BY SAM FORSTER, PA TECHNOLOGY innovation EXPERT
Approaching half of UK organisations are involved in some form of open innovation1 – sourcing new ideas from suppliers, customers or academia for example. But this traditional approach to open innovation is no longer enough for firms that want to truly disrupt their industries. The most exciting upheavals may come from a growing type of inventors called permissionless innovators. But if your approach is ad hoc you’re less likely to get the return you want. To get ahead of the game, be proactive and have a strategy.
Who are permissionless innovators? There’s no typical profile. These folks are inventors at heart and are enabled by the internet. They make what they like, when they like. Companies like Uber and Airbnb are perhaps the most permissionless of all: they own no infrastructure and have pioneered new business models entirely through digital platforms.
And you don’t even need the venture capital funding of an Airbnb or Uber to be a permissionless innovator: today, inventors can get a project crowdfunded on Kickstarter, designed on Breakthemold and 3D-printed through Ponoko. There’s a stream of ideas out there, developed independently of the corporate machine.
Step by step
Your way into this world is through accelerators – programmes that allow start-ups to apply for funding and mentoring. You may find innovations you want to invest in, but will definitely learn how to work with start-ups and how to embrace the cultural change you need to make your own organisation more agile, more entrepreneurial and ultimately more innovative.
There are literally hundreds of thousands of start-ups, so it’s impossible to keep track of them. 608,100 new businesses started in 2015 in the UK alone. Accelerators bring together experienced and expert people from different industries and different backgrounds. With your fellow panel members you support a selection of start-ups, giving the benefit of your experience and knowledge and, in some cases, investment.
It gives your people a chance to explore this new culture, see the innovations that are trending and burgeoning in your own and similar industries – and completely different ones. It also means they’ll meet peers from other organisations and can make connections and share ideas. There are networks and global directories to help you get started, like Global Accelerator Network gan.co or http://www.seed-db.com/accelerators. And you can find out more about them from innovation charity Nesta2.
Companies who have invested in this world come from many industries. Swiss Re, Fidelity, P&G, General Mills and government organisations such as GCHQ are all seeking to exploit accelerator programmes.
If you do identify a product or service you think is right for your business, working with start-ups entails co-developing products or services. Start-up Kinetic, a graduate from RG/A’s Accelerator Program in New York, is now working with a large US parcel delivery company to pilot their innovative wearable human performance technology in real life projects. These devices help manual workers do their jobs safely. The delivery company were involved in the accelerator. It’s a win-win. And there are hundreds of similar examples.
Get the best of both worlds
There are also similarities here to the ‘collaborative venturing’ models used by HP3 and Coca-Cola4 to invest in start-ups. Coca-Cola Founders form partnerships with entrepreneurs: ‘Together we focus on big problems lots of people have. Using lean startup methods, they grow the startup with Coca-Cola as the lead backer. Once the business model is proven, Coca-Cola becomes a minority shareholder. We collaborate from the very start to create more speed, more scale, and more impact.’5 There’s an order-management company in Vietnam, for example, whose technology gives Coke better insight into its consumers.
Here’s where the experience from accelerators comes into its own. Build collaborative venturing teams from your newly ‘trained’ entrepreneurs and innovators. These people are highly valuable as they possess both your own DNA and that of permissionless world. They understand and can exploit both sides of the coin.
So fund them with the P&L of your business units. Task them with seeking out the breakthrough and pioneering innovations for a particular line of business, aligned to strategy and future ambitions. They could target specific areas of innovation.
A long-term investment
Explore the world of accelerators before your competitors do. Take what you learn to help you innovate more effectively in-house, but more importantly get experience of collaborating with permissionless inventors. After all, why would the brightest MIT students of the future take a job with you when they can launch their own start-ups online before they even graduate? Learn through experience and you could shake up your industry sooner rather than later.