Addressing the scale-up problem in corporate innovation management

We have started to work on the integration problem.

The original pain point – Welcome, ambidexterity

More than three years ago, innovation-3.com’s Frank Mattes and Dr. Ralph-Christian Ohr noticed a pain point in corporate innovation: How should companies balance the different requirements in searching for tomorrow’s business and in running today’s business? They wrote A WELL-RECEIVED ARTICLE urging the need for organizational ambidexterity, i.e implementing dual corporate innovation structures.

Frank’s and Ralph’s main arguments have been proven in practice.

Some shining examples like e.g. Amazon’s Cloud Computing business or Daimler’s Car2Go showed that scalable business models can grow out of appropriate ambidextrous structures.

Also on a broad scale, organizational ambidexterity has become mainstream. By now, one finds more than 300 corporate innovation centers around the world, widely pursuing explorative innovation via approaches such as incubators, accelerators, innovation labs, hackathons etc. And many companies are also increasingly using Corporate Venture Capital to drive explorative innovation (see exhibit below).

bcg

Companies use different tools to drive explorative innovation (Source: BCG)

Furthermore, a recent survey of German corporate innovators found that 100% (!) of them see an ambidextrous strategy to be vital for staying in the game. Even more so when “Digital” becomes part of the game.

The next pain point is emerging

Working with our clients to get dual structures to pay off, we clearly see a new pain point emerging: Companies are struggling to scale up their corporate start-ups / corporate ventures into impactful businesses.

In this context it is remarkable that the first of these ambitious innovation centers are being closed. Yes, these are singular examples by now. But on a broad scale, dissatisfaction with the ‘Return on Exploration’ seems to be growing.

Innovation theater and the missing integration

“Every CEO these days needs his innovation center. And of course, the C-suite has to see Silicon Valley. But where is the impact of this ‘innovation theater’?”, some people are already asking.

We do not see the real problem to be that too few managers have been exposed to Silicon Valley – There has almost been an ‘innovation tourism industry’ emerging over the last years.

We do not think that the root cause is a missing methodological foundation for conducting work in explorative units and the incubated corporate startups herein. On the contrary: Teams are working with Design Thinking, Lean Start-up, Business Model Canvasses or by applying agile development techniques.

We also do not see – in many cases – the root cause to be that these explorative units have not been set up properly for success. Necessary – while not sufficient – factors of success have been identified.

We observe more and more that the key problem is somewhere else: In order to get from exploration to impact, inherent tensions along the scaling process need to be managed well. In particular, the tensions in integrating the ‘innovation speed boats’ with the ‘mothership’.

So far, there seems no comprehensive approach for what it takes to successfully cope with this critical innovation phase.

Open call to practitioners: Let’s work on how to get from corporate start-up to impact

We have started working on this approach and developed the first outlines of a solid framework: Some sort of scaling methodology containing guidelines on what to consider in which circumstances to improve the chances for successful scaling.

We feel that we are only a few steps away from an actionable concept – a “Minimum Viable Product” if you will. We therefore invite all innovation practitioners to join forces and to work on this.

Please send us a short message on LinkedIn (Frank Mattes or Dr. Ralph-Christian Ohr) if you want to be part of this thinking process.