A term that is growing a lot of traction around the business world is “innovation accelerator.” What specifically is an innovation accelerator, and how can using this business model help a company?
Think of an innovation accelerator like this: Someone has an idea that just might work for your company. This might be a way to increase your market share and increase your bottom line. But there is no data available. Maybe this will be the kind of idea that makes everyone looks great, but to try this new way of doing things (innovation) will involve new training, new machines and materials; basically, it will be expensive.
What is a company to do? An innovation accelerator allows corporate teams to go through the process of starting a new process and giving a great idea a “tryout.” These teams will all try what they view as the best practices for making this effort a success, and, at the end of the process, the company will have the data they need to either move on with a project, or to end it.
Using an innovation accelerator allows even companies that are reluctant to move forward without the appropriate data to be on the front lines of innovation. However, they can also pursue corporate innovation, but at the end of the innovation accelerator process, find that the idea will not be suitable for their needs. The upside to knowing that the idea isn’t right is that it will save the company time and money — they will have a decision on an idea and spend much less than they would with a full commitment to a failed idea.
Using these multidisciplinary teams that will be working as though they were an independent startup allows companies to either accelerate projects that work or kill projects that will not work. The process allows the people on teams to learn new skills and new ways of thinking about things, and keeps talented employees busy, focused and happy. This allows a company to retain quality employees.
Simply put, the innovation accelerator definition can be summed up this way: it’s an effort to develop a business idea, test that idea, and essentially treat the idea as a new business startup, pursuing the idea or ideas over the course of a few months. At the end of this period, the teams involved will determine if the idea will work.
A benefit to innovation accelerators, in addition to providing data and experiences that will be important in predicting if an idea or a process will work, the teams will also understand what decisions and processes they made worked, and what decisions caused pitfalls or perhaps even failures. Perhaps the answer to “What is a business accelerator?” is that it is a process that allows a company to discover what works, what won’t work and ultimately what will allow them to make more money with a more nominal investment in the process.
It seems that every time a person turns around there is some sort of effort to find institutionalized funding for a startup. But the idea of a startup accelerator business model is actually different from most other startup models. According to the Harvard Business Review, startup accelerators work.
A startup accelerator helps a company that is in its early stages with rapid growth. Startup accelerators provide support with education, mentorship, and financing over the course of a few months. The goal is to take information and experiences that would have required years into just a few months of learning through hands on experience.
At the end of the timeline, the startup has a demo day in which they show a product and/or they provide lectures and other informational opportunities so that potential investors can understand the need for the startup in the market, and what they have learned in the course of their innovation period to show why they believe they will be a success in the future.
One of the important difference between innovation accelerators with startups and other supporting programs for startups is the amount of time spent on the project. Incubator programs can last up to five years and angel investor programs can have an indefinite duration, innovation programs are from three to four months.
There are differences between an innovation incubator and a startup accelerator.
Innovation incubator is focused on innovation of a company. The “parent” company already exists, so the innovation incubator part of the effort is to find out what can be done to create innovation. This might be creating a new effort the company will work at. It might be changing how things are done in the future. It might be getting involved in more markets. The effort will be to offer an innovation or innovations over the status quo.
A startup accelerator is more interested in starting something new, at least new for the company. They may have an original idea for a service or a product, or they may have a different way of doing something that they think something will work. The startup accelerator will be mentored by someone in business, they will receive some education, and they hope they will receive financial assistance.
Techstars is a company that assists startups through a startup accelerator. Techstars has potential accelerator groups apply to the company, then, if selected, for 6% in stock options, they receive some funding up front, as well as other services. Techstars has three main phases of their assistance to startups, mentorship, growth, and investment. Then, at the end of the program, they have a demo-day when potential investors can see the new people on the business scene.
An advantage for companies to use an innovation accelerator is it provides an opportunity to follow a structured process to develop a new venture. Sometimes, taking chances is the hardest thing for corporate America (New Coke?), yet making a change can also be the smartest thing a company can do. Netflix went from mailing discs through the mail to streaming content online. Somehow Netflix new that streaming would work, and one thing they could have done (and maybe did) was use an innovation accelerator for corporates.
The process allows teams to run experiments that they have designed. The experiment will either show them that the innovative idea will work, or that it will not work. This is a controlled experiment that will show them how desirable the potential change would be, how viable that change would be, and if it is even feasible to do it. Mistakes will probably be made along the way, and if it is determined that a launch of the new idea should be made, the mistakes will be as important as the successes.
There is a lot of competition to get into corporate accelerators. Some programs have an acceptance rate of 1.5%, meaning 106 applicants are accepted when 7,000 applied. The top t0 corporate accelerators, based on the number of successful exits, are:
Y Combinator from Mountain View, California. This group has a valuation of $100 billion and has helped Airbnb, Dropbox, Reddit, Twitch, Weebly, and many others.
500 Startups from Mountain View, California is an early stage venture capital fund which has invested in startups in at least 60 countries. They have worked with Credit Karma and have made sales to Google and others.
Techstars from Boulder, Colorado hand has helped get 134 startups on the road business and has a value of more than $8 billion to help these startups get moving.
Plug and Play from Sunnyvale, California supports their inhouse startups with from $25,000 to $500,000 dollars and has raised more than $7 billion for its startups.
Mass Challenge from Boston works around the world and its startups, which focus on Biotech and Fintech, have created 80,000 all around the world, including in Great Britain, and Israel.
SOSV from Princeton, New Jersey works on creating digital products, but also real products too. They have access to labs that make it a good place for food and biotech startups.
Startupbootcamp from London has startups around the world, including Singapore, Mexico City, Mumbai, Dubai, Amsterdam, and other locations. The average startup they work with begins with 1.16 million Euros.
Internet Initiatives Development Fund from Moscow specializes in cyber security, educational technology, and big data.
Wayra from Buckinghamshire in the United Kingdom is backed by large telecommunications enterprises, and has 45% of the groups it funds are women.
Start-Up Chile, from Santiago is one of the fastest growing accelerators in the world. It was started by the government in Chile and funds all kinds of startups.
Another innovation startup is the World Food Programme, Innovation Accelerator WFP. The purpose of this project is to help innovators with good ideas to end global hunger. They view their innovator program as a way to test solutions to world hunger in an agile way. They can find out what works and what doesn’t without making hundreds of millions dollars’ worth of investment that won’t work, and will still leave people hungry.
A corporate innovation platform allows quick moving and creative ideas so any company can grow and improve. Stagnation may work for a while, but society changes and society’s habits change. It is up to corporate America to work to stay up with those changes, or they will be left behind. Corporate innovation tools can ensure that ideas are worked through to not only find out what works and what doesn’t, but to also find out why things work, and why they don’t. It is a way to develop a data set and an experiential set to find future success.
At High Alpha, we believe that the venture studio model is the best solution for overcoming the innovator’s dilemma. We can help you deploy High Alpha’s venture studio playbook to create a permanent, productive innovation function that creates a steady stream of startups focused on a specific brand, industry, or vertical.We work with partners to solve their toughest innovation challenges via startup creation. Our proven process helps companies quickly generate strategic and financial value by generating, validating, and launching new ideas through High Alpha’s Sprint Week process. In just a matter of months, we help you launch and scale a venture-backed startup.