Americaninoo
How Corporate Innovation Centers Are Fostering Startup Growth
By: Nick Greenhalgh
All across the country, and the globe, large corporations are doing whatever they can to keep up with the innovative ideas and technologies that emerge from startups.
Rather than waiting to acquire or partner with these startups, many large corporations have created innovation centers that help grow these ideas under their own roofs.
From Google and Microsoft to Delta and Nike, corporate innovation centers are popping up all over the world, and Silicon Valley is home to many of them.
The Bay Area plays host to more than 50 corporate innovation centers, building next-generation technologies out of souped-up startup “garages.”
On Wednesday night, American Inno brought together some of the region’s brightest corporate innovation leaders to talk about how big companies are fostering startups through innovation labs.
American Inno’s State of Innovation: Corporate Innovation Centers. Photo Credit: Mollie O’Brien.
The panel, sponsored by Analog Devices and moderated by Silicon Valley Business Journal editor in-chief Joshua Moss, covered how these idea incubators are investing in the community and providing local startups with the support they need to reach customers and investors.
“Accelerators and innovators got most of the attention,” Moss said. “There is no one model for an innovation hub.”
Panel members included Justin Muller, global head of prototyping at CISCO CHILL; Nimrode Moreshet, emerging business director at Analog Garage; Natalie Cummings, COO of IBM Data and AI at IBM Innovation Center and Michael Magyar, head tech scout at the Gore Innovation Center.
With varying experiences across the industry, all of the panel members agreed that the Bay Area’s garage culture is evident in the current corporate innovation scene, whether these centers are named garages or not.
“I think a lot of the breakthrough innovations come from the small companies,” Moreshet said. “It would be malpractice if you didn’t keep an eye on the small companies.”
This awareness in startups has caused some well-established companies to change the way they do business.
“AT SOME POINT AN INNOVATION THAT’S NOT MAKING MONEY IS TELLING YOU IT’S THE WRONG THING TO DO.”
At Gore, the company best known for inventing GORE-TEX fabric, Magyar said the company would turn away startups in the past, encouraging them to further develop the product before returning to partner.
Now, they’ve switched up the model to help grow these companies in house.
“We realized that we were missing out on quite a bit of earlier stage technologies. Where, if we were engaged in the conversation earlier, we could articulate what we would care about,” he said.
By bringing these companies into the fold earlier, Magyar said Gore has been inspired by the drive of startup teams.
“One of the great things that startups bring to the table are folks who are dedicated passionately to a vision that they see and are driving it myopically,” he said.
As startups build their companies from scratch, failure is inevitable. The panelists agreed that setting expectations for these corporate innovation centers is key to determining ROI.
“At some point an innovation that’s not making money is telling you it’s the wrong thing to do,” Muller said. “Part of our job is understanding and setting expectations for when that point exists.”
At IBM, Cummings said key stakeholders understand that innovation comes with inherent risk and a low probability of success. Thus, the company is willing to accept when a project doesn’t work out.
“Our CFO understands that our business model is to invest a certain percentage of our budget into emerging technologies, the things that might fail and might not pencil out,” she said. “We have a reserve for failures.”
