Is there a magic bullet for business innovation?

By Dave Hengartner, Co-Founder and CEO of rready, < em>a SaaS startup that helps companies unleash the greatest asset for innovation: their people.

Innovation is key to ensuring the long-term survival of every business. Although the term is always interpreted differently in all fields, there is no doubt that it is crucial in ensuring the success and longevity of organizations.

At the heart of innovation, especially in the context of business, is the process of finding new ways to challenge the status quo and redefine what a business will look like in the future. There is no one-size-fits-all approach to this. Instead, there are many different ways to approach innovation in incremental or disruptive ways. This includes classic research and development, mergers and acquisitions, corporate venture capital, innovation ecosystems, startup collaborations, and intrapreneurship. The question is, what's the best way to do this for your business?

The classic R&D approach

Traditionally, most companies have a business unit dedicated to R&D. Instead of a human-centric approach to innovation, R&D is usually technology-driven and product-driven. This approach can be costly, as it potentially takes years to produce the next innovation.

Personally, the important role of R&D in pharmaceutical companies impresses me. Yet despite the positive business impact that R&D projects can have, personnel working in other business units are often not actively involved in innovation efforts. Therefore, no skill upgrades take place and no mood changes are triggered.

Mergers and Acquisitions

Instead of running an internal innovation program, some organizations decide to buy a startup or young company and then integrate it into the existing business.

As Head of Innovation at Swisscom, I was involved in some M&A projects. The good: The financial benefits and knowledge come quickly. The bad: Legally speaking, it takes a lot of (billed) hours for different legal teams to prepare the legal construction for signing. The Ugly: This approach can pose obstacles along the way, as company and startup cultures can clash.

Corporate Venture Capital

Increasingly, companies are establishing a separate business unit: a venture capital arm, in which promising startups are identified and invested directly. This process, also called corporate venturing, is how a traditional venture capital firm operates. Being backed by a CVC ourselves, I think the success of a VC arm depends a lot on how it is structured and the LPs behind the capital: is it just the company?

In this case, the company must provide a strategic advantage for the company. If third-party LPs are involved, the financial interest must be foremost (which could again lead to a conflict of interest with the parent company). Such a CVC can be useful if spin-off companies are formed by the company.

Startup collaborations

When I joined Swisscom, the Swiss IT and telecommunications leader, my role was to bring my own startup experience to research companies and run proofs of concept as a company with them. When companies partner with emerging startups, it can form a dynamic duo. These collaborations can take different forms and exist over more or less long periods. The goal is to maintain and foster the startup spirit, unlike a merger and acquisition, where startup culture transcends corporate culture.

Furthermore, since startups tend to be attuned to the latest developments in the market, businesses can rely on their knowledge to stay up to date. A successful collaboration could later become a CVC agreement or an acquisition agreement. I've observed that founders often have high expectations when talking to large companies. Since large organizations evolve at a slower pace and have more governance and politics than startups, it takes time to establish a pilot and even longer to turn that pilot into an enterprise-wide collaboration. company.

Innovation ecosystem

An innovation ecosystem consists of a network of individuals who share experiences and help solve problems by ensuring a flow of information and resources within and between organizations, professionals, educational institutions superior, government agencies, etc.

I was...