How outsourcing the creation of digital business models to temporary incubators and accelerators can still be a good idea for companies who don’t have the possibilities of creating their own.
To whom are CEOs turning to when it comes to creating, testing and building new products, services, and ultimately new businesses? The enterprise is progressively becoming worse at innovating and attracting talent, in a world where startups are disrupting every possible industry.
The greatest talent of the next generation is spending their weekends trying to create the next big thing at hackathons, lean startup workshops, design jams, and the likes. They are ready to quit their jobs and adventure into the startup gold rush. After almost ten years, the enterprise is still trying to figure out how to adapt to these new times.
The new emerging trend is the proliferation of Digital Business Design companies. Those combining design, business, and technology with the capability of building startups from scratch, with the purpose of exploring new ventures as a self-sustaining business rather than a company expense. They offer startup as a service for big and medium size firms as a more tangible form of innovation.
But why doesn’t innovation thrive in the enterprise?
There is a fundamental distinction between established organizations and startups. The first exists to execute an existing business model and grow in a way that ensures that operations are efficient and customers are satisfied. In contrast, startups are made to search for that viable and repeatable business model. Therefore, constant experimentation is the daily modus operandi.
For large companies, things like innovation, new markets, new products can significantly vary depending on the industry. However, something they share in common is the slow time to market and going over budget when developing new products and services, mostly due to cumbersome internal factors.
The risk aversion of most companies is usually a result of focusing on short term results in a culture with a very low tolerance for failure. Most resources are devoted to the day-to-day business where incentives are geared to maximize efficiency and not innovation. Other factors include the fear of uncertainty or cannibalizing current business.
Since most companies don’t have a standard process to develop and implement new ideas, it is not a surprise that most managers lack the training to “manage” innovation. The result is often the false believe that “outside experts should do innovation” or a dedicated department should handle it. Not every company has the ability or financial means to create and maintain such internal units. Often they are thought as R&D departments, where the focus is primarily on research and experimentation, rather than the creation of new business ventures.
A model called Skunkworks, was introduced by Lockheed Martin during the 90s, to produce experimental manufacturing projects outside the corporate mainstream. Similar models, such as Intrapreneurship, incubators, and accelerators have not had the broad adoption expected in the Enterprise. These hip-to-have and expensive attempts have proven to bring little or no results. Innovation then is seen as a cost and a high-risk investment.
The size of the company usually influences the complexity of its corporate culture. Trying to change it means a process that can take years without any guaranteed results. Many modern companies, mostly in the digital and startup world, have included internal mechanisms always to look for new opportunities using a lean approach. In contrast, many companies in older industries, still don’t have the mindset to change the way they go about doing innovation.
Large and mid-size companies are finally seeing startups, more and more, as a credible competitive threat. In this day and age, it is easier to launch a startup than ever before. The use of Lean Methodology makes it possible to test and develop products before they even get to market and find a real problem-market fit. Also, techniques like Growth Hacking considerably reduce the required marketing budget to launch a product. Other solutions like crowdfunding Kickstarter, allows startups to launch products with an investment raised at a record speed. The barrier to entering, almost every industry, has indeed been lowered.
Do you want to be a part of innovation or just watch from the sidelines?
If you don’t, then here are some tips for your consideration:
Participate in a Business Design Jam, Design Jam, Hackathon or Lean Startup workshop to get a feel of the methodologies and mindset. Getting out of your day-to-day job will help you experience at first hand what the startup world is about, even if you are not thinking about starting a business. Who knows, maybe it might even give you an idea or change your mindset, either way, something you can bring back to your organization.
A valuable aspect is that it will put you in contact with people from different fields in a co-creative environment. Participating in this type of experience will help to enrich your professional career.
Moreover, if you already work with agencies, it might help you challenge them and tighten your existing working relationship.
So, regardless of your position within a company, you will always benefit from being leaner, faster and customer-centred.
Challenge your assumptions:
The biggest assumption is that Business Design firms are just like digital agencies. In reality, they are from the outset created to be company builders. They can easily act as an independent incubator and accelerator of innovation. It’s not just about business, technology or design, but all parts are working together in a holistic system. The result is simple: a much more efficient use of time and budget.
Currently, here is a huge disconnect between idea, implementation, business analysis and planning, and marketing of new products. Digital Business Design treats all elements as a whole and working together as an iterative system. The lean mantra: “Build > Measure > Learn,” is kept at the core of the process and the general mindset.
So, if you are in the position to allocate a small budget and complete a small project with a Digital Business Design firm, do it. The results might surprise you.
In the wise words of Charles Darwin (according to the internet): “It is not the strongest of the species that survives, nor the most intelligent; it is the one most adaptable to change.”
About the Author(s)
Juan Tejeda is the Managing Director of digital business design agency Brains & Hearts (www.brainsandhearts.de). A forward-thinking designer and strategist, he specializes in concept and business development.