Don’t talk to me about open innovation anymore!

by bold-lichterman

For the past year, I have had the opportunity to discuss with a large number of leaders of large companies, mid-size companies and start-ups, I have learned some lessons and thoughts that I share here: I would be delighted to have your insights and contradictions.

Open innovation is dead

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Open innovation: I decided to erase that word from my language (there may be a bit of my annoying spirit in all of this).

Pity! When I was still at school, I had the impression of discovering the most exciting concept in the world through academics like Von Hippel, Lakhani, or of course Chesbrough. But it had been a while since something bothered me about the open innovation put into action by French companies, and finally, the recent announcement of the alliance of Numa and Roland Berger against “innovation washing” ended up putting words to what I felt. It must be said that there is a gigantic distance between the message carried by the theory and its understanding by the business world.

After almost a decade of successive crises and “flight to quality“, The top managers of large listed companies (or not), have undoubtedly favored the defensive to the detriment of the offensive. In other words, their job has become to “keep going”.

We visit incubators like we go to the zoo

However, for one or two years, we have seen more and more Corporates parade under the banner of open innovation in French incubators and accelerators, a bit like at the zoo to be honest, to understand what the secrets of these companies are. which attract the media lights and the attention of politicians. We are here in an approach to innovation strictly confined to supporting an ecosystem (quasi-philanthropic com ‘) and not to participating in it (business).

I can no longer count the number of communication managers who call me to ask me to host an event for their Comex by reserving a mini-pitch slot for start-ups who will come out disappointed with the experience in the vast majority of cases.

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We often forget that innovation is the number one engine of growth. In most of the large companies that I have had the opportunity to meet, innovation and growth are carried out in silos. Business and strategy on the one hand, innovation and risk on the other. For Laurence Capron, teacher. from Strat to Insead, author of the excellent Build Borrow or Buy, we are more functional oriented: R&D on the one hand, M&A on the other and partnerships between the two. Generally, in all organizations, the power play always means that one of the three ends up winning and very strongly orient the roadmap and the means implemented by the company. A good counter-example in this area, of a company where growth rhymes with innovation, is Gemalto (which in a few years entered the CAC40).

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Management Committee of Gemalto as of January 1, 2016 At Gemalto, strategy and innovation are both headed by Martin McCourt, EVP Strategy and Innovation. Certainly the signal that all the tools of growth (R&D, alliances, mergers and acquisitions) are being used to the full.

It goes without saying but not always: any need for new resources to execute a growth strategy (innovative or not) must be addressed in a rational manner. Do I have the talents to build the resource internally? Am I able to take dependency on a third party? What is my degree of risk in integration and what is my opportunity cost? The Capron framework offers a good avenue for reflection (below) L. Capron, W. Mitchell (2012) Build Borrow or Buy

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L. Capron, W. Mitchell (2012) Build Borrow or Buy

I want to work with start-ups

Despite all this, and all the strategic talents present at the SBF 120 Comex, many still come to see me telling me that they want to “work with start-ups”. Working with start-ups yes, but why?

I saw the emergence of a movement to create small “open innovation” units responsible, for the most part on a reduced budget, to meet as many entrepreneurs as possible (#leurfaireperdredutemps) (I was recently told about a bank having such a unit and whose main KPI was the number of entrepreneurs met), without always knowing how their product will fit into the vision of their partners. And that’s the rub. We select start-ups on the basis of intuitu personae, we initiate tests, we issue a press release and we almost never deploy, because we realize that the product does not serve the corporate vision, beyond the issues of timing, culture, working style .

To be effective, going through start-ups must follow the same process (by adapting it) as for any customer / supplier relationship, partnership, or acquisition, starting first from the vision and the relevant means. to serve it.

Working with startups: the new CSR

Beware of “washing innovation”! In most cases, the company that communicates about a startup partnership does not take this seriously.

Start-ups are only interested in their exceptional growth potential

Why? It all lies in a big mistake. For Corporates, start-ups are technology, technology is innovation, and innovation is different from business. However, in a world where technology is becoming a commodity, start-ups should not be seen as carriers of tech innovation. Start-ups are only interested in their exceptional growth potential at a speed that is beyond comprehension. Only in this race there are only a few winners.

This is not advice to Corporates

I don’t have any advice for anyone, but here’s what I would tend to say to Corporates who decide to go for it.

1. In life, nothing is free: plan a budget

A growing number of start-ups are deploying free tests for large companies. Time is the main resource of any startup and generally Corporates will demand ad hoc developments prior to collaboration. This development time must be paid.

2. Beware of direct investing

Very few are the examples of companies having succeeded in the Corporate Venturing adventure. This investment method requires a seasoned internal team, relevant to this asset class, navigating a permanent conflict between the interests of the Corporate and those of the entrepreneur. Not easy (to read). But, some good examples exist.

Think about other alternatives. Indirect investment, for example, makes it possible to be supported in its transformation by specialized external investors who see almost all startups pass and who benefit from a unique point of view on the evolution of traditional industries in the context of the digital revolution. Some examples : Daphni, CapHorn Invest, Partech Ventures, 360 Capital Partners,

4. The Chief Growth Officer or CEO intrapreneur

Over the past two years, as you have seen, I have seen a number of Chief Innovation Officers or Chief Digital Officers appear within SBF 120 companies. This is probably a good signal resulting from a strong intention from our French companies. And to be honest, I think most of them are very talented people. On the other hand, from an organizational point of view, I witnessed the dismay of a certain number of them confined to roles of transmission of culture, without real business impact and without means made available to them.

Indeed, these roles are relatively new and require for the people who take on these responsibilities to build their influence with the business units, which will certainly take them a few more years.

The more I think about it, the more I find myself imagining Chief Growth Officers in Comex or CEOs intrapreneurs, influential and who will carry the business vision by activating the tools of innovation in the service of the growth of their company. A good example of this manager of a new kind, it is perhaps Ronan Le Moal of the Credit Mutuel Arkea.

This is not advice to startups either.

To startupers who read this post and who are thinking about working for / with Corporates, I will say this:

  1. Do your due dil: find out about your future client / partner and his practices, key people, etc.

  2. Prepare to do ad hoc dev

  3. Don’t exit a line of code without getting paid for

  4. Forgo zero marginal cost scalability, but you can still do something big

  5. It’s all in customer service

  6. Don’t waste your time! better to lose a bad customer who will come back later anyway.

  7. Zero excluded! Enjoy the ride! : if it works, it can be an incredible adventure (I haven’t experienced it, but I was told :-)).

In the end, here’s what I think: Corporates and startups have a real interest in going out and about the world together, breaking down cultural barriers and setting up international giants. In France, we need corporates fully participating in the ecosystem of startups (via partnerships and acquisitions) and startups that also have their place within corporate ecosystems.

Whether you are on the corporate or start-up side, I hope this post will resonate well with your experience, and if not, I would be happy to hear your contradictions.