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DISRUPTION
DISRUPT OR BE DISRUPTED
American business guru Clayton M. Christensen coined the
term disruptive innovation during the late 1990s. Since then,
there has been a demise of industry incumbents who have
been outmanoeuvred by new technology and business models.
Corporations are focused on avoiding the mistakes that killed
giants such as Kodak and Blockbuster to ensure they are not
pushed out by innovators like Uber and Airbnb.
Christensen also identified the ‘Innovator’s Dilemma,’ a
problem that many large and established companies face.
When making healthy profits today, the incentives are stacked
against adopting new technologies or business models that
could disrupt the established business. The result is that scale
and embedded risk aversion can prevent agility to changing
markets and competitors. Whilst investment in research and
development can achieve incremental change, it is essential
to have an awareness of disruptive threats and the right
organizational structure in place to respond to fundamental
innovations in the market.
IF YOU CAN’T BEAT THEM, JOIN THEM
Outside the corporate environment, we are seeing the
entrepreneurialism of startup ecosystems producing the fastest
pace of innovation. A growing number of major corporations
are looking to harness that potential by creating corporate
incubator programs and innovation spaces. These spaces can
be used to identify and develop new opportunities outside
an organization’s existing operational structures. In such,
an ‘ambidextrous organization,’ find successful ideas from
experimentation.
For incumbent organizations, the incubator should focus on
the organization's area of business – i.e. banking group DBS
running a FinTech accelerator. The corporate incubator can
then leverage the resources of the organization and harness the
agility, technology, and creativity of startups in order to future
proof the business strategy by gaining access to
new competitive advantages.
There is a compelling proposition for startups too.
By working with a large corporation, the startup
gains access to domain expertise, networks,
distribution channels, customers, mentoring from
employees, physical workspace, and possibly also
investment and capital.
Unsurprisingly then, the range of industries where
corporations have initiated their own incubator
scheme is hugely diverse. It ranges from the traditional
technology company, IBM; to the aircraft manufacturer,
Airbus; to the healthcare provider, BUPA; as well as the
telecommunications operator Telefónica – to name just a few.
A SPACE FOR INNOVATION
Every organization has different goals for their corporate
incubator program and these will feed into the approach that is
adopted for delivering the program.
For smaller incubator programs, the sponsor may either
bring the startup teams into their offices directly – perhaps
designating an area for those on the program – or provide
rented space within a co-working facility with embedded
corporate employees there as mentors.
Where a larger or permanent incubator program is planned,
corporations have invested in creating designated incubator
spaces, often within major offices or HQs. Partnering with a
delivery operator is common, utilizing their expertise to run
the space and provide events and networks. The incubators
often utilize a co-working style, with open-plan as well as
private rooms having proven popular to foster collaboration.
As corporate incubators focus on a particular market segment,
the benefits of sector agglomeration in a single space is key for
driving innovation based on the ‘random collision’ theory.
However leaders in this field recommend avoiding ‘innovation
theatre,’ shunning the decorations associated with some startup
work spaces (bean bags, indoor slides, and football tables) for
a practical workplace to nurture collaboration. The corporate
incubator space needs to be flexible to different configurations
and agile methodologies, whilst having high quality amenities
and excellent connectivity.
A NEW CHALLENGE FOR CORPORATE
REAL ESTATE
The appetite for corporate incubators seems to show no
sign of slowing. When a corporate incubator is proposed,
corporate real estate leaders need to be highly engaged
with the business in order to enable the right space and
management to be implemented.
Re-configurations of existing
offices may be necessary, or the
acquisition of new space – ideally
in proximity to current office
hubs. Partnerships are likely to
be required with the operator
and refitting of existing offices
is usually needed to create a
suitable workplace. Access to
and from the incubator will need
controls - without preventing
the intended permeability of
staff into the space - and IT should balance easy-of-use with
data security by maintaining corporate network access for
employees but providing a separate network for incubator
companies.
BY PROVIDING THE RIGHT
WORKSPACE TO AID
COLLABORATION BETWEEN
THE CORPORATION AND
STARTUPS, CORPORATE
REAL ESTATE CAN ADDRESS
DISRUPTIVE INNOVATION
AND HARNESS IT TO POWER
FUTURE GROWTH.
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