Companies innovate to create and capture value – easy to say. Much harder to do is knowing which types of value are needed, and how to make the needed innovation move from idea to impact. Many CEOs ask a simple question critical when it comes to innovation efforts: “When will I see some results?” The virtuous duo of value creation plus speed is top of mind.
For companies looking to build a pipeline of relatively low-investment, quick-return innovation options, investing in corporate start-up accelerators may be one possible instrument. Compared to the other 7 instruments, accelerators has the shortest time to impact, which makes it potentially attractive for many companies. But only if it’s employed for the right reasons, and built correctly from the start.
Start-ups join accelerator programs to obtain training and support, plus (typically) some degree of seed funding. Large companies that support corporate accelerators gain low-cost, low-commitment options in their innovation portfolio. They also gain powerful side benefits as a “hub” of startup activity: access to fresh talent and the chance to spot innovative ideas early. That’s why large corporations, such as Microsoft and Boeing, AIG and Eli Lilly (among many, many others) have or are considering launched their own accelerators: the risk is low, the financial investment is affordable, and the company can concentrate several start-ups in a common place, uniting ideas and efforts to develop new products or processes. If a groundbreaking innovation is born within this program, the company supporting the accelerator has the inside track for extracting that value.
Accelerator programs, per idea-set, last just a few months, maximizing the discovery of new talents and innovations applicable to a given firm. These short-cycle acceleration programs mean executives don’t have to wait for years to see their innovation investments translated into value.
And yet…accelerators aren’t for everyone. To execute a successful accelerator program it is important to ask yourself an honest question: What can I offer to the start-ups, and what do I expect from them?
There is an increasing number of accelerators, and start-ups decide to apply for one or another based on the set of advantages -funds, but also training and networks – that each of them offer. It’s important to be as realistic as possible in defining how your company’s accelerator program will compete with other options. Otherwise, you will be left with B-rate applicants and an underperforming investment class. Will your organization commit to creating the right degree of connectivity and knowledge transfer between in-house and portfolio companies? How will you ensure that start-ups in your program are working on innovation areas with likely relevance to your overall strategy?
Be brutally honest about these questions up-front, as they are important qualifiers for vetting the suitability of an accelerator program. Otherwise, you will almost certainly be disappointed later. No matter how promising the start-ups are – or how original and interesting their projects may seem – if their ideas are not applicable to your firm, or if your organization lacks the experience or resources required to capture value downstream, they will ultimately be useless in pursuit of the overall objective: translating innovation into value.
For a complete primer on the pros and cons of corporate accelerators, feel free to contact us. We’d be happy to discuss your specific situation further.