2018 Year in Review: The Global Innovation Landscape – of and by Corporations
The Corporate Challenge: How to gain and maintain competitive advantage?
Our 2018 Year in Review looks back at the innovation landscape with a focus on corporations. After all, what types of innovation these players want; where they invest their resources; and what they ultimately bring to market, influences activities by business incubators and accelerators—and their startups. It’s a feedback loop that some would argue begins with corporations’ business strategies and their ever-present need for competitive advantage.
At the start of the year, UBI Global surveyed 78 multinational corporations across industries, each operating in at least ten countries and each describing themselves as “innovation-ready”. We wanted to discover what their biggest needs were in 2018 and what their attitudes were related to the greater global innovation landscape.
The survey results revealed what these leaders believed their corporations should focus on – and how innovation could be sourced and applied. We confirmed that their feedback does tie into the activities and focus areas of incubation programs and startups operating internationally today. We saw that clearly there are opportunities for nimble startups and established corporations to meet and work together. In fact, we saw that throughout 2018, incubators, accelerators, and their startups have already been actively participating and contributing to corporations’ “hot” areas of interest.
What Corporations Want
In 78 in depth interviews with corporations conducted over the past year, UBI Global has learned that almost 30 percent of companies look to innovation to solve problems in the following areas:
- customer retention
- new product development
- internal management issues
Nearly a quarter of corporations listed strategic direction (including transformation of the business framework) as a top focus. Remaining competitive and offering their customers more value, are deep concerns for corporations with this focus. After all, they strive to grow and outpace their market peers.
The survey also revealed that maintaining a continuous pipeline to market (22%), staying on top of the industry (14%), boosting their own in-house accelerators (9%), and finding new clients (5%), were among other areas of focus.
The big picture looks like this:
#1 Innovation for Problem Solving
Problem solving is top of mind for corporations when considering applications for innovation (27%). However, at its core, problem solving is a reactive approach that seeks to fix shortcomings or failures. Corporations often focus on what is wrong with current products and services— or even operations. In contrast, by being proactive about challenges they face, corporations have a better opportunity to source and apply innovative products and methods. They can collaborate and partner with innovators at business incubators, for example.
- Big Data Innovators to Help Corporations Solve Problems
One way companies have been proactively problem-solving in 2018 is by focusing on data. In specific: what it is and how to use it for predictive modeling. Zeroing in on “big data” and how manipulating information can solve problems, has been a key area in which corporations have collaborated with incubation programs and their startups.
“Demand for big data technologies is expected to generate $210 billion in revenue by 2020 and that industry growth is spurring a steady stream of startups developing innovative big data products,” according to CRN.
Data analysis and new ways to uncover patterns of behavior is what big data promises. It has been applied, with the help of startups presenting new approaches, to improve customer retention, new product development, and even attraction and retention of a company’s own employees.
#2 Innovation to Bolster Strategic Direction
Next comes “strategic direction” as preoccupying corporate minds (23%). Typically, corporations establish an internal structure that clearly defines the vision of the company and its brand(s) and the role of each department and employee in supporting it. Open communication of goals and a transparent structure are key to achieving set strategies. But how does one look to innovation to help with this business practice? And would a company easily recognize a start up’s market offering as a potential solution to its strategic woes?
- Room for Innovative Thinking (vs Innovators)
The answer is to develop an innovation strategy or an innovation mindset when setting and evaluating current business strategies. And though startups do not necessarily help a company communicate its current strategy, they can offer different services and products that could perhaps compliment or bolster a company’s current offering. Adding, replacing, or improving an offering can be seen as “bolstering strategic direction”. The innovation landscape is filled with startups capable of helping corporations and their current strategies; in general, the corporation needs to consider innovation-for-strategy as a way of thinking:
- An innovation strategy needs to be truly inspiring and should describe a desirable future state for the company.
- The innovation strategy needs to be ambitious in terms of providing the basis to break away from the competition, beat the competition, and create new spaces.
- The process of developing the strategy needs to be open.
- An innovation strategy must also be specific to the time in which it is developed, as it is grounded in the reality of a company’s environment, and it reflects the available capabilities, technologies and gaps that may need to be filled.
- An innovation strategy needs to be adaptive and to evolve over time, i.e. incorporate learning, allow adjustments to the desired course and maybe even allow an organization to cut its losses if required.
#3 Innovation by Startups and at Incubators to Feed a Product Pipeline
Corporations are ever-concerned about keeping their offers fresh and in synch with— and even a step ahead of— consumer demands. From our survey, 2 of every 10 multinational corporations (22%) state that sourcing new products and improvements on current ones is why they would seek outside help (from incubators and startups). Called, “continuous pipeline strategy”, it is a straightforward, repeatable deployment process with a goal of providing delivery of new or improved products to the customer. With this approach, corporations employ short cycles. At any stage, the product or service can be released and experience success in the market.
As expected, reliance upon startup incubation is heavy for this approach. Corporations have begun to form delivery teams, with development, operations, and testing departments working together with startups as a unit to shorten the release cycle for innovative, exciting products. The benefits of continuous pipelines include:
- Faster time to market
- Better quality
- Competitive advantage
- Customer satisfaction gains
- R&D cost reduction
In fact, it is well-known that startups have a key hand to play in helping corporations “pivot”.
“Pivot is a lean start-up term that refers to the concept of introducing a product, understanding how customers react to the offering and then changing the offering to better align with the customer needs based on the learning from the product introduction. Lean has introduced the idea of a Minimally Viable Product (MVP) to our lexicon.”
Examples of how corporations turn to startups to feed their product pipeline and more easily pivot are found here.
What About Supporting In-House Accelerators?
One of the least mentioned areas of interest among the multinational corporations we spoke to is a focus to boost their own accelerators, or home-grown centers of innovation. This is likely because not many corporations have a separate incubator associated with their Research and Development or innovation-centered activities. This makes sense from what we have been seeing in 2018. As we have noted, even in our own community of incubation programs, there has been a spike in collaborations between corporations and startups.
It’s called “corporate venturing”. The term describes established firms that collaborate with startups (whether through corporate venture capital, scouting missions, hackathons or “excubators”) as a way to source new ideas and expand their own offerings. According to Forbes, large companies such as Intel, Siemens, Xerox, GE, IBM, Lucent and Merck have been corporate venturing for years:
“Between 2010 and 2016 in fact, the use of corporate incubators and corporate accelerators among the 30 world largest companies in the world rose from just 2% to 44%.”
The Incubation Connection
The needs and requirements outlined by multinationals in UBI Global’s survey echo the activities within the incubation ecosystem. Throughout the Best Practices and World Benchmark reports, university-linked incubation programs have demonstrated that their goals and objectives are in line with what corporations need in order to innovate in their sector.
It makes sense for corporations to turn to startups and incubation programs that guide them. It’s a great match, according to Forbes:
“Large corporations are like big, slow ocean liners: difficult to steer when it comes to innovation at the pace the market requires. Standardized processes, bureaucratic management, risk aversion and lack of creativity are some of the reasons for this. In contrast, start-ups desire to challenge the status quo, have potential for rapid growth and the capacity for a continuous flow of new ideas.”
UBI Global offers a strategic way to connect to the incubation community worldwide for both corporations and the incubation programs guiding the next generation of startups. Corporations can learn how to efficiently collaborate with exciting programs and their startups. Incubation programs can better connect with insightful information and each other through our UBI Connect platform. Our own “year in review” looks like this: