|By Marketwired .||
|June 17, 2014 12:01 AM EDT||
MUNICH, GERMANY -- (Marketwired) -- 06/17/14 -- Recognizing that innovation is the surest, straightest route to growth and superior business performance, companies are increasingly looking beyond internal research and development (R&D) and traditional mergers and acquisitions (M&A) to help them in their quest for game-changing new ideas, according to a new report by The Boston Consulting Group (BCG). The report, titled Incubators, Accelerators, Venturing, and More: How Leading Companies Search for Their Next Big Thing, is being released today.
Based on extensive research into 180 companies in six innovation-intensive industries, the report identifies the expanded suite of innovation discovery tools that these companies use to gain a holistic view of growth that encompasses core, adjacent, and noncore activities. These tools accommodate diverse methods of collaboration and start-up support and allow for varying levels of investment and rates of development in different spheres. Drawing on BCG's extensive experience in the field of corporate venture investing and related activities, the report offers insights into the most effective applications of these tools and describes how they can best be used in concert for maximum strategic advantage.
"Not every tool needs to be in use at every company," said Michael Brigl, a BCG partner and coauthor of the report. "But leading companies in innovation-driven industries are leveraging them to widen their search fields and discover innovations in corners of the business world that they had not previously explored."
An Inventory of the Innovator's Tool Kit
The report describes in detail the tools that leading companies in the automotive, chemical, consumer goods, media and publishing, technology, and telecommunications industries are employing in their search for innovation, including business incubators and accelerators, venture investing, and strategic partnerships. In 2013 alone, 19 of the 180 companies in BCG's sample established incubators or accelerators.
Incubators enable companies to support and collaborate with a handful of promising start-ups over periods as long as three years. In addition to investing equity capital, sponsoring companies offer start-ups access to their resources and facilities and have significant interactions with them both at the corporate and business-unit levels.
Accelerators, in contrast, enable rapid screening of a large number of start-ups focused on a particular technology or region. Support takes the form of a structured business-development curriculum for a fixed term (typically, three months). The start-ups invited to participate in the accelerator are usually on the verge of launching revenue-generating activities, and the sponsor promotes their development by granting them access to office space, technical support, high-quality mentoring, networks of other start-ups, and funding sources. In return, the company gains early access to promising ideas and companies. Interaction at the corporate and business-unit level is limited.
The most promising alumni of incubators and accelerators often become targets of the sponsor's venture-capital unit. Such units are typically the cornerstones of any corporate effort to access outside innovation. Best-in-class venturing units concentrate on accelerating the growth of their start-ups and their own business units, establishing clear guidelines that spell out the strategic needs of the business units and align venture search fields and targets with those needs. The search fields focus on areas where one or more of the business units can offer a start-up a competitive edge and a value creation plan.
Finally, a growing number of large companies are forming strategic partnerships to close knowledge gaps and drive value creation for both partners. The partnerships enable companies to leverage the assets of other companies to drive near-term commercial growth, address new customer populations, expand the market for existing or contemplated products, share distribution or sales channels, and fine-tune new business models.
Use the Right Tool for the Job
The most innovative companies are careful to employ the tools that most closely suit their overall company and business-unit strategies. Each company will have unique and specific needs and should design its suite with those in mind. As the innovators intensify and fine-tune their activities, the seeds they have already planted have begun to bear fruit, increasing their lead on the competition. Clearly, the train is leaving the station, and those that don't climb aboard may wind up under it.
A copy of the report can be downloaded at www.bcgperspectives.com.
To arrange an interview with one of the authors, please contact Eric Gregoire at +1 617 850 3783 or [email protected].
About The Boston Consulting Group
The Boston Consulting Group (BCG) is a global management consulting firm and the world's leading advisor on business strategy. We partner with clients from the private, public, and not-for-profit sectors in all regions to identify their highest-value opportunities, address their most critical challenges, and transform their enterprises. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with 81 offices in 45 countries. For more information, please visit bcg.com.
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Growth is not optional. It disproportionately drives shareholder returns, and it attracts and motivates talent. But achieving value-creating growth, while possible in any industry, is rarely easy. BCG's Winning with Growth initiative brings together leading experts on corporate strategy, innovation, globalization, M&A, business model innovation, marketing and sales, and organization to help clients chart their unique paths to value-creating growth. This publication is a product of that collaboration.
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