The. The big idea. How big corporations disconnect teams from the organization to connect, network and co-create with outside entrepreneurs.
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1 The corporate garage. The big idea. How big corporations disconnect teams from the organization to connect, network and co-create with outside entrepreneurs. 42associates.com
2 The world is filled with amble opportunities and great ideas. Unfortunately, when corporations grow older, the ability to create new ideas decrease. That is why leading companies such as Ford Motors carve out small teams and place them physically in some of the world s hot spots for innovation. They want to replicate the entrepreneurial spirit surrounding the start-up garage, which have given birth to a multitude of Fortune 500 companies such as Amazon, Apple, and Google etc. Big corporations cannot innovate. Big corporations are searching for the next big innovation to disrupt their industry. However, as organizations grow older, it becomes harder and harder to identify the next big thing. Only 71 companies remain today from the original 1955 Fortune 500 list. The traditional corporate strategy functions cannot find the next leapfrog ideas trough analyzing market development and consumer preferences. They have become too detached from the customers and too slow to respond to changing market conditions Likewise, the R&D functions have become limited to providing sustaining innovations to existing revenue streams and business models. The R&D departments react too slow to new technological improvements and tend to have centralized the research centers into a handful of excellence centers ignoring the fact that most innovations emerge in small companies. Somewhere along the journey, the courage and entrepreneurial spirit has disappeared. New and untraditional measures must be used. To regain that entrepreneurial spirit which most big corporations were founded upon in the first place they need to get closer to where the action takes place. Getting into the hot zone. To be part of such an ecosystem, big corporations needs to place themselves physically in the hot zone. The multi-facetted nature of today s innovation calls for replacing the model of placing corporate strategy and R&D departments at the center of innovation. 1/3
3 As a response, leading big corporations start so-called Corporate Garage projects in the search for new ideas and growth. For this part, Silicon Valley plays a significant role in the re-invention of the disruptive corporate innovation model. Across industries, big corporations are being disrupted at an unprecedented rate by a variety of innovations (e.g. technological; business model, go-to-market model etc.). Many of these creative disruptions are created by Silicon Valley-like start-ups. However, large corporates actually have ability to scale ideas from: - Global infrastructure Ability to use their existing footprint and carry new products through existing channels. - Deep pockets Access to funding through established channels. - Brand reputation Well-knows brands can carve the way more easy to gain trust among customers. - Launch capabilities Experience in commercializing new products - fast. The next generation big corporations have the will and patience to identify potential creative disruption themes and explore these together with the entrepreneurs and firebrands that know these areas the best in the natural inhabit. The winners of tomorrow dare establishing a Corporate Garage outside the existing organization pulling together the best team from both outside and inside the organization and letting them go with a clear mission, but not interfering while they do their job. It does, however, require that young entrepreneurs acknowledge that working for a big corporation does not equal selling out on the contrary, it mean a faster way to success. Ford Motor Co. is doing it. Ford Motor Co. has just opened a 25,000 square-foot innovation and mobility center in the backyard of Google, Yahoo and Facebook with the clear aim to accelerate its mobility and autonomous vehicle research. As of January 2015, the new center is home to 21 engineers, developers and scientists, but Ford expects to employ 125 by the end of Although Ford already has similar research centers in Dearborn and Aachen, Germany the Palo Alto facility was chosen because of its location and the ability to share ideas and connect to the local start-up environment. As President and CEO said in relation to the opening Its all about being in the right neighborhood because of the collection of companies one example is the partnership with Google s Nest. The Palo Alto team will be working on technology that allows people to drive a vehicle remotely. Dragos Maciuca, a former Apple engineer with significant experience in consumer electronics, will head the new center. One of the team s first challenges will be to come up with modular upgrades instead of having to buy an entire new car. Another example is the leading Nordic bank Danske Bank, which has just launched Project X headed by three former CEO s from three tech companies. With their own budget and mandate, they have 2/3
4 been given the task of defining the bank of tomorrow and to revolutionize the banks IT solutions leading the disruption, instead of being disrupted by others. The project has been initiated not by a fear of the other banks but what the future is going to look like, when mastodons such as Facebook and Google move into the traditionally well-protected banking industry. A key component of this project is to establish partnerships with non-traditional partners in the common search for tomorrows saving and payment solutions. Is it time to go back to the garage? - Have you launched paradigm-shifting innovations in the recent decade? - Do you believe that the next creative disruption will come from inside your company? - Do you have a clear picture of what it takes to disrupt your existing business model? 3/3
5 42 Associates Christian IX s Gade 7 DK 1111 Copenhagen K Tel.: cph@42associates.com 42 Associates Inc. 44 Tehama Street San Francisco, CA USA Tel.: sf@42associates.com 42associates.com
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