More and more companies are leveraging the start-up ecosystem in global tech hubs to boost their own innovation in an increasingly cutthroat ICT market.
According to a recent report by analyst company, Altimeter Group, and Capgemini Consulting, there is an increasing trend in companies looking to launch innovation centres in major global technology hubs like Silicon Valley.
The report, The Innovation Game: Why and How Businesses are Investing in Innovation Centres found that companies want to leverage the ecosystem of startups, accelerators, vendors, venture capitalists and academic institutions.
Altimeter group principal analyst, Brian Solis, believes that, for the world's largest organisations, innovation has never been more important - or more difficult.
"Without constant innovation, once dominant players are finding their tried and trusted paths to innovation are now dead ends," he said.
The two research companies studied the innovation centre efforts of the largest 200 companies globally across five sectors including automotive, financial services, consumer products and retail, manufacturing and telecoms.
Capgemini global chief digital officer, Fernando Alvarez, said, “By combining the culture and approach of innovation centres with the budget fire power and access to customers that they enjoy, traditional organisations have an excellent opportunity to innovate and re-energise their capabilities.”
The report found that 38 per cent of the leading 200 companies had set up innovation centres in a global tech hub with 61 per cent of companies establishing one or more centres in Silicon Valley. The most popular areas of research remained well-established technologies; 63 per cent mobility and 51 per cent big data and analytics.
“Many organisations are solving the issue of embracing innovation by partnering with or acquiring technology startups, but too often this is a sole focus. A more equal balance between external and internal thinking is required," Capgemini global head of research, Jerome Buvat, said.Read more: Rackspace names startup competition finalists
"Innovation centres are proving an effective means to cultivate the agile startup mentality needed to remain at the forefront of the market, but it is clear that establishing an effective centre has many challenges.”
Particular strategies to cover these challenges include the creation of a cross-functional team, operating with a degree of budgetary freedom, yet staying aware of when to abandon a project, and ensuring an optimal focus that is not too futuristic nor too close to current business operations.
According to the report, implementing a lucrative centre remains challenging with a failure rate as high as 80-90 per cent.