Deathcycle of Traditional Corporate Incubation

Alex was asked to build an “innovation capability” for her business.  She’d been at the company sixteen years and was previously at a startup that got acquired.  MBA.  Undergrad from Harvard.  Alex was bright, fun to work with and well respected.  So… she brainstormed with other company “innovators.”  Got their advice.  Chatted with Ivy League professors.  Hired consultants.  Convinced key coworkers to join her team.  Pulling it all together, they produced a “pipeline funnel” with “stage gates” and a “milestone-based funding” process.  They called the group BID (Breakthrough Innovation Division).

BID solicited ideas from around the company, industry visionaries, consultants and did vast ethnographic research to gather user insights.  They went to TED.  They took an executive education seminar at the Harvard Business School.  They read Fast Company, Entrepreneur, Wired, Inc., Good to Great, The Innovator’s Dilemma, Innovation and Entrepreneurship, Crossing the Chasm, How to Get Ideas, The Art of Innovation, Blueprint to a Billion, The Art of the Start, Ten Rules for Strategic Innovators and more.

The goal was to find big new ideas with “billion dollar potential,” give them resources and shelter from mainstream “core” company processes and then “graduate” the best opportunities into business units once they’d proven themselves in the marketplace and were on track to success.  This was going to be awesome!

Several years later Alex looked tattered around the edges.  Almost all the ventures BID had funded were either shut down or on their last legs.  She’d always known there would be attrition – heck, it had been part of the “funnel” design from the onset.  The whole point was to narrow down ideas to the very best businesses and “graduate” them at a cadence of one or two a year.  Problem was, she hadn’t been able to put enough “wins” on the board and people were asking hard questions about BID’s accomplishments (or lack thereof).  Several of her most promising businesses had been orphaned (i.e. shut down or spun out in a fire sale because no mainstream business unit would take them) and some that actually found homes were later discontinued.  Just five businesses survived their graduations, at least for now, but they were all meager “incremental” innovations for existing businesses – not the big, huge, diversifying growth blockbusters BID had been formed to create.  Alex kept being asked “where are all those billion dollar businesses you promised us?”  Eventually BID’s funding petered out.

Two years later Ron, a rising star, was asked to build an “innovation capability” for the company.  He’d been there twenty one years and had previously helped launch three company growth initiatives.  MBA.  Undergrad from Stanford.  Ron was bright, fun to work with and well respected.  So… he brainstormed with other company “innovators.”  Got their advice.  Chatted with Ivy League professors.  Hired consultants.  Convinced key coworkers to join his team.  Pulling it all together, they produced a “pipeline funnel” with “stage gates” and a “milestone-based funding” process.  They called the group MIIG (Market Innovation and Incubation Group).

The goal was to find big new ideas with “billion dollar potential,” give them resources and shelter from mainstream “core” company processes and then “graduate” the best opportunities into business units once they’d proven themselves in the marketplace and were on track to success.  This was going to be awesome!

This Post Has 4 Comments

  1. Hillary

    Round and round it goes, everyone thinking they’re the first ones to try. Unfortunately I’ve seen this all too many times. Sad state of affairs if you ask me. Thanks for telling this story.

  2. Tobias

    A very interesting blog piece indeed. There are a few very good lessons in there. Asking enthusiastic and bright people to develop innovation capability isn’t enough. Neither is hiring consultants and talking to academics. It may be enlightening, but doesn’t achieve results. The worst part is that in the (probably not too hypothetical) corporate from your article is no lessons were learned from one initiative to the next.

    It would be very interesting to know how much “Traditional Corporate Incubation” is still being practices around the world. My impression is that many corporates have learned important lessons from past failures and have altered and improved their approach. Quite a few have extended their activities to commercialise non-core IP. Notable examples would be Siemens and Philips.

    Do you have examples of non-traditional incubation? What are the trends in large corporations in that field? Better still – what approach would you suggest?

  3. Toby

    Nice article Thomas. I guess the key for all people in this group is how you break the death cycle you describe. Some groups have managed to play the innovation game for the long-term. Is it any thing more than luck backing a few good winners early on?

  4. Asa Lanum

    Thomas, There are so many potential pitfalls that exist in the tale you tell but one seems to me to be significant. That is the desire/need to “graduate” the ideas to the business units. To start with that tends to put you into a category of having to “find a home” for each idea to live. Frequently disruptive innovation with LARGE ideas does not fit conveniently into existing organizations and can sometimes even be threatening to their existence. Also pretty much everyone there already has a day job and probably a “favorite” product or service that they are involved with so finding the time and enthusiasm can be tough. There are potentially a LOT of other issues, but without a deep dive, it is just tough to tell which ones apply; BUT that still does not mean they won’t happen again. IF innovation becomes core to the business then even threatening ideas can be accepted. I’ve been on both sides of organizations that do it well and badly.

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