Corporate Innovation Makeover: Excubation rules for the core business

This blog post is dedicated to the final three Excubation rules, and thus concludes our Corporate Innovation Makeover series. These three rules focus on the core business and the actions necessary to effectively enable the innovation business and the portfolio.

For a sustainable flow of ideas and an effective innovation company, as a complement to the executive company (read rules #1 and #2), the core business needs to change along with the development of the innovation business. This need is often overlooked when companies begin setting up their innovation activities and focus primarily on driving them. As the Excubation approach builds upon enabling innovation by leveraging the core business, the following rules are central to making it successful.

Rule #5: Inspire employees

As the recent PwC benchmark study has shown, over 60% of corporate executives consider their employees their most important partners in innovation. It is thus crucial to inspire employees in the core business to partake in innovation activities. The main objective is to win entrepreneurial talent from within the company. In corporate practice, a few key measures are typically employed to achieve this:

• Job rotation: for example, by playing the role of the start-up CFO for a week or becoming a start-up team member for three months, by bringing in external start-up CXOs onto the corporate management team or virtually participating in online forums.
• Connection of employees within the start-up community: participation in start-up events and fairs, internal roadshows, e.g. via internal “TED talks”, presenting innovative business models from the innovation company.
• Rule breaking: reduction of rules and guidelines (for instance working hours, process adherence, corporate identity guidelines, etc.)

It is fairly easy to put these measures in place in a larger corporate context and leverage this activity as a communication vehicle to bring the larger employee base on board. As with all start-up activities, a “minimum viable” approach is more effective than a perfectly set-up inspiration program that takes long lead times. Trying things out and tailoring them over time already puts the leadership team into the right mindset.

Rule #6: Educate employees

Besides the inspiration of the core company’s employees, their education in start-up and innovation-related matters is necessary for the development of entrepreneurial talent. Teaching employees core methodologies and approaches for developing radical innovations equips the 5-15% entrepreneurially minded people in the organization to participate in corporate start-up activities. To achieve this, a few key activities can be deployed comfortably in parallel to the core business:

• Start-up library – physical or digital resources with key books and content to read up on.
• Fablabs for experimentation, e.g. with design thinking, mock-ups and prototypes.
• Co-working spaces to foster collaboration activities with start-ups.
• Quarterly boot camps for the development and pitching of new ideas within two or three days that can be channeled into the innovation company.

The opportunities are almost limitless. All that is needed is to provide some structured guidance to those interested in innovation methodologies to equip them with the basics. It is not about following a textbook approach (and there are many) or having employees take all kinds of courses and gather certificates in design thinking. Applying the learning, and making things real, is crucial.

Rule #7: Support innovation flow

The objective of this rule is to secure a constant flow of innovative ideas from the core company into the innovation company. As the core company and its employees are faced with basic elements of the core company’s business model on a daily basis, ideas on how to substantially improve and ideally disrupt the business may also come from these sources. To support employees in identifying and bringing forward innovative ideas, a few measures should be implemented:

• Partial allocation of working time (of a selected or broader set of employees) to idea development (for example 10%).
• Additional capacity from the execution company to support the innovation company and its start-up activities when support is needed.
• Provision of IT/IP/technology as needed for specific innovation activities.

Overall this rule is about enabling the innovation activities as effectively as possible and ensuring a sufficient leverage of the capabilities and capacities available in the execution company. It is that support, after all, that creates the strategic advantage of a corporate start-up over a greenfield start-up and that increases the probability of the start-up’s success from the often cited 10% to 20-30%.

Dr. Markus Anding is Co-Founder and Managing Director at Excubate Corporate Startups, a firm focused on helping large corporations innovate like start-ups. Together with his team, Markus builds corporate start-ups and the respective incubation environments for companies across industries and helps them implement the Excubation approach. Markus has an academic background in information systems, and he combines long-term practical experience as an entrepreneur and as a Principal at Bain & Company. He also acts as Managing Director for the Munich Center for Internet Research.