Study: Corporations on the Track of Start-ups 2021

Study: Corporations on the Track of Start-ups 2021

From playing fields to digital business units and innovation platforms

News

The digital innovation scene is as lively as ever

Even the Corona Pandemic has not changed that. However, the big revolution has failed to appear. While five years ago, Digital Innovation Units were seen as comprehensive solutions for everything, today, their scope is defined clearer and more precisely. Only a few units added noticeable value in earnings to their parent company. This is the result of the study “Corporations on the Track of Start-ups 2021” by Infront Consulting, a subsidiary of KPS AG, and the economy magazine “Capital”. The study is the largest of its kind in the German-speaking area. It shows how well-established corporations and medium-sized enterprises can foster and manage innovation using dedicated innovation units.

The title “Best Digital Innovation Unit 2021” was awarded to “Körber-Geschäftsfeld Digital”, “Wayra” (Telefónica Innovation), and “EnBW Innovation”.

For the fifth time, experts from Infront Consulting and Capital have examined the results of Digital Innovation Units by German corporations and medium-sized enterprises. Both, successfully commercialized innovations close to the core business, as well as outside the core business were evaluated equally:

  • Core business innovation at the borders of today’s business activities, to expand business in existing markets
  • Non-core business innovation, outside of today’s business activities, to tap new markets

The analysis was conducted using an extensive online questionnaire, as well as personal interviews with the Head of the respective Digital Innovation Units. Furthermore, the managers responsible in their parent companies (E.g., CEO, CDO, Strategy Manager) were also questioned. Additionally, a ‘post mortem analysis’ was conducted this year, where closed or re-integrated units were examined.

Main Findings

The study results show the many advances made during the last years, as well as the hurdles needing to be avoided. While the best units are already generating 8-figure revenues each year, other units never exceed the prototyping phase. The key findings of this study include:

The “keyboard of innovation vehicles” further developed – and the best Digital Innovation Units know precisely how to play on it. Self-development, venture clienting, and start-up minority shareholding are currently the most-used innovation vehicles. Traditional start-up accelerator programs have lost parts of their relevance. However, company building and Buy & Build gain in importance.

A clear trend towards KPI-driven management: While Digital Innovation Units were mainly launched without clearly measurable goals, KPIs are widely used for performance measurement today. The expectations are exceptionally high for larger units, which are expected contribute towards the parent company’s financial performance.

Digital Innovation Units have become less funky and have shifted closer towards the core business.  This includes both topic selection and closer cooperation with business units, support functions, and an increased alignment with the company’s strategy.

The Corona Pandemic has not impacted the popularity of Digital Innovation Units. A large wave of shutdowns has not occurred. In fact, the opposite could be observed: Digitalization and innovation have gained even more importance and were prioritized further.

Observing closed units has made clear: Closing does not equal failing! Reasons for shutdowns are diverse and often intertwined with strategy- and management changes in the corporation, missing or incorrect goal setting, structural hurdles, as well as lacking success in scaling the Digital Innovation Units.

The success of a Digital Innovation Unit also comes and goes with its strategy alignment and form of organization. Dr. Felix Lau, Lea-Theresa Münch, and Thomas Sindemann, the study’s directors, have identified two success patterns, differing regarding business purpose and organizational implementation:

  • Digital Business Units focusing on the purpose of scaling, advancing the core business in the area of digitalization, running in parallel to existing business units
  • Innovation platforms with a broader innovation and transformation purpose, bundled in a hub, as an accelerator for innovations within and outside the core business. 

 

The authors’ suggestion derived from this study is: “The blueprints are available. Now, all it takes is courage and strategy, but also endurance, to emerge as a winner in the increasingly fast world of digitalization.”

Digital Lab Award 2021: Germany’s best Digital Innovation Units

Using a two-stage evaluation procedure, the study found the best Digital Innovation Labs in the German-speaking area. These were honored with the Digital Lab Award 2021 in mid-June 2021 by Infront Consulting and Capital. This year’s winners:

Core business innovation

Service

  1. Wayra, Telefónica Innovation
  2. ERGO Innovation & Digital Transformation
  3. SAP.iO und VINCI Energies Digital

Industry

  1. Körber-Geschäftsfeld Digital
  2. Heidelberg Digital Unit
  3. Henkel dx Ventures

Non-core business innovation

Service

  1. EnBW Innovation
  2. Lufthansa Innovation Hub
  3. Greenhouse Innovation Lab für Gruner + Jahr und die Mediengruppe RTL

Industry

  1. Körber Geschäftsfeld Digital
  2. Henkel dx Ventures
  3. Prismade – FutureLab of edding

Background information

“Corporations on the Track of Start-ups 2021” was conducted by the strategy- and management consultancy Infront Consulting & Management, in cooperation with the economy magazine Capital in the first half of 2021. 49 units participated in the study. It was published for the fifth year in a row in 2021.

  • Find the complete study here.

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