These days you don’t have to be a small, agile startup to generate new ideas. Large, more mature companies can, and in our opinion, must make innovation a priority to remain competitive.
So it’s not surprising that a growing number of Fortune 500 companies have done just that. Companies as diverse as Google and Coca-Cola have incorporated research labs and other entities to further spur innovation. To remain competitive, savvy executives are looking at new ways to bring creativity and speed into the traditional corporate ecosystem.
Accelerators—entities that provide early-stage companies with mentoring, capital, and access to investors in return for an equity investment—are growing by leaps and bounds.
How Common Is This Practice?
A significant portion of Fortune 500 companies have some kind of accelerator or incubator housed in at least one business unit, according to Boston-based consulting firm New Markets Advisors. What’s more, there was only one corporate accelerator in existence in 2005. Today there are more than 700, according to a study by the Brookings Institution, a Washington, D.C.-based think tank.
Why should startups want to work with big business? Because 90% of startups fail, and established companies have the infrastructure, marketing, manpower and finances to open doors.
One possible advantage for the companies that engage with startups: Corporate executives can select projects to extend and amplify their products and services. In addition, firms can form new entities in their image and have an investment in the future.
Looking Toward Local Startups
Large organizations can help maximize their creative potential by partnering with more agile startups that can efficiently test and fail in uncertain environments, unlike established companies that must be more risk-averse.
If possible, corporate leaders may consider engaging in partnerships with firms that can help you learn and innovate. You may uncover ways to take advantage of complementary strengths. I’ve seen this in banking, as large, established financial services bring resources and scale to their pairings with agile financial technology startups. For example, Bank of the West recently launched a corporate accelerator alongside an innovation studio that is designed to match our businesses with financial technology (fintech) companies to develop prototypes and test products directly with customers.
How to Find the Right Partner
To help make this model successful, select a firm with a strong track record of identifying the latest innovative technology and digital trends, and analyze and evaluate its impact on organizations.
Other ways to embrace innovation include adopting proof-of-concept pilots, hosting employee-learning and crowdsourcing events, and creating dedicated innovation teams throughout your organization.
Most corporations are set up, structured, and designed to maximize profit and minimize risk. This is especially true for the regulated financial services industry. To become the disruptor, as opposed to the disrupted, it helps to be willing to take measured risks.
Science author Steven Johnson once observed: “Innovation doesn’t come just from giving people incentives; it comes from creating environments where their ideas can connect.”
Companies of all sizes can foster a culture of creativity. We’ve found it’s essential that the executives at the top make it okay for employees to experiment and fail. You don’t need an incubator for that.
This article first appeared in Forbes.