By Antonia Frizberg, Verena Judmayer, Michael Wlaschitz and Richard Asher.
Pioneers Discover has completed the first study of how leading corporates drive innovation in the DACH (Germany, Austria, Switzerland) region. This 2019 survey by our consultancy arm covered 104 companies headquartered in the region, which average over 1,000 employees and €500m in revenue. Senior management, most often the overall heads of innovation or digitalisation, provided the responses.
KEY FINDINGS: Startups & Senior Management are Critical to a Positive Innovation Culture
Pioneers Discover’s survey of over 100 major companies headquartered in the DACH region tells a clear story of why companies try to innovate, the number one barrier to their success and, finally, the best way they can overcome that barrier.
The responses we received clearly showed that gaining (or maintaining) a competitive advantage is the primary driver of innovation among top DACH companies. But, while many try to innovate using intrapreneurship programs (among other formats), 65% of intrapreneurship projects are not successfully implemented.
This, according to the study results, is primarily due to internal resistance to innovation – something intrapreneurship is supposed to address! Improving the innovation culture amongst employees therefore remains a task that should get top priority – and intrapreneurship alone is not the answer.
The solution lies in the survey results. These revealed the two factors that have been most successful in helping companies address that internal innovation culture: top-level management involvement in programs and startup-driven innovation.
The study showed that support from top-level management leads not only to positive outcomes of innovation activities but also internal satisfaction with results. 97% of respondents highlighted the importance of top-level management support and more than 50% describe a push from supervisors as a main factor of success in innovation activities. But this is particularly relevant when it comes to intrapreneurship programs, as 79% of respondents state that senior commitment is key for such initiatives.
Startup-driven innovation, meanwhile, surpasses expected outcomes in regards to improving a company’s innovation culture. Perhaps surprisingly, it also surpassed intrapreneurship programs in this aspect. This is one of a number of findings that testify to the exceptional value of innovating alongside startups.
OVERVIEW OF RESULTS
Cross-Innovation Stream Findings – Innovation Governance in DACH Companies
Competition is the main driver for corporate innovation in the DACH region. The results of this study show that many corporates innovate by delivering new products and services to clients, developing and digitizing processes or fostering an open innovation culture. To better understand how innovation is implemented, the first part of the study offers insights into their governance of innovation.
Involvement of Top-Level Management
Innovation is a top-level management topic, with 88% of respondents reporting strong involvement of senior management in innovation activities. The importance of their commitment is underlined by 79% of study participants who see senior support as a key aspect of success in intrapreneurship. 53% stress its importance in startup collaboration. The study found that this is especially valid during the transition phase towards a more strategic approach to innovation.
Structure of Innovation Teams & Strategy
Findings show that the size and structure of the teams responsible for driving innovation, as well as the strategy behind innovation initiatives, differ markedly. 12% of companies attempt to innovate ad hoc without following a clear strategy, usually with a single employee (not specifically dedicated to innovation projects) responsible. Meanwhile 33% have a strategy but no clear timeline or KPIs. Companies who do demonstrate a clear strategy generally foster innovation through cross-department teams (31%), innovation centers and hubs (30%) or via separate legal entities (13,2%).
Innovation Through Intrapreneurship – Why Outcomes Lag Behind Expectations
DACH companies engage in intrapreneurship to develop new products and services (82%), foster strong innovation cultures (56%) and improve internal processes (47%). Results show that companies believe in the quality of employees’ ideas and aim to use their abilities for internal development.
How is Intrapreneurship Done?
The majority of companies offer employees a budget (59%), mentorship opportunities (48%) and dedicated time for side projects (45%) to work on their own ideas. Internal idea competitions (58%) and innovation or entrepreneurship trainings (40%) are the main innovation formats used in practice.
What are the Main Enablers & Challenges for Successful Intrapreneurship?
The study shows that strong involvement of top-level management (79%), clear strategies and goals (61%) and high-quality ideas (32%) are the main enablers of intrapreneurship. The biggest barriers are internal resistance (48%), low budgets (36%) and a lack of support from company leadership (32%).
What are the Outcomes of Intrapreneurship Initiatives?
Intrapreneurship activities result in product innovations (57%), improved innovation cultures (49%) and motivated employees (43%). The study identifies ineffective innovation activities by comparing the resulting product innovations (57%) with the product and service development goals originally set by around 80% of companies. With internal resistance being the main preventer of innovation, outcomes for improved innovation culture likewise fail to meet the respondents’ goals.
When reviewing the average numbers of started and successfully implemented intrapreneurship projects (on average 4-6 projects were initiated and 1-2 successfully implemented), the study suggests that companies are still experimenting on a rather small scale. With a failure rate of over 50%, increased efforts on the corporate side are deemed necessary in order to ensure successful innovation projects and lasting intrapreneurial impact. Only 25% were ‘more than satisfied’ or ‘highly satisfied’ with their intrapreneurship activities.
Innovation Through Startups – The Road to Success
Why Startup-Driven Innovation?
In order to stay ahead of the competition, 88% of corporates engage in startup collaboration as part of their innovation program. Main goals include product innovation (86%), process innovation (41%) and new market entry (39%).
How is Startup-Driven Innovation Done?
Common practices that lead to successful startup collaboration involve two essential formats. First, many companies host startup pitching challenges (49%) or hackathons (39%) to get to know a large number of potential collaboration partners. Second, the best-fitting startups are offered financed pilots/PoCs (69%), as well as access to data (53%) and customers (59%). Accelerators enjoy high popularity with corporates as 41% run their own 6-12 month programs, thus combining the previously mentioned formats. Incubators (13%) or co-working spaces (19%) are used less frequently.
The study reveals that most companies (56%) collaborate with growth-stage startups, as they provide the benefit of a market-ready solution, a tested business model and some initial industry and business experience. However 21% do work with early-stage startups while 31% are prepared to work with startups at any stage of their development.
What are the Main Enablers & Challenges for Successful Startup-Driven Innovation?
The study shows that the main enablers of startup-driven innovation are clearly-defined expectations for the collaboration (63%), the involvement of the corporate’s top-level management (53%) and a strong commitment from both the startup and the corporate to the collaboration (46%). The biggest challenges are different cultures and work methods (47%), internal resistance (46%) and technical integration (46%).
What are the Outcomes of Startup-Driven Innovation Initiatives?
Startup-collaboration initiatives achieve most of the expected outcomes, enabling process innovation (41%) and entry to new markets (41%). However, 65% of respondents report that the expected product innovations are not yet achieved.
When it comes to the goal of improving internal innovation culture, the results are very positive. 32% of respondents state it as a goal, and 31% report success. This suggests more companies should keep in mind that improved innovation culture is a highly likely outcome.
Even though only 15% of respondents aim for an improved reputation, 31% report being seen as more innovative after working with startups.
Around 40% of questioned companies state that they worked with more than 11 startups in the past three years. Overall, 92% have implemented at least one successful collaboration project with startups while 14% have successfully implemented more than 11. All companies that have worked with more than three startups in the last three years managed to implement a successful project.
Respondents were generally positive about the different collaboration formats they had tried, but the enthusiasm varied by format. Specifically, incubators lead to highly satisfying results: even though only 12.5% of the companies had hosted an incubator, 80% of them were ‘highly satisfied’ or ‘fully satisfied’ with the outcomes. In comparison, 55% of respondents were similarly satisfied with accelerators, 45% with hackathons and 51% with pitching challenges.
Most companies (72%) seek external support when engaging in startup collaboration. 38% are employing external consultants while around 20% are working with universities or external mentors. Looking at the levels of satisfaction with the project outcomes, it’s clear that companies who have no external support are less satisfied with the outcomes than those who do.
Multi-Corporate Innovation – The Quest for Perfect Partners
The study also analyzed multi-corporate collaboration, a third stream of corporate innovation after intrapreneurship and startup-driven innovation. Even though 78% of polled participants had already attempted multi-corporate innovation, companies are less likely to innovate with other corporates than with startups. The main reason for this, as indicated by 47% of respondents, is the difficulty of finding the right corporate partner with similar goals from another industry.
47% of multi-corporate innovation takes the form of co-creation to develop new products, while 49% of companies are building a cross-industry ecosystem to achieve their goals. The main goals of multi-corporate innovation are product development (65%), ecosystem building (40%) and process innovation (40%).
This executive summary reveals just a glimpse into the results of the survey. The full report turns up further good arguments in favour of startup-driven innovation. It also explores a number of other topics facing major corporates in the DACH region, including country- and industry-specific outcomes.