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  • Writer's pictureLior Weizman

The Corporate Innovation Spectrum

The Corporate Innovation Spectrum

This article explores the most common tactics corporations employ to foster innovation, organized into three primary categories: external innovation, internal innovation, and investments. Each tactic is explained and positioned within a four-quadrant model I have developed, which classifies them based on their time-to-impact and the nature of their innovation—from functional to strategic.


Corporate leaders can use this model as a tool to understand how various approaches contribute to their corporation’s overall innovation landscape. It provides insights into which areas their organization is actively focusing on and highlights potential gaps in their innovation strategy. By leveraging this framework, leaders can better align their innovation activities with their long-term business objectives, ensuring a balanced and robust innovation strategy.


Click here to download the PDF version of the article, with high-resolution images of the framework.


Background

In my 20 years of experience dealing with tech innovation, both within corporations and in close collaboration with many startups, I realized I was missing a holistic framework to view or analyze the innovation strategy of a single corporation or to compare several corporations. I needed a framework I could use to explain the role and impact of each practice, its strategic significance, and how quickly it could generate results (tangible innovation, practical applications).


Over the years, I have developed the 'The Corporate Innovation Spectrum', a chart that visualizes the strength of each tactic, consistently updating it based on my conversations with numerous entrepreneurs and corporate leaders. As such, it represents the average across all cases I have studied.


The Spectrum

The tactics are placed on the chart (X and Y axes) based on two criteria:

  • Time-to-Impact (X-Axis): The timeframe it takes each tactic to generate innovation that is applicable, practical, and is expected to impact the organization. The right side ('Immediate Impact') represents tactics aimed at addressing current needs or market opportunities. The left side ('Long-Term Impact') focuses on endeavours that will mature in the future.

  • Impact Type (Y-Axis): The nature of the innovation each tactic is primarily designed to generate. The upper section ('Strategic Innovation') encompasses tactics aimed at driving significant, transformative changes, positioning the organization for new market opportunities or comprehensive operational shifts. The lower section ('Functional/Operational Innovation') refers to more immediate, tangible improvements in processes, products, or services that enhance current business performance.


The Corporate Innovation Spectrum

There are numerous tactics that corporations utilize to foster innovation, each uniquely shaped by factors like corporate culture, industry size, and market demands. ‘The Corporate Innovation Spectrum’ visually represents these variations, outlining 19 tactics most commonly employed by corporations. Below is a chart showing their placement along the spectrum.


The Corporate Innovation Spectrum

Click here to download the PDF version of the article, with high-resolution images of the framework.


This next section provides a high-level description of each tactic, including insights into the strategic considerations behind their adoption, how these approaches are used by corporations, and their associated benefits and challenges. Additionally, I have included some personal insights and observations based on my extensive experience with these tactics.


Common Tactics of Corporate Innovation Adoption


External (Open) Innovation


Single Deal (through procurement): (X: 10, Y: -7.5) A single deal involves a transaction between a corporation and a vendor or partner to implement or adopt existing technology for a specific project or customer. This tactic is used to address immediate operational needs with technologies that have a clear and near-term application, typically processed through traditional procurement channels focusing on rapid integration and deployment. The benefit of single deals is quick implementation and immediate operational impact. However, challenges include limited scope and scalability, along with a dependency on external technology.


Partnerships and Alliances: (X: 7.5, Y: -5) Partnerships and alliances involve collaborative agreements with other companies to leverage each other’s strengths and capabilities, mainly aimed at generating near-term revenues through joint efforts using validated technologies. These engagements often involve joint marketing and sales efforts, or shared technology platforms. Benefits include access to new markets and enhanced resource utilization, while challenges can include coordination complexity, potential conflicts of interest and coopetition. While these collaborations can be significant for immediate operational goals or revenue generation, they may not always profoundly impact the company's long-term strategic objectives or fundamentally alter its competitive positioning in the market.


Corporate Development: (X: 2.5, Y: 5) Corporate Development includes planning and execution of strategic activities, such as mergers, acquisitions, strategic partnerships, joint ventures, and IP acquisitions. This involves detailed due diligence, negotiation, and integration processes that can carry high costs, significant risks, and require extensive time investment. While the exploration and scouting efforts can involve futuristic technologies, the activities are mostly aimed to achieve a foreseeable impact, potential for transformative growth and improved market positioning.


Mergers & Acquisitions: (X: 7.5, Y: 7.5) Mergers & Acquisitions are strategically driven and involve buying or merging with another company to directly integrate their operations, technologies, and staff, aimed at quickly acquiring new (proven) capabilities or responding to competition. This complete integration of acquired assets offers immediate access to new technologies and market presence. However, challenges include cultural integration, organizational and operational changes, regulatory approvals, and high financial risk.


Licensing and IP Acquisitions: (X: 0, Y: 5) Licensing and IP acquisitions involve obtaining the rights to use, produce, or sell specific technologies or intellectual property, aimed at accessing cutting-edge technology without internal development. Unlike owning an entire company, negotiations allow flexibility and exclusivity based on needs, making this approach cost-effective with less investment. Challenges include potential dependency on external IP and usage limitations. Licensing and IP acquisitions can vary significantly in terms of how quickly they can be applied and generate impact.


Joint Venture: (X: 5, Y: 5) A Joint Venture is a strategic alliance that forms a new entity with one or more partners, sharing resources and risks to explore new markets or develop innovative products collaboratively. Usually, these activities are with high strategic importance, and in most cases involve a solution that is ready for the market. This joint investment and combined operational effort share risks and enhance market reach but can also complicate management and alignment of strategic objectives.


(Owned) Corporate Accelerator: (X: 2.5, Y: -2.5) Corporate Accelerators support the growth of early and/or late-stage startups by providing resources such as mentoring, access to decision makers, and support. Different accelerators can have different goals, mode of operations, and outcomes. In general, these programs are aimed to “accelerate” a process: building a partnership, technical integration, funding, etc. The more successful programs have a clear ROI to the corporation itself. This can include acquiring more startup customers, expanding startup partnerships, enhancing ecosystem collaborations, and boosting branding efforts. Most accelerators are program based and require collaboration with multiple teams inside the corporation. From the perspective of the corporation, most startups represent functional innovation that is complement, but some can evolve to be strategic.


Innovation Center: (X: 2.5, Y: 2.5) Innovation Centers are facilities and teams dedicated to adopting and integrating external innovations. They collaborate with startups and other external entities to pilot and scale new technologies, strategically aligning external innovations with internal capabilities. As opposed to Corporate Accelerators, these activities are not program based, but more task/project/domain oriented. In most cases, the team also holds technical capabilities to conduct PoCs (Proof of Concept), and collaborate with other teams within the corporation. Challenges can include balancing investment in external innovation with internal R&D efforts.


Innovation Scouting: (X: 0, Y: 2.5) Innovation Scouting is crucial for corporations that systematically search for emerging trends, technologies, and startup ventures. Often conducted by specialized professionals who report directly to senior leaders like the CIO or CTO, the goal of innovation scouting is to identify and leverage external innovations that can be strategically important or satisfy immediate functional needs, spanning a range from cutting-edge to mature technologies. The process helps corporations stay at the forefront of technological advancements and market trends, providing strategic insights that guide decision-making. However, filtering through vast amounts of information to determine the most viable and impactful innovations can be challenging.


(Owned) Corporate Incubator: (X: -6.5, Y: 5) Corporate Incubators are initiatives typically set up by corporations to nurture early-stage startups by providing them with resources, mentorship, and investment. The purpose is to foster innovations that could be strategically integrated/partnered with the corporation owned operations, products, or services, supporting long-term strategic goals. Corporate Incubators usually offer a controlled/friendly environment for innovation, allowing corporations to cultivate new technologies and business models from the ground up. However, they face challenges such as high resource requirements and the uncertainty of these ventures’ success.


Startup Program: (X: 0, Y: -2.5) Startup Programs, distinct from accelerators and incubators, often view startups as potential customers, offering benefits such as cloud credits, mentorship, office space, and free basic services (e.g., legal, accounting). These programs also aim to build relationships with the broader startup ecosystem, thereby enhancing the corporation’s image as an innovator. While these programs can stimulate engagement and innovation, they may not always result in direct strategic gains and can lack the structured impact of more formal accelerator programs.


Academic Research: (X: -8.5, Y: 5) Academic research collaborations involve partnerships with universities or research institutions to explore advanced theoretical and applied research topics. These collaborations can extend the corporate R&D efforts into areas that are out of immediate scope but have potential for long-term strategic value. The challenge with these partnerships is that they often require long-term commitment and may not directly align with immediate business needs, making them a more speculative investment in innovation.


External Incubator/Accelerator Program: (X: -3.5, Y: -2.5) Many corporations engage with external incubators or accelerators that they do not own but sponsor or partner with. Most of these programs focus on early-stage startups and sometimes involve multiple corporate sponsors. The framework allows corporations to tap into a broad spectrum of innovations without the direct responsibility of program management. This participation enables access to new ideas and technologies at an early stage, potentially leading to more strategic collaborations in the future. This practice results with less ability to make an impact for the corporation, since the program team is not part of the organization, is not exposed to all strategic considerations, and don’t have access to internal resources, or knowledge. In most cases, this is part of a broader or a light sourcing mechanism.


Internal Innovation


R&D (Research and Development): (X: 0, Y: 5) Research and Development (R&D) departments are crucial in driving the company's future technology and product advancements. R&D focuses on developing new products and improving existing ones through systematic research and technological innovation. The role of R&D is strategic and foundational, directly contributing to the company's growth and sustainability by maintaining its competitive edge. The benefits of a robust R&D organization include continuous improvement and the ability to adapt to changing market demands. However, R&D can be costly, with significant investments in time and resources that may not always result in commercially viable products.


Innovation Lab: (X: 0, Y: 7.5) Innovation Labs are specialized units within corporations that focus on developing new technologies and solutions that align with long-term strategic goals. These labs operate parallel to or as part of the R&D division but are specifically geared towards radical innovations rather than incremental improvements. Innovation Labs often work on emerging technologies, aiming to keep the corporation at the forefront of industry developments. The advantage of having an innovation lab is the ability to pilot and potentially scale breakthrough innovations that can significantly impact the market. However, the challenge is that these innovations may require long development times and substantial investment before yielding tangible results.


Intrapreneurship Program & Hackathons: (X: -5, Y: 2.5) I have combined the 2 models to simplify the model.

  • Intrapreneurship Programs are designed to harness the creative and innovative potential of employees by providing them with resources, support, and sometimes capital to explore new ideas that could lead to business improvements or new product developments. Benefits include increased employee engagement and retention, fostering a culture of continuous improvement and innovation. However, challenges include ensuring that the innovations align with the company’s strategic goals and managing the scale-up of successful projects without disrupting existing business lines.

  • Hackathons are events where employees, and sometimes participants from outside the company, collaborate intensively for a short period, typically 24-48 hours, to solve specific problems or develop new ideas. These events are designed to ignite creativity and rapid prototype development, often yielding surprising and innovative solutions to business challenges. Hackathons can serve multiple purposes: they can be a source of fresh ideas, a tool for employee engagement, and a means of fostering a teamwork-oriented culture. The challenges include ensuring the sustainability of the ideas generated and integrating successful innovations into the company’s regular operations or product lines.


Venture Building: (X: -2.5, Y: 5) Venture Building involves the creation of startup-like teams within the corporation, tasked with developing new businesses or products from scratch. Unlike traditional R&D, venture building is structured around the startup methodology, which includes ideation, team formation, MVP development, and scaling. This approach allows corporations to explore new market opportunities with agility and focus, building ventures that can potentially operate independently. The benefits include fostering a culture of innovation and potentially creating new business lines. However, venture building can be resource-intensive and risky, as not all ventures will succeed, and those that do may require significant investment to scale.


Investments


Direct Investments and Corporate Venture Capital (CVC): (X: -5, Y: 7.5) Direct investments in this article refer to strategic investments (as opposed to financial investments). Such investments by corporations into external startups or growth-stage companies typically occur through Corporate Venture Capital (CVC) arms, and in some cases by a specific line of business. CVC units operate similarly to traditional venture capital firms, and their investments are made strategically to align with the corporation's long-term goals, seeking strategic benefits such as access to new technologies or markets, and improved position for future follow-on investments, partnerships or M&As. Such investments usually come with high risks associated with startup failures, and the strategic benefits may take time to materialize, requiring sustained investment and management attention.


Indirect Investments (LP in a VC): (X: 0, Y: -7.5) Leading corporations invest indirectly in innovation through limited partnerships in venture capital (VC) funds. These indirect investments allow corporations to support a broader portfolio of startups without direct involvement in day-to-day management. By being a limited partner (LP) in a VC firm, a corporation can gain insights into emerging trends and new technologies across different sectors and regions, guided by the VC's expertise. The benefits of being an LP include diversified exposure to innovation with relatively lower risk compared to direct investments, and minimal resource commitment. However, the challenges include limited control over specific investment decisions and potential misalignment between the VC’s decisions and the corporation’s strategic interests. Additionally, the returns and strategic value derived from these investments can be unpredictable and varied.


A 4-quarter discussion

Organizing the innovation strategies into four distinct quadrants allows us to explore and clarify the diverse impacts and strategic influences of each approach. This segmentation provides a clear framework that spans the spectrum from immediate to long-term impacts and ranges from functional enhancements to strategic transformations.


The Corporate Innovation Spectrum

  • Upper-Right Quadrant - Immediate Strategic Innovation: Innovations in this quadrant have both a significant strategic impact and a short time-to-impact. These are often transformative actions or technologies that can quickly redirect company strategy or significantly enhance competitive advantage in the near term.

  • Lower-Right Quadrant - Immediate Functional/Operational Innovation: Tactics here are focused on enhancing operational efficiency or solving specific functional problems with immediate applicability. These innovations tend to be more incremental, offering quick wins that improve day-to-day business processes or address immediate operational needs.

  • Upper-Left Quadrant - Long-Term Strategic Innovation: This quadrant encompasses innovations with a long time-to-impact that are expected to have a profound strategic influence on the organization's future. These may include investments in emerging technologies or new business models that will drive the company's growth and direction in the future.

  • Lower-Left Quadrant - Long-Term Functional/Operational Innovation: Innovations in this quadrant are expected to enhance operational aspects or specific functionalities in the future, potentially also gaining some strategic impact. This might include developing new processes or technologies that require time to mature. The far left-bottom corner is “Out of Scope”, simply because it doesn’t make sense to develop or invest, over a long period of time, a technology that will eventually only gain functional or operational innovation.


This quadrant framework can help leaders visually assess where their organizations are most active in terms of innovation, identify areas of strength and opportunity, and ensure that their strategic efforts are aligned and balanced across both immediate and long-term goals.


Conclusion and Next Steps

This overview of 'The Corporate Innovation Spectrum' aims not only to inform but also to inspire actionable change within your organization. As you reflect on where your organization stands within these quadrants, consider initiating a strategic review session to discuss these insights. Engage with your teams to evaluate and potentially recalibrate your innovation efforts. Are there areas where you are over or under-investing? Are they balanced across the quadrants? How well does your current strategy align with your long-term goals? By regularly reviewing and updating your approach, you can ensure that your organization thrives in a competitive and evolving market.


Thank you for your interest in Corporate Innovation. Please contact me if you wish to learn more or further discuss the topic.


Following is a link the PDF version of the article, with high-resolution images of the framework.

The Corporate Innovation Spectrum - Lior Weizman
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