Monday, 16 july 2018 | Redacción CEU
Digital transformation has forced companies to adopt new points of view that help them to compete in a scenario in constant evolution, a VUCA environment. Large companies have economic capital, productive capacity, material resources, infrastructures and experience. Nevertheless, they lack what startups and new entrepreneurs excel at: promoting an agile culture, flexibility in processes, passion for ideas, creativity and full adaptation to the new digital environment. This is the reason why some companies have decided to adopt new entrepreneurship models such as Corporate Venturing based on the Open Innovation concept. What does this paradigm consist of? How do these strategies help to boost innovation in companies?
The innovation model which had prevailed until recently argued that the process leading to innovation should be completely controlled by companies. Only when a company finally launched a product or introduced a service to the market, could this innovation go beyond the limits of the company -of course, always considering the perspective of patents and licenses-. But, in 2003, Professor Henry Chesbrough coined the term Open Innovation. Since then, an alternative approach to innovation has being gaining strength in the company framework.
The new era of digital transformation is pushing companies to innovate more and more quickly. Changes are no longer linear, but exponential. Companies have difficulties in keeping up with market demands. The traditional paradigm prevents companies from being able to take advantage of the ideas coming from the rest of businesses. Sometimes, it even encourages the doubling of efforts in vain. This is the case, for example, of the companies that work in designing tools that others have already developed or in solving problems for which effective alternatives already exist.
Open innovation defends that companies should put aside their limits and borders and focus more on being able to use both external knowledge flows as well as their internal ones and, in this way, achieve the maximum potencial for innovation. This new conception puts forward the idea that companies should not shut themselves off. Innovation can be driven by participation, external collaboration and feedback. Companies also grow to the extent that they are able to create synergy, learn from the rest and cooperate.
Corporate Venturing is a type of corporate entrepreneurship that fits in this new trend of open innovation. This strategy tries to put companies directly in contact with new entrepreneurs and startups with the aim of creating a hybrid innovation model. In this way, the weaknesses of ones are compensated with the strengths of the others. By means of this joining companies are able to tap talent, implement new technological solutions and discover alternatives for their business models. On the other hand, startups benefit from the economic and productive capacity of companies, their know-how, their data and the access to foreign markets. In short, it all comes down to growing thanks to the joining of their strength, thanks to the synergy.
In the United States, 57% of companies use Corporate Venturing as a standard methodology. According to The Boston Consulting Group, the ROI of the companies that use it to boost their R & D processes is 2.6% higher than the average. However, in Spain the Corporate Venturing it is not a widespread strategy yet, although there is a growing demand for managers of Corporate Venturing and Open Innovation. In particular, companies demand professionals with a broad business vision and a great analytical capacity that also allows them to make qualitative decisions and that are open to change, have the technological expertise, are willing to learn and know how to work independently.
Corporate Venturing can resort to different mechanisms to create these bridges and synergies. Among the main tools used we can find corporate accelerators and incubators, corporate venture capital funds, the acquisition of startups, hackathons, strategic alliances, mentoring programs, scouting missions, the use of licenses and partnerships with universities.
This is precisely one of the obstacles to the development of this model: the increase in complexity within organizations. However, this paradigm implies a change in mindset rather than a large deployment of methodologies and tools. Any company is able to apply this model whenever it is willing to face innovation from a different perspective to the traditional one, because a simple approach and interaction with another entrepreneur can affect the way companies see things.
Corporate Venturing is a new way of reaching talent and finding balance in such a changeable environment which lacks stability. It is also an instrument that helps large and small companies to be able to shake hands -even if it is a one-off event-, follow the same path and work as a team to get bigger together. Unity makes strength, in this case, in order to keep up with the accelerated march of digitalization.
At The CEU IAM Business School we believe that innovation and excellence are two key issues in the organizational transformation in today's business environment. For this reason, we have designed a Master's Degree in Human Resources, the Management of Talent and Leadership with a practical and current approach and a strong commitment to leadership, talent, innovation, people management and networking.