Labs, Incubators, Skunkworks: What’s The Best Setup for Your Innovation Program?

Most organizations now realize that to carry out the disruptive innovation that will propel them into the next decade, they’ll need special structures and teams.

But how do they decide whether to acquire, hire or train a new innovation team? In conversation with curator Hans Balmaekers, Mapch49 partner Dave Blakely breaks down the different types of strategies and structures available to the innovation-hungry enterprise.

Structure for your needs

We’ve all heard the terminology: incubator, accelerator, skunkworks… But what defines each of these unique types of innovation organizations?

Incubator: Provides physical space, financial resources, business services and mentoring to an innovation team. Incubators can be standalone, like Y Combinator, or built by a large enterprise.

Accelerator: Created with the sole purpose of bringing a new line of business to market. Prior to launching an accelerator, the team has already answered the big questions an incubator still needs to ask.

Skunk Works: A company creates a Skunk Works when it has a disruptive idea that cannot develop within the walls of the enterprise. Skunk Works exist in a different physical space to gain the freedom necessary to innovate.

Buy, build or invest?

Do you make, buy, build or invest in an innovation team? An enterprise needs to choose the right strategy based on its unique needs and objectives, and never in response to what someone else is doing.

Weigh your innovation options

There are many effective ways to develop innovative new products or business models. Innovation teams, which can sometimes be unruly and expensive to maintain, aren’t the only way forward. In today’s environment, Dave sees three internal trends in disruptive innovation.

1. Buy a unicorn
A unicorn is a privately held company whose illiquid valuation quickly rises higher than $1 billion. Everybody loves a unicorn. Many tech companies have succeeded with this model (Facebook buying Instagram), and now non-tech brands are getting on the bandwagon (Unilever buying Dollar Shave Club). When large companies buy unicorns, they’re purchasing disruptive innovation.

2. Create an incubator
Large enterprises recognize that the market is moving faster than they can, with all their processes and controls. Startups can act as “buffers” to help large companies match pace with a rapidly-changing market. With modest investment they can create an incubator that will fund multiple startups with strategic agendas that match the organization’s innovation goals.

3. Disrupt from the inside out
Large organizations are becoming very effective at building disruptive innovations internally. Correctly applied, proven tools such as design thinking, disruptive innovation, lean and agile methods can dramatically increase a legacy organization’s ability to create, build and launch entirely new lines of business..

Innovate in a rich environment

You want to locate your innovation team in an innovation hub – a tech city such as Boston, Silicon Valley or Tel Aviv with a large creative class and access to great tech and business schools. If your company’s main office is located in a remote business park, open your incubator in a creative tech city where it can truly thrive.

Keep a managerial distance

By their nature, startups incubated by a large enterprise can’t be as independent as a self-funded startup. Tethered autonomy allows teams to innovate independently, but with a strong link to the mother ship. To enable the fledgling startup to grow and maneuver quickly, lift existing policies, procedures and corporate governance.

“We’re just in the early stages of pretty remarkable change in the way global 1000s innovate.”

Key innovation team members:
A CEO-type-person who maintains the vision and is highly persuasive
A product person who understands the art of the possible and how to mitigate risk
A marketing person who helps startups understand their customers and resonates with them

Determine a viable innovation by asking:
Does anybody want this?
Can we build it?
Can we make money with it?

The 12-week challenge
Give yourself 12 weeks to incubate a new business. If the idea doesn’t cut it by then, kill it. Redirect your competent startup team onto a new challenge