Published On: Tue, Sep 1st, 2015

The Barouch Feature: The arrival of the corporate innovation lab

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Jonathan-Barouch---Portrait-#2There has been a welcome shift in corporate thinking in Australia in which some of the nation’s largest companies are experimenting with ways to harness the entrepreneurial energy that is driving disruptive change through information technologies.

The emergence of internal entrepreneurship is a fascinating phenomenon to watch, because ultimately these corporations are attempting to capture the creativity of grassroots guerrilla innovation – with support from the highest levels of the organisation.

This is a management conundrum: these are forward-thinking boards and CEOs trying to infuse their organisation’s culture through a bottom-up entrepreneurial movement, but with the understanding that the effort will fail without top-down management buy-in.

It’s a bit like catching a unicorn – you get better at it with practice. But there is a growing and impressive list of Australian companies that have now adopted ambitious experiments in innovation.

Woolworths’ Wstart program, or Wesfarmers’ venture capital program, the new Commonwealth Bank Innovation Lab and the ANZ’s Innovyz program are all high-profile – and very different – approaches to capturing and fostering the same innovation culture.

Telstra’s creation of the muru-D accelerator and co-working space, as well as its recently launched Experience Centre, has the same creative ambitions. The same can be said of the local operations of large multinationals, like Optus’ Innov8 Seed program and its sponsorship of Fishburners, or Coca-Cola Accelerator in Sydney.

The common thread seems to be the creation of a central group or space that is highly visible and acts as a beacon for the organisation to drive creative thinking.

It is impressive that this growing band of corporate brothers in Australia is embracing the possibilities of further fostering their internal entrepreneurial culture. Ultimately, these kinds of efforts feed each other.

The mere fact that Australian companies have become so active in this space is perhaps an acknowledgment that Aussie corporations probably haven’t been as innovative as their overseas competitors, particularly those in the United States.

Anecdotally, it seems most of these innovation lab initiatives have come about through the agitation of small, energetic groups of entrepreneurial-minded executives within the companies. It has been one or two individuals who have driven the idea from the inside, and secured the funding to back it.

These internal innovation guerrillas are the catalyst to cultural change, and the innovation labs and other experiments are the platforms that will help to drive that change more broadly through an organisation.

But as we all know, culture flows from the top. And the most important role that these internal guerrillas play is in securing buy-in from the CEO and from the board. For large companies, we know that the dollar value of the investment is inconsequential.

We have seen that the corporate appetite to engage with entrepreneurial culture is large and growing. But it will be interesting to see just how successful these experiments will be – the creation of internal or external innovation labs, or sponsorships of accelerators, or even the creation of internal VC funds is a tremendous step forward.

But labs and accelerators alone are not sufficient to create successful outcomes without management support. This should not be thought of as a PR stunt, but rather the first step on a longer journey.

The biggest handbrake within corporations usually resides in the procurement department. Procurement is the last bastion of the corporate conservative. Many smaller, more nimble and innovative partners are often deterred (or outright blocked) from engaging with their larger partners.

I see solving this issue as one of the major challenges a large company faces: balancing their need for risk mitigation against the ability to move fast with smaller entrepreneurial partners.

I have dealt with large companies that handed me a 20-page document outlining procurement guidelines before we even began a proper discussion. Just meeting the requirements to enable a contract negotiation can be extremely burdensome to a smaller player.

If large companies can find the energy and the slimmed-down processes that enable them to work with smaller innovators, the opportunities are huge.

It is interesting to me that a very healthy proportion of Australian start-ups are focused on issues related to managing and extracting maximum value from large volumes of data – with its social streams, or sales inventories, or both at the same time. And this is where corporate Australia can perhaps benefit most from a more engaged relationship with local entrepreneurs.

*The author has participated in innovation programs with CBA and Woolworths.

 

Jonathan Barouch is founder and CEO of location-based social analytics company Local Measure. Local Measure is headquartered in Sydney and with international offices in Singapore and the US.

 

 

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