Not sure what innovation method is right for your business? This is for you...

What innovation method is right for you?

You want to innovate, but the innovation landscape is full jargon and far from straightforward. It’s hard to know where to start, what to pick or which way to go for what you need. We get it. 

To help through that journey, we've laid out the innovation methods, identifying which ones are best for which company structure and goals.

Some methods require more time or resources, others depend on buy-in from multiple departments, or won’t work without some prior experience and expertise. You can see at a glance which methods make sense for companies on a  budget, those with a small team, and those whose main concern is impact. Note that your own experience will be unique, so while this is based on industry knowledge and experience, it’s still only guidance. 

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Hackathon

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Hackathons are a good way to associate your brand with innovation and make a small attempt at solving a problem. Hackathons are a great source of ideas but are unlikely to transform your business. 

Hackathons are strongly focused on ideation and limited proof of concept: someone has an idea, and they can kind of make it work. But everything beyond that, including validation, testing, development, and deployment, all has to be done outside the hackathon itself, meaning that if your hackathon produced something amazing, your problems are still far from over.

Don’t estimate the power of an idea, we have an example ourselves of a start-up that was born from a hackathon - Qudini, read the case here. 

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Hackathon pros:

• Low resource requirements
• Good for innovation marketing & culture
• Founder vetting experience
• Good way to source some new ideas
• Entry point into the innovation ecosystem
• Good way to source new founders

Hackathon cons:

• Does not result in a built solution
• Generally does not include a post idea testing and implementation plan
• No guaranteed business outcome (potentially wasted business resource)
• Time restrained

Who are hackathons for? 

Companies that:

• Want to start conversations around innovation
• Have a small budget
• Don’t want to commit to a bigger process
• Have a broad challenge or are not sure of what their challenge is
• Have a resource or data they want to figure out how to monetise
• Want to engage with founder ecosystem

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Incubator

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Much like the name suggests Innovation incubators are a space for founders to build their businesses. They are easy to set up, all you need is a space and someone to manage the project. But there is no guarantee of return on investment. While they’re a good way to be around start-ups without knowing how to work with them, they can also consume resources without producing anything. Because this is a hands off model, tangible impact for the corporate is limited by the lack of alignment between the opportunity or pain point the corporate is trying to capitalise on and the solution the start-up is building.

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Incubator pros:

• Lower barrier to entry 
• Wide net
• Allows you to dip toe into entrepreneurial world without large commitment/internal infrastructure in place
• Good for mindset and innovation culture
• Gets C-level accustomed to innovation

Incubator cons:

• Low conversion into business contracts
• No guaranteed business outcome (potentially wasted business resource)
• If there is no commercial vehicle or investment it's hard to scale solutions
• Early stage start-ups are less predictable

Who are Incubators for? 

Companies that:

• Have space
• Have staff to manage the programme
• Want to dip a toe into innovation

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Accelerator

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Accelerators are a step up from incubators for those more seasoned in innovation. 

There is generally an expectation of a curriculum and support for founders making the process overall more hands on.

Reasons that they’re usually more serious is the time commitment and an exchange of equity between the accelerator and the founders, but despite the increase in commitment there isn’t necessarily an outcome. You can read our accelerator case with GE Healthcare here.

Accelerator pros:

• Corporate/start-up relationship building
• Building start-up network
• Gain understanding of venture market

Accelerator cons:

• Takes more resources and staff than previous methods
• Have to develop a programme to support the founders
• Need a better understanding of business and their needs
• Risk of innovation theatre
• Need resource to engage companies 6-12 months

Who are Accelerator programmes for? 

Companies that:

• Have some experience working with founders
• Have a programme manager
• Have distribution channels to find start-ups
• Have a database of mentors
• Corporates with good idea of what their challenges are
• Start-up friendly infrastructure 

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Intrapreneurship

The Intrapreneurship model is sponsoring someone internally to build a new business inside yours. The advantages are obvious: you know your problem, can pick your team, lay out your criteria for success, assign budget and resources knowing that you have ownership over the whole process. But the big risk is that most companies don’t know how to build a company internally. If you’re a company without a strong history of internal innovation, this can be a very expensive mistake.

It sounds great right? Building a new business in the existing business (without all that risk) but what often happens is that intrapreneurs end up doing their real job whilst building a business part-time and the business fails. But when it does work it’s a great way to keep the workforce engaged/excited. It’s also a good way to build an innovation culture and a solutions oriented team. 

You generate ideas that are more aligned with the business/that come from genuine business pain points unlike a hackathon.

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Intrapreneurship pros:

• Owned internally
• Strong ideas because of understanding of internal business pain points
• Keeps workforce engaged
• Creates good culture
• Gives staff the opportunity to own an idea/project

Intrapreneurship cons:

• Resource intensive
• Staff multitasking/lack of focus
• Sometimes-unrealistic expectations of staff
• High risk (potential wasted business resource)
• Risk of conflict over project ownership

Who is Intrapreneurship for? 

Companies that: 

• Have a large budget for innovation or human resources
• Have a long-term commitment and vision - for innovation or employee enrichment 
• Have an existing innovation culture
• Quality staff with relevant technical expertise for all stages, including additional technical support (to take ideas to fruition)
• Are more innovation experienced businesses, perhaps with innovation department
• Have stakeholder and senior leadership buy-in 

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Venture building

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Venture-building resembles Intrapreneurship, but instead of building a ‘start-up’ off of your staff’s ideas, you pick a very specific business problem and bring in an external team to build the company, usually as a separate business unit.

Typically, this will be oriented so as to directly address your business problem. The results can be impressive, and you retain significant control — but at the price of significant commitment and investment.

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Venture building pros:

• You directly tackle your problem
• Proprietary technology
• You are building an entire solution specifically focused on your problem 

Venture building cons:

• High risk
• Risk to your budget/funds
• Very time-consuming
• Takes a lot of staff budget and resources
• Have to pay to run your own proof of concept 
• All your eggs are in one basket

Who is venture building for? 

Businesses that have:

• Experience working with founders
• A large budget, 
• Long term commitment and vision
• An innovation culture
• Access solution architects/technical expertise 
• More seasoned businesses 
• Stakeholders & senior leadership buy-in
• Validated problem statement
• Extensive experience in innovation 
• The right network to source staff

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CVC (Corporate venture capital)

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CVC lets your company act as a venture capitalist to a start-up. CVC is where you are actively investing in start-ups either for financial returns or strategic fit with the business. 

Unlike other innovation methods CVC is less focused on tackling internal problems and more focused on future trends and technologies and identifying new opportunities. 

CVC requires knowledge of the venture landscape, a team that is able to find companies and deploy capital and manage those relationships.

CVC pros:

• Allows you to identify future trends
• If you invest you have a say on the product development
• Competitive advantage
• Long term financial commitment

CVC cons:

• There is capital at risk in investment
• No promise of business development opportunities

Who is CVC for? 

Businesses that have:

• An understanding of the ecosystem and investment knowledge (if investing for financial returns)
• A strong understanding of what the business problems are (if investing for strategic fit)
• Long term financial commitment
• Stakeholders & senior leadership buy-in
• A budget for investment

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Venture client

Where CVC is focused on investing in start-ups, venture client is focused on building a commercial relationship. Different to intrapreneurship Rather than building a product internally you are using an existing product. That's what makes venture client cost efficient, time efficient and risk efficient. 

Venture client is a very focused approach, whereas an accelerator has a broad net and is about scaling start-ups. Venture client is deeply scouting companies to solve very specific problems for the client.

Venture client pros:

• Geared for business outcome
• Quality over quantity 
• Not cash intensive as opposed to venture building
• Has a strong focus on specific problem statement 
• More buy in from start-ups (clearer opportunity)
• Gain a deep understanding of the industry and become an expert around that specific problem

Venture client cons:

• You don’t own the innovation/start-up
• Time intensive 
• Not a scalable process, very specific to each business, has to be bespoke built process
• Resource intensive 

Who is the venture client model for? 

Companies that have: 

• A good level of innovation culture 
• Experience interacting with start-ups
• A strong understanding of the business problems 
• Stakeholders & senior leadership buy-in
• Allocated budget
• Commitment to innovation 
• Scouting capacity

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If you want to look more into innovation and would like some advice you can contact us here.

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