Most industrial market have endured their own Copernican revolution lately. Whether it was because of mobile, sheer customers discontent or the future threat of artificial intelligence, is of no real importance at this point. What is clear is that the old innovation playbook involving trickling down military technology to B2B and then to B2C doesn’t work anymore. Facing startups with seemingly random hit-and-miss business models that nonetheless aggressively push in the market and eventually succeed, what are the options?
Incubating in-house your own friendly breed of disruptors does make a lot of sense. The common misconception though, of corporate incubation, is that funding intrapreneurs to launch startup-like projects will eventually unmask in itself the next big business.
This doesn’t work. Or at least, it’s not that straightforward.
Since 2007, I’ve explained at length in keynotes or articles why. But the idea of finding the next big thing by being more agile and customer-driven is powerful. This idea is a virus that pushed corporations in the same pitfalls again, and again, and again.
Not that corporate incubation doesn’t work. It does. But for it to work you have to consider your incubator as a fruit flies laboratory.
In genetics research, fruit flies have been a fantastic model because they’re cheap to breed, their reproduction cycle is damn fast, and their genetic code is very simple. And most of all, out of their 14,000 genes, they share 8,000 with us. This is why since the 70s fruit flies have been a tremendous model for research.
So what would that mean for your corporate incubator?
Imagine that instead of selecting the six best projects every year and aiming to scale to best out of the six, you’d design your startup-like projects as generations of fruit flies that will unmask new patterns that you can leverage in your core business (both technology and market patterns).
These « fruit flies » projects would have these characteristics:
• Fast cycle projects that give a market output within 3-6 months (while your core business will require 18-24 just to start to turn around);
• Projects that reduce potential new business models to just a few parameters (they won’t have to go full-scale);
• For each opportunity you need to explore, you organize at least three different projects sampling different approaches (you can go up to twelve or more depending on the importance of said opportunity);
• You kill projects on a regular basis, get clear post-mortem on the hypothesis you sampled and infuse the information in other projects that get progressively smarter and closer to viable endeavors for your company;
• Anytime you need to decide what you’ll do next at scale in the market, you step-back, snapshot the strategic learnings continuously delivered by your program and only THEN start designing a 2.0 version of a business line.
It also means that your intrapreneurs are not mindlessly dedicated to a single project. They are not entrepreneurs (or they would have resigned long ago from your slow-moving / red-taped business).
In that kind of corporate incubation process, intrapreneurs are agile teams on many level: they learn to work faster with precisely delimited targets. They get some level of full power on their projects within a given budget. And they also learn to jump from a project to another, carrying on the best practices and insights from previous projects that were killed (the genetics element).
That is the key logic of fruit flies genetics: iterate fast, see how things propagate, decode what is going at scale, then decide and potentially design the complex solution you need.
In that game, making sure to mix enough projects that are customer-oriented, process-driven, or betting on future tech turn-arounds is critical.
With that in mind, that a bank would try to incubate a new online version of itself doesn’t make a lot of sense. A bank that needs to invent its future would launch a dozen of different enough projects on new online interfaces, a dozen on new consumer services, and maybe a dozen still on retail operations (a pop-up bank in an airport corner for foreign travelers can be setup and deliver insights within a month).
Understand that we all know where the next big things are coming from. We just don’t know when they will appear and what shape they will really have. If seeing that AI will be disruptive is a given, no one knows what it will mean. And certainly not in your own market.
The only way to outsmart competitors is not to try to get it right before everyone else, but to be able to outplay them at sampling the future and learning from a portfolio of projects. Or you can wait for Gartner and management schools to explain to you, after the battle is over, what went wrong and what you should have done.