4 Questions Corporations Should Ask Before Launching Innovation Projects
Apr 14, 2021
Corporations have a lot of moving parts, making innovation projects difficult to get off the ground. As a result, corporate innovation leaders spend a lot of time navigating the enterprise playing field, balancing the scale of the business with the agility of an innovation team. Neil Soni, founder of Open Innovation Leads, author of The Startup Gold Mine and innovation growth consultant, experienced this challenge multiple times as both a startup and corporation innovation leader. He realized the solution is to ask yourself the right questions before jumping to action so you’re set up for success. In a Forum Innovator Spotlight, Neil shared the four key questions he thinks every corporation should ask themselves prior to starting an innovation project.
Question 1: What do you do well?
It seems obvious, but Neil said many corporate innovation leaders forget to ask themselves what they are good at. Enterprise leaders tend to be a focus on developing all things in-house, said Neil, because that approach worked for main business lines in the past. Launching successful innovation projects, though, requires enterprises to play to their strengths.
“It’s about figuring out what you do really well - and what you don’t do well,” said Neil.
To illustrate his point, Neil shared the example of Ameritas Insurance, a national insurance brokerage headquartered with over 2,000 employees. Neil said that Ameritas is a key player in the insurance space, but their main strength is selling through agencies. The company doesn’t have a direct to consumer (D2C) division and has no D2C experience. For the innovation team, this ‘weakness’ meant an opportunity. Instead of building D2C competence in house, the innovation team could easily look to partners with D2C experience and focus on Ameritas’ strength in building insurance products.
Question 2: What external ecosystems can fill gaps?
Continuing the Ameritas Insurance example, Neil talked about the importance of leveraging external ecosystems.
“It’s not always about hiring the skill in house,” he said. “If you build internal skill sets all the time, you have to recruit and focus on changing culture, which can take a long time.”
An external ecosystem, for instance a startup that has complementary expertise, can help you get to market faster.
“Partnerships are where you can cut out some of the pain in corporate innovation,” said Neil.
Question 3: How can you make it easier for startups to do business with you?
For corporations, moving slowly and keeping warm relationships keeps the boat chugging along smoothly. For startups, it can be a death sentence.
“The incentive to move quickly is much bigger in startups than it is in big corporations,” said Neil. “So corporations that want to innovate need to quicken the pace, even if it’s saying no. A quick no is better than a maybe.”
Making these changes, said Neil, is about streamlining back-office functions. For example, creating a separate procurement track for partners with accelerated legal and accounting due diligence. While corporations need to focus on security and compliance, startups often need small changes - for example Net 30 payments instead of Net 90 - to make partnerships work.
“If you make your process transparent and move quickly, it becomes a flywheel,” said Neil.
Question 4: What is the biggest investment you can easily say yes to?
In the enterprise world, people might scoff at $25,000 contracts since they are used to six-figures or higher. For startups, a $25,000 contract could be their biggest customer to date.
“Not everything has to be a $500,000 or $1 million engagement to show impact,” said Neil. “Lower your barrier to entry if you’re on the fence about trying startup partnerships.”
If you can’t immediately get approval for lower contract amounts, Neil’s advice is to leverage internal examples where the company already spends that much money. For example, pre-pandemic it would not be unusual for a corporation to have a six-figure conference and travel bill. Neil said innovation leaders should take facts like that and pitch spending 50% of that bill on startup partnerships for one year.
“Don’t be afraid to make some bets,” said Neil. “You’d be surprised what startups can do.”
Getting ready for speed
Once innovation projects start, they can move very quickly. Asking the right questions before jumping in helps the team identify possible obstacles and remove them before they become a problem. If you know your weak spots and how you can improve specific parts of the process to make it easier to work with startups, the more quickly you can advance once the project begins.
Interested in connecting with other Innovation and technology executives to share strategies, experiences and learnings? The Innovation Forum brings together Innovation execs across sectors to connect, share and support each other. Get exclusive resources, expert talks and first access to our growing community of B2B startups. Learn more by emailing me at Jon@forumvc.com.