Can corporations innovate like startups?

We are mostly giving bits of advice to startups in our blog, thanks to our experience that we gained seeing…

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by Gökhan Menge 9 January 2019

We are mostly giving bits of advice to startups in our blog, thanks to our experience that we gained seeing the lifespan and mentoring hundreds of startups in our programs or events. Even if we are trying to change the mindset of our corporate friends with those events, in the end, they are still working for corporates.

As I was writing this blog while watching Top Gear on my 2nd screen, I can say that while a startup is like a Caparo T1 which has twice the power-to-weight ratio of the Bugatti Veyron, but completely untamed. On the other hand, a corporation is like 18-wheeler; powerful with more control, yet slow. But can that truck let go of its wagon to get more agility? Not quite.

This is street legal.

As Hackquarters, our team has a corporate background, so we can easily tell that we understand what you need to go through in a corporate environment. We know about some of the obvious problems in most of the corporations.

Fear of rejection in corporate “battlefield”

While we use those fancy words a lot in our startup environment, it’s hard to be innovative or disruptive in a corporate hierarchy. Usually, innovation is “commanded” from the top to the bottom in corporations, yet our experience shows that it starts from the bottom to the top. But we have “brave warriors” within the corporations that we work with, who fight for innovation within the company and luckily they have the support to make mistakes for the better good.

“I love my job, more than you do”

In a corporate environment, most people have their own agenda for keeping their job, appear successful (even if they suck) or gaining promotion. They are usually not brave enough to take responsibility within the company to create space for innovation. They have “What if I fail?” in their mind and they don’t want to lose their ground for possible future opportunities.

Trust issues within the company

Most corporations want to keep their privacy. They list lots of unnecessary things as confidential. When you want to sign an agreement with a corporation, there will be at least a few “confidentiality” clauses within the contract and this also applies to their employees. In some companies, even information exchange between some departments is limited (and I worked for one of those companies. Can’t tell the name; it’s confidential).

When it comes to innovation, things do change a bit, but in the end, you still can only see the top of the iceberg only. So when someone from the lower levels of hierarchy tries to do something new, he/she can hit an invisible wall (like the ones in old racing games like Need For Speed).

Turnover rates in managerial positions

It’s not like the 70s or 80s when people work for a single factory for 40 years until they retire. According to research, %21 of millennials change their job almost every year and 60% of them are looking to change their jobs. Thanks to them, it’s no different on managerial positions. And this situation affects innovation possibilities on corporations.

Assume that you have a great, supporting manager who appreciates your efforts on innovation, but in the middle of a great project he lands another job and leaves your company. The new manager is not very fond of innovative projects and he doesn’t want to risk his new position. There goes your effort, right into the trash bin of ideas.

Vanity metrics FTW!

As corporations usually can’t move as a whole, turnover rates in lower positions or managerial positions hinder the progress toward innovation.

Costly and risky experiments are a NO NO

As an entrepreneur, usually you don’t have much to lose, because you already know that less than 10% of startups “succeed” and this number is lower in entrepreneurs below 45. You can experiment, you can try new things that even it’s idiotic to some people. But it’s OK, you don’t lose much if you fail, and if you hit rock bottom, you can just insert another coin to start from the beginning. As a corporation, this is not applicable.

Corporations can try new things, but if they fail, they may lose a lot of money, which makes investors very unhappy and sometimes even causes the corporation to go bankrupt.

When a startup builds their plan, they can take a high risk – high reward path. If they succeed, they enter that 10% we mentioned before. A corporation, on the other hand, doesn’t take high risk unless its absolutely necessary.

Is innovation “impossible” in established corporations?

If the answer was “Yes“, we would be looking for another business. But most of the corporations are trying to handle innovation on their own, and 84% of them just spend money without any results at all. In fact, their expectations were neither met nor exceeded and the gap between expectation and meeting were so enormous, so it was considered a failure. Corporations cannibalize innovation (without guidance).

Here’s our secret. We push the secret INNOVATE button.

It is said that “It is not the strongest of the species that survive, but the most adaptable”. Corporations can’t adapt as fast as a startup. When a startup feels like “blockchain is sexy“, they can integrate blockchain into their model. But for a corporation, this operation needs lots of research, lots of manpower and lots of approvals. When they are ready to adapt, usually it is no longer “sexy”. It is just like my example at the beginning: Caparo T1 vs 18-wheeler.

Corporations need “startup-like” mind to innovate their current processes, and this is possible with collaboration. Partnership with a startup is a win-win for both parties. A startup can gain opportunities such as market access, workforce, resources and visibility from corporations, while corporations can gain agility, endless new ideas, willingness to take risks and potential high growth.

But how?

Solution: Inbound Open Innovation Projects

As we stated before: Corporations cannibalize innovation. But also, “All generalizations are false, including this one” as Mark Twain said. As Hackquarters, we are working with the few that chooses inbound open innovation as their way to keep pace with the new generation.

Inbound Open Innovation is a way of collaboration that corporations choose to include external resources into their own processes. Managing innovation effectively means rethinking corporations as a whole and usually problems are invisible from the inside. In Turkish, we have a saying “… you need a third eye” and this fits perfectly to this situation. Even if you believe that you are a digital, innovative company, you can not see what you are doing wrong. Hackquarters is the third eye.

Grants4Apps program that we are proud of!

In short, there is a growing culture of innovation and raising awareness of the need to review corporations as a whole, review processes with a view to seize opportunities for innovation, absorb knowledge and increase the engagement from all levels within the corporation. One of the most basic obstacles to moving forward on the road to innovation is whether or not employees within the corporation are aware of the challenges. Because if they’re not aware of the challenges they won’t get involved in the solution. Basic awareness about those challenges is probably the key indicator of how well the process will do.

As Hackquarters we provided lots of startup engagament to corporations such as Isbank, Bayer, Here and many more. If you need guidance on your way to true innovation, we would always love to have a cup of coffee and chat about what we can accomplish together.