How can corporations build effective incubation engines?
How can they create new, sustainable businesses within their organizations?
Companies must adapt and innovate if they want to remain relevant and gain market share. As discussed in our recent webinar Corporate Incubation: the Key to Innovation in an Uncertain Market, to get there, they need to incubate the right way. Only then are they able to strategically develop, commercialize, and scale new ideas for products and services.
With my fellow panelists Professor Charles O’Reilly of the Stanford Graduate School of Business, Uwe Kirschner, Vice-President, Business Model Innovation at Bosch, Michael Nichols, Global Lead of the Bosch Accelerator Program, and Yusuf Jamal, Senior Vice-President, Devices and Platforms at Western Digital, we shared our insights into what companies can do to build effective incubation engines and best practices from companies that have successfully fostered corporate incubation.
Three key takeaways from the webinar include:
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Mastering the Three Key Disciplines of Innovation: Companies have to learn how to explore new market areas through the three key disciplines of innovation: ideate, incubate, and scale. As we have seen time and time again, many companies are good at ideation, which is when they generate new ideas through processes like design thinking and hackathons. However, once an idea is developed, companies need to go a step further and determine if it is valid and if customers will pay for it – this is when they enter the incubation phase. The third and final discipline is scaling. In this stage, companies must ask and answer critical business questions, such as does the idea have the potential to grow into a successful business and provide great returns?
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The Importance of Evidence-Based Validation: When companies venture beyond their core business, the failure rates can escalate. That means they need to test quickly before too much time and money are invested into a pursuit. Only through this process can they gain a qualitative understanding of the business, the users, and the customers to know if they have a scalable solution that can be built into a profitable business.
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Understanding Successful Business Models for Innovation: Leading companies such as Amazon and Bosch have successfully developed and scaled their businesses through the three disciplines of innovation. For instance, Amazon has developed a system that encourages individuals to explore new ideas and a process that enables people to submit their ideas. For an idea to move forward, it has to provide a differentiated customer experience (i.e., delight the customer), has the potential to grow into a large business, and provide returns on invested capital.
Bosch is another prime example of innovation, with its proven track record of successfully introducing new products and technologies to the marketplace. To get there, the company started by creating an internal and external network of partners dedicated to the business-to-business model of innovation and working with the world’s leading universities. At the same time, the company implemented innovation business models within their organization – something the company continues to do today. The third element of Bosch’s innovation practice focuses on their methodology and standardized tools to enable the company to turn ideas into a sustainable business.
Without a doubt, many corporations still have a lot to learn when it comes to corporate incubation. However, as evidenced by companies like Amazon and Bosch, by implementing the three key disciplines of innovation, companies can create value by fueling innovation and nurturing an entrepreneurial mindset within the business. And in today’s world, large established companies need to take risks and explore new areas if they want to remain relevant and competitive.
Want to learn more on getting corporate incubation right? Register here to watch the webinar Corporate Incubation: the Key to Innovation in an Uncertain Market.
And those of you who want to test their readiness for a new way of building innovation portfolios, take this survey.
