships Provide Unprecedented Opportunities
As mentioned above, in an attempt to reach a level of corporate innovation, many corporations end up limiting themselves to internal ideas, technologies, and resources. However, working with an external partner can open up a new world of possibilities for corporations.
To make these possibilities clear, in the following paragraphs we highlighted some benefits corporations can leverage from working through corporate partnerships:
1. A Higher Level of Agility. One primary element of driving corporate innovation is how teams work. By working with an external partner, corporations will be able to operate with more agility while working through structured, clear product development, especially when corporations are up against industry competitors and are under pressure with their time-to-market.
2. New Knowledge. Agile teams that explore new ideas, projects, and products will ultimately leverage new knowledge, putting the organization in a better position to build and develop a more valuable product. The new knowledge gained through the external partner can be grounded in expertise in a certain industry or technology – this is what makes the partner so valuable to the corporate.
3. Access to Technologies. Working with an external partner can provide technological capabilities beyond those that are only available internally as well as offer unprecedented opportunities in highly complex, technologically-advanced processes and setups. With access to up-and-coming technologies, corporations have the fuel they need to develop industry-leading products.
4. Access to New Markets and Verticals. Corporate partnerships allow corporations to access new markets and verticals that otherwise may not be accessible. Corporate partnerships can provide the organization with insights and intelligence necessary to accelerate their go-to-market strategies.
5. Product Validation. Corporate partnerships can help organizations with automated testing of products in a controlled environment. From design to development, a corporate partnership can help organizations think objectively and quickly adapt to changes.
The Right Corporate Partnership
All in all, working with the right external corporate partner can help corporations and enterprises to innovate, digitize, and optimize their existing processes, products, and services; discover new business models and ideas; and implement new models to help drive innovation—all by significantly reducing the risks of increased costs, project failure, and lack of execution.
Next Big Thing AG is the innovation vehicle to bring your business idea to market faster, more reliably, and in an economically viable manner, enabling you to save time and resources. With our engineering team consisting of hardware, mechanical, firmware, frontend and backend professionals with decades of combined IoT & Blockchain experience, we are the external tech studio for disruptive business innovation.
Finding the right partner can help encourage internal corporate innovation, empowering organizations to become thought leaders in their particular niche or market, gain and maintain their competitive edge, improve profitability and performance, and plan for and embrace the future.