Many large organizations have established different types of incubation and acceleration programs.

These agile, design-thinking-driven idea chambers help you experiment with radical ideas outside the lens of your core business model.

You get a chance to test out new tools, play around with those crazy business models, and experiment with the ever-tricky word “disruption” without actually “disrupting” your profit margins.

Yet it still remains challenging to grow these ideas: somewhere on the journey from corporate startup to scaleup, most initiatives fall flat. During our recent Innov8rs Connect – Business Design & Venture Building online event, we’ve learned from four innovation leaders how they are improving the odds of success.

Business Incubation @ BASF: Markus Bold, Managing Director at Chemovator

Markus Bold is the Managing Director for Chemovator — an internal incubator at BASF. Markus broke down some of the primary challenges that BASF is dealing with in the current market. And, unsurprisingly, they’re the same set of challenges that most mature organizations deal with.

• How do you innovate without stalling the core?
• How do you make new plays in the market without introducing significant risk?
• How do you rethink your KPIs without pausing your processes?
• How can you deliver new experiences to customers while still delivering the experiences they’ve come to expect?
• How do you really nail digitization and digital transformation without caving into expensive tech and buzzword-heavy marketing pitches?
• How can you really challenge everything you know and do?

For BASF, the answer is Chemovator. This idea-fueled innovation think tank has a startup mindset and the freedom to operate outside of the traditional barriers that impede progress. As Markus puts it, “Chemovator enables a lean and customer-focused validation of business opportunities — with a startup mindset.”

Chemovator is an incubator with two-year programs to build scalable start-ups like BOXLAB — a venture that uses advanced logistics to reduce waste in the chemical industry. The organization’s setup is based on three parts:

• Venture Teams: Up to 12 teams at a time can transform ideas into investable and scalable business opportunities.
• Core Team: A small group of five full-time people that runs and develops Chemovator while supporting the Venture Teams from behind the scenes.
• Entrepreneurs in Residence: Experienced external founders from various industries act as coaches and mentors for the Venture Teams in Chemovator.

The Chemovator approach is offering incubation teams unique resources, as you can’t just plug them in and wait for results. At Chemovator, they provide six core resources — which are relevant to almost every business:

• A protected space: Markus explains that Chemovator offers a corporate shield of convictions and goals. In other words, Chemovator uses the history, mission, and values driven by the core to safeguard its innovation team. They innovate within the context of their organization — not just for the sake of innovation.
• Learning opportunities: By pairing innovators with external founders, Chemovator gets coaches and external sponsors on board to assist with breakthroughs. This is crucial. You don’t want to keep your entire learning unit internal. Innovation is all about thinking outside-of-the-box. If you just pair innovators with internal stakeholders, you’re not getting new ideas and concepts; you’re just recycling the same ones you’ve always had.
• A supporting structure: You also have to have an internal foundation to support innovation. Does everyone know where to go with ideas? Do they know how to secure funding? Are they able to quickly scale startups without having to search for confirmation and answers?
• Commercial relevance: Innovating without results gets draining. If you’re not offering your innovation team the chance to scale to a commercial level, you may have issues with drive, ambition, and participation.
• Professional coaching: These are the “Entrepreneurs in Residence.” Obviously, these aren’t the only types of coaching you can offer. Internal coaches can be great. But only have internal coaches can quickly drive groupthink mentalities that stall forward momentum.
• Networks: This is what Markus calls the “unfair advantage.” This is how you can outpace your competitors. If you have a better innovation network, you have a commercial advantage. The more external organizations and founders you can rally under your banner, the more power and knowledge your innovators have to work with.

Chemovator has a unique unfair advantage. You need your own. Generally, organizations have built-in unfair advantages. You’re big, and you have the pockets and resources to really scale up ideas. You can fail without bruises. But you need to determine your unfair advantage upfront and use it to scale your program.

Markus also added that it’s ok to be itty-bitty: Don’t consume too many resources. Don’t focus too hard on scalability. And remember that every breakthrough doesn’t have to be a billion-dollar marvel. And finally: there is no one-size-fits-all incubation model. Be daring. Be different. And do what works for you — not just what worked for Chemovator.

Launchpad: Miriam Eaves at bp Launchpad

Inovation labs are almost always built with a purpose. You may be looking to hit new target markets and grow. You may be looking to deliver new experiences to customers in a specific market. Or you may be looking to challenge your entire core by focusing on a shifting direction in your industry.

At bp Launchpad, Miriam Eaves and her team are doing all three. Launchpad is looking to build companies that supply the world with “clean, reliable, and affordable energy” to help bp reach net-zero emissions by 2050.

BP is in a great position in terms of innovation, since Launchpad is already established. They’re not starting from ground zero. Yet Launchpad is also separate from bp. They operate alongside bp Ventures, and they aren’t immediately involved in bp’s core processes.

Of course, there are obvious reasons for this. The friction between the core and these innovations could quickly become a risk-fueled diaster party if they were integrated.

BP Launchpad operates as both an investor and an operator. They invest in a private equity model and use bp’s assets and capabilities to scale the business. Imagine pairing a great energy startup idea with bp’s assets, partners, and supply chain. Plus, since bp Launchpad exists outside of bp, they can push bp to act as a first customer for some of these startups (so long as they actually contribute value to the core.)

Launchpad has a careful screening process to identify internal and external deals that make a good fit for Launchpad’s portfolio. Companies need to have their technology ready to go and be able to operate at growing scales in order to be considered as “residents.”

The process mimics the typical Series A funding round a bit, but bp has layered in a “Bootcamp” for promising candidates that don’t meet that standard because they’re too early, or they don’t have the traction.

The program offers cornerstone accelerators:

• Performance Acceleration: funding and growth, financial management, and execution support
• Venture Building Excellence: founder support, access to world-class dev ops, and “Entrepreneurs in Residence” who can fill in C-suite positions for the business
• BP’s “Unique advantage”: rapid scaling through key bp connections

Launchpad selected ten companies from this year that will, in five or six years, provide billions of dollars of enterprise value as in-house companies or through exit plans.

Launchpad looks for potential resident start-ups that are a good fit based on these four criteria:
1. They address a painful problem.
2. There are growth potential and scalability.
3. The start-up has a passionate team.
4. It has product readiness.

Building Ventures with Impact in Times of High Uncertainty: Steffen Knodt, Director of Digital Ventures at Wärtsilä

Like bp, Wärtsilä exists in an industry that’s undergoing dramatic change. As digital transformation and digitization present themselves as a path forward for industrial, marine, and energy manufacturers, finding ways to disrupt the old ways and usher in the new ones requires innovation. Wärtsilä committed to addressing the UN Sustainable Development Goals (SDG), including things like ending hunger, eliminating poverty, increasing the quality of education.

When Steffen and his venture team approach startups, they look for ideas that fit into at least one of those core SDGs. In a sense, this gives Wärtsilä some breathing room. They can approach startups that operate outside of their domain, so long as those startups exist within their core value levers.

The first question that Wärtsilä’s venture team asks startups is, “what is your north star?” What is actually driving you beyond the product or service? What’s the end game?

Generally, Wärtsilä works with “north stars” that fall into one of their SDGs. This is a goal-driven venture project.

Here are some of Steffen’s lessons learned:

Build Trustful Relationships: Venture building shouldn’t be impersonal. Dumping money into the right number of startups based on market statistics to try to reap the most rewards works for venture capital firms. But it doesn’t work for Venture-driven business units. You want to build a meaningful relationship with your startups. You have the tools and resources to really scale their innovations. By disconnecting from them, you’re throwing your competitive advantage away. This is especially important if your venture is driven by SDGs or some other mission. Growing flowers is easier when you understand what type of soil that flower really thrives in.

Be A Venture Client: You want to bring startups together in a safe environment. You have the resources, experience, and toolkits to help startups thrive. Steffen and his team give them space to spawn their proofs-of-concept, collaborate with other startups, and build their tech without outside market pressures.

Put People First: Connecting the corporate world with the startup world starts with the right people. You need the motivation, interest, and skills to create a thriving venture ecosystem.

Navigate All Horizons: The goal of corporate innovation is almost always to bridge the core with the future. But to do that, you can take your time. You have the tools and experience to fuel a project beyond that quick-fire time frame. Scaling is much easier when you have time to reduce risks and fine-tune your startups’ marketing plans and business models.

Become Ambidextrous: You have to be ambidextrous. Build bridges between the core and startups, but don’t let traffic cross them. Keep the core separate from the innovation labs, but use the core to fuel it.

The Step from Start-Up to Scale-Up for Corporate Ventures: Dr. Christopher McLachlan, Company Builder at EnBW

“Ditch the unicorn; scale-up deer.”

That’s the opening statement from Christopher McLachlan. Don’t spend all of your time looking for the next Uber. Instead, focus on realistic startups with realistic expectations. Christopher is all about the “fail harder” and “done is better than perfect” mentality.

EnBW has worked on 50 projects so far. They’ve stopped 25 of those. And the rest are at ~$50 million in revenue with year-over-year gains. There are currently 6 projects in the scaling phase, and they also have 7 spin-off businesses. In other words, things are going great. And there are no unicorns in sight.

So how did they do it?

In traditional venture capital, the gap between the initial seed funding and Series A is drastic. That moment where the startup has to look beyond the product and think about marketing plans, business models, market-fit, and all of the other real processes is where the majority of startups fail. According to Christopher, it’s the same for corporate ventures.

To help combat the trend, EnBW created two teams: one for startup and one for scaleup. The startup team focuses on incubation. From ideation to piloting and launch, the startup team focuses on the standard incubation processes. The scaleup team takes it from there. They focus on growth, scale, and maturity. These two “stages” of venture require different skill sets. But, before the project can go from one team to the next, EnBW sits down with the startup and asks some questions.

This “Ready to Scale” exam checks the startup for fit. Can it cross that gap? What is there market attractiveness? Can they execute? Do they have a strategic fit?

The move from launch to scale shouldn’t be a small step. It’s a make-or-break moment. If you take the time and figure out when scale should really happen, you can figure out if the project is more of a spin-in or spin-out.

Christopher talked about the “Ready to Scale” exam in some detail. It’s broken down into three parts:

Market Attractiveness

In this part, you need to discuss size, growth, competition, and profitability in light of current market conditions.
• Is this project marketable today?
• If not, what needs to happen for it to be marketable?
• What market conditions would this project thrive in?
• What are your market risks and opportunities?
• Who are your competitions?
• What do they do better?

Ability to Execute

In this part, you need to discuss how ready to execute this project really is.
• What’s the strategic vision?
• What is the product today?
• How did it get here?
• What’s ahead?
• Is the project well-equipped?
• What are the financials?
• What is the marketing and sales playbook?

Strategic Fit

Finally, it’s important to consider where the project is actually a strategic fit for EnBW. If not, you need to push it outside. Is it actually relevant to you? It may be relevant on paper. But that doesn’t mean it is in reality.