A year ago, I was a judge at an innovation demo day. The event showcased proposals of intrapreneurs within the host firm.
The idea was to choose 3 pitches that would receive funding for development and go-to-market. It was a high energy event, with great ideas.
Most pitches at the event focused on solving a problem faced by the firm. There was little thought around how the solution could scale beyond the firm into a viable business model.
Arunkumar Krishnakumar is a VC at Green Shores Capital, where he focuses on deeptech and sustainable investments.
Intrapreneurs are employees within a large corporate looking to solve a problem in an innovative way – sometimes in collaboration with the innovation lab.
Innovation Theatre is a phrase that I picked up from Richard Turrin‘s book on Innovation labs.
As an investor, I am tuned to look at the “so what?” of a solution. We often come across very cool ideas, and interesting solutions searching for a problem. Often times, the problems are not big enough to turn the idea/solution into a viable business. In the startup world, they often say that ideas only contribute to 2% of a firm’s success. Execution is everything.
At the end of the presentations at the event, I had a candid chat with the innovation head of the firm about what he could do to make this intrapreneur model work.
We discussed several ideas about spin outs from the innovation lab, and how an Intrapreneur+Innovation Lab+VC model could work quite well. My idea didn’t go very far though (its only 2% of success anyways).
Innovation labs are often set up to be a theatre to talk about ideas. Often times, they have absolutely no clue how to make it beneficial to the organisation, to the people involved, and of course to consumers. The way to get it right is to perhaps, role play a little bit.
Intrapreneurs in an organisation getting involved in the innovation lab should perhaps think like entrepreneurs who don’t belong to the firm. Their analysis of the problem area, and the business opportunity will improve drastically if they did that.
Innovation team should start looking at them as VCs would look at startups. They should offer a holistic framework for the intrapreneurs to work with and pitch. Feedback must be candid, and the outcome should be refining the thinking of the intrapreneur in achieving a scalable business proposition.
Innovation events shouldn’t be just to help the intrapreneur make a cool pitch. It shouldn’t be about running a demo day as a flash exercise and it shouldn’t be just about the PR that it would bring. At that point it becomes innovation theatre – firms and intrapreneurs should stop wasting their time with such initiatives.
Having said that, in the past week alone, I have come across a few good outcomes from innovation labs and corporate venture arms in financial services. There are several firms investing in fintech businesses through their corporate venture arms.
- Mastercard acquired a loyalty company called SessionM recently. SessionM will help advertisers better target their customers with offers. The effectiveness of this acquisition depends on how well Mastercard can execute post integration.
- Amex recently invested in an AI startup called Voca.AI based out of Israel. Voca.ai developed AI agents for virtual call centres.
- Santander Innoventures invested in roostify that digitzes the entire mortgage lending process. Consumers can use their app to search and close a home alone.
But the best of them all is about ColivMe, a startup that was born out of an internal innovation event at BNP Paribas, has launched as a communal housing marketplace.
The marketplace focuses on coliving which is similar to a flat-share, but is more flexible in terms of the rental period. ColivMe was founded by two BNP Paribas employees who spent 6 months in their innovation lab developing the platform.
It is easier to invest into a startup that aligns with the firm’s strategic goals, as Mastercard, Santander and Amex have done. It is harder to create a culture that nurtures innovation, inspire intrapreneurs and help them in their startup journey as BNP Paribas have done.
It shows that with genuine efforts and leadership, innovation labs can also walk the talk.