Constant dollars

Corporate innovation: avoiding the cult of freight

By Jeremy Kagan

Young companies are always on the lookout for new, cutting-edge ways to find products that fit the market. Startups are defined by innovation and experimentation. For larger, more established companies, the story is different. Long-established successful businesses and the process and structures that support them can make innovation extremely difficult.

Companies accustomed to focusing on fine-tuning their massive operations and reducing their efficiency understand that it is neither possible nor practical to just throw away what works and embrace every shiny new object of innovation. Executives can almost always see when the tide is turning in their industry, but often lack the tools, processes or talents to steer the ship in that direction without risking core businesses. How can they bridge this gap?

The answer often lies in one of the most promising, but poorly understood, tools of business innovation: the Accelerator Program.

Most leaders now understand that they can’t have all of the smartest people in the world in their own organizations, and the next really disruptive idea will almost certainly come from outside their business. Accelerators provide the “innovation interface” and allow large companies to connect and assess external innovations from the startup world without having to immediately change their entire organization.


Executives can almost always see when the tide is turning in their industry, but often lack the tools, processes or talents to steer the ship in that direction without risking core businesses.

The business innovation roadmap

There are many types of innovation programs that connect the external world of startups with the internal world of companies operating on a global scale. The business accelerator remains a constant and is often one of the first forays into a more diverse business innovation agenda.

However, what works in the startup world, with independent accelerators operating with a finance-focused venture capitalist mindset, generally doesn’t work in the corporate world. This is the number one mistake made by business acceleration programs.

Many companies have emulated independent accelerator models, such as the popular Techstars and Y Combinator programs, by creating their own in-house accelerators. Called “business accelerators,” these programs are popular with large for-profit companies, many of which are publicly traded and should be seen as innovative in the eyes of their shareholders. They offer a combination of office space, training, mentoring, product development, investment, and partnerships for startups.

Independent accelerator programs focus on achieving financial returns through ownership of participating startups. They make money when those company shares become liquid through an acquisition or initial public offering (IPO), and are motivated to help startups succeed so that they achieve a bigger bottom line.

Business accelerators often don’t have such clear goals. The complex machinery of large corporations can pull these programs in many different directions, trying to appeal to multiple stakeholders while not satisfying any. In many cases, goals are a version of market intelligence to avoid their own disruption and increase their income for themselves. In the worst case scenario, they only use the programs to boost their own PR agendas and to appear innovative – the theater of innovation, where actors perform for senior management and the stock market – but no change. real is never brought into its culture.

This is not necessarily a bad thing. In fact, self-preservation and profit are a fiduciary responsibility of state-owned enterprises. Of course, some people within these companies are interested in helping startups for personal reasons, but large companies are not philanthropists and the potential financial reward from equity is probably not a sufficient incentive. As long as startups understand this, there are a lot of good things that can come out of it. But never forget that the reason a business will launch an acceleration program is to benefit that business in some way. Unlike independent accelerator programs, which win big if participating startups win big, business accelerators may not have the best interests of startups as a top priority.

Despite this, the trend has spread and business accelerators have invested hundreds of millions of dollars in tens of thousands of startups. However, we know that these programs tend to be short-lived, 60% of acceleration programs fail after only two years. Design a business accelerator with the model that works for independent accelerators – where ROI is the goal and 5-10 year time horizons can be the norm – instead of meeting just corporate goals , can be a recipe for failure.

Worshipful thought of freight

The “cargo cults” are a metaphor when we imitate behaviors without understanding how they work in the hope of achieving the same results. They emerged in the South Pacific as native islanders sought to mimic the technologically superior behaviors and physical structures that brought rich cargo and supplies to the soldiers stationed there during World War II.

The GIs of the New Hebrides (now known as Vanuatu), which are part of the Melanesian islands off the northeast coast of Australia, discovered that the natives were recreating their foreign planes, radios, routes and their airstrips from materials such as wood, straw, and sand. They performed rituals and built these artifacts in the hope that their wooden structures would rain down the same gifts of food and weapons that they saw coming from the magical ships and planes sent by “Rusefel” (Roosevelt), the sympathetic. king of America.

Obviously, planes made from wood and straw did not provide bounties of food and supplies to South Pacific islanders. But are the behaviors of business innovation leaders mimicking the success of Y Combinator and others really that different? Just as islanders building wooden planes haven’t trained their ability to fly, simply copying agile risk accelerators won’t lead to successful business innovation either.

Just as islanders building wooden planes haven’t trained their ability to fly, simply copying agile risk accelerators won’t result in successful business innovation.

Business innovation presents many challenges, but there are also an impressive number of tools available for companies looking to be more innovative. In particular, partnering with startups in a program structured as an accelerator helps companies stay abreast of transformative technologies that will drive evolution and disruption in their industry.

Business accelerators are an important piece of the complex innovation puzzle. They can bring new ideas and cultural change into a more established business and, when done right, have a real impact on the business of the business. But simply mimicking the mechanics of a risk-based accelerator is like mimicking cargo enthusiasts. To be successful, companies must focus on setting their goals and partnering effectively to bring innovation to their business.

Jeremy Kagan is Venture Partner at Reign Ventures and an advisor to businesses, startups and digital media companies. He is co-author of Design a successful business accelerator, and the manual Digital marketing: strategy and tactics. As the former Managing Director of the Eugene Lang Center for Entrepreneurship at Columbia Business School, he oversaw the Entrepreneurial Studies Program, Student Programs, the Lang Venture Fund, and the Columbia Startup Lab.

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