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LAB BLOG

25-Jan-2016

Incubators, accelerators & start ups the new innovation model?

A surge of start-ups

 

Tech ecosystems all around Europe surged in 2015. 

A proliferation of start-ups, co-working spaces, crowd funding platforms and the expanding interest of corporates made for an active year. With 25k tech related meet up groups (almost 4k in London alone, approx. 1.5k in Paris & Berlin) and 35 companies with $bn valuations emerging from Europe (20 in 2014,13 in 2013) it is true that last year was a major tipping point for entrepreneurialism, investment and growth.

 

According to a report by Nesta:

 

“Start-ups are an important means by which new ideas are brought to life – especially those ideas which challenge existing industries or do not find ready support inside existing companies. They are core to the process of creative destruction and crucial for increasing employment.”

 

 

Opportunity or Threat?

 

It would be remiss not to be plugged into all of this activity and growth as a corporate entity or company with an established, and successful business. With a reputation: for upturning business models, digital disruption and attracting jaw dropping levels of investment to fuel rapid growth, those that make it, are surely a clear threat to the future. Or an opportunity to be seized while one can? 

 

The big question now is: as an incumbent, how can you be supporting this system and leveraging some of this activity and growth? And what are the opportunities in doing so, or indeed, are there any risks of not throwing some funds and focus into the fray? Corporate investment in startups in many different forms is growing. From capital injections to competitive incubation programs –  many companies from salesforce.com to Google have found ways to hedge against a future direction that is unclear.

Having spent time recently working with accelerator and incubator programs in Europe, mentoring start-ups and being invited onto selection juries for leading accelerator programs we have a unique vantage point.

 

Wired for success

 

The truth is, in all of our innovation work with big businesses, the one thing that has inspired us more than anything in working with start ups is the sheer scope of ambition, speed and standard of execution that some of these new founders achieve.

 

The entrepreneurs' ability to navigate around constrains, the re-casting of ‘failure’ as experimentation, and the ‘get it done, not perfect’ mindset make great ingredients for success. However, there is no sure fire way to finding the winners. There are some factors to consider: the founders history, energy, leadership skills; a great idea; a seamless execution; right insight, right timing, right people, right place, right support system …all of which is part of the success mystique. But there are no formulas here. Not yet anyway.

 

A numbers game?

 

Truth be told, it’s not all rocket fuel and IPO’s.  Most start-ups will not succeed. Blindly launching hastily built ‘products’ into markets without clarity of the fundamentals is indeed a game of luck. You might hit the bull’s eye if enough arrows are thrown, but by no means the most efficient or effective way to build a business. Vital in working with the unknown is to find ways to rig the odds for potential success.

 

At best, we see: deep understanding of markets, technological & behavioral trends, customers needs (conscious & unconscious, current and pending) and a clear vision for the future. Add to this an agile mindset, fast decision-making, the intelligent naivety to ask questions incumbents would never think of:  How can we build a transport business without owning cars or employing drivers? How can we build a hotel business without owning real estate? And there is something special to work with.

 

Incubation for innovation

 

At LAB we believe the start-up incubation model is a key part of a balanced innovation strategy. Along side internal innovation projects, external black box expertise and considering innovation at: incremental and game changing levels, there are many ways to leverage the intelligence of smart non professionals to boost the business leading to growth for all.

 

 

In terms of the risks of not bringing some of this untutored thinking in, in some way, one only need to consider the fates of Blockbuster, Kodak, or indeed Motorola to remind us that when disruption comes, it comes from the blindside.

 

As Clayton Christensen described in the ‘innovators dilemma’ – the imperative to develop new sources of growth, which may cannibalise or up-end existing businesses, becomes increasingly difficult when one is already feeding a big family and reaching targets.  And the desire to not pay attention to those nipping at the edges, when one is well established is strong.

 

However, to have innovators working just outside the company, in a fast paced environment, whether in ideas or execution, and with a non connected brand to explore new options without reputational risk, is a smart way to consider how you might need to blow up your business, to stay on top. It's also a powerful recruitment strategy for a group of hungry superstars looking to make their own way in the world and a positive dent in it. We say it’s an essential part of the future-proof armory in a time of rapid and unprecedented change.

 

If you’d like to know more about how LAB can help you build an innovation engine inside or outside your company, please email: Bhanita@lab-innovation.com for an informal chat and some provocative ideas for your business.