On the Frontier of Innovation

Essay, 2019
9 Pages, Grade: 4.0


Table of Contents

On the Frontier of Innovation

Theoretical Framework
Innovation Outposts in Silicon Valley
Innovation Theater
Prevention of Innovation Outpost Failures

Real-World Implementation
Successful Strategy Integration of Innovation Outposts
Failed Strategy Integration of Innovation Outposts
Opportunities and Challenges for 1 Atelier LLC



On the Frontier of Innovation

The Enterprise Garage stated, “Silicon Valley is the most innovative region in the world, making a huge splash around the world. In the past decades whole industries have either been created or destroyed thanks to companies that had their origin or came to full bloom in the Bay Area. The microprocessor, graphical user interface, web browser, smartphone, electric and autonomous vehicles, internet search, social media and so on had direct impact on the way we live (Enterprise Garage, n.a.).”

The chapters presented next provide a theoretical framework of Innovation Outposts in Silicon Valley, a definition of Innovation Theater, and prevention of Innovation Outpost failures. It follows examples of real-world implementations of successful and failed Innovation Outposts into company strategies. The last chapter presents the opportunities and challenges of 1 Atelier LLC and personal takeaways.

Theoretical Framework

Innovation Outposts in Silicon Valley

The next chapter presents a brief history of the development of Innovation Outposts, a definition of Innovation Outposts and its general functions.

Innovation Outposts have been established in 2010. It originated from Research & Development (R&D) Labs (Simoudis, E., 2015).

According to McKinsey, “An innovation outpost is a dedicated unit set up to be entirely separate from the historical culture, decision-making bureaucracy, and technical infrastructure of the main business. It creates inspiring products that illuminate the digital art of the possible (sometimes with questionable economic impact), and hatches new business models in informal settings such as over football tables. This path has traditionally been popular as a first move, but is now less common (Bender, M. & Willmott, P., 2018).”

Based on the previous paragraph, a short version of Innovation Outpost is - it is an organizational structure that is placed at the innovation center of startup ecosystems such as Silicon Valley to adopt the frenetic pace of innovation (Simoudis, E., 2015). A startup ecosystem is “a concentration of interconnected companies that both compete and collaborate (Simoudis, E., 2015)”.

An Innovation Outpost suits one main purpose, the observation of the startup ecosystem in the Silicon Valley to “sense” new innovative technologies and companies and to create new products or services by taking advantage of these innovations (Simoudis, E., 2015). The monitoring of the innovation cluster is essential to foreign companies due to the following reasons:

(1) The Innovation Outposts brings the company closer to where the innovations happen and support the discovery and monitoring of trends.
(2) The Innovation Outposts support the search for local talent and for products and services that could be invested in, partnered with or acquired in the Silicon Valley.
(3) The Innovation Outposts demonstrates a company’s openness to innovation and the way of thinking.
(4) The company could discover innovative products or services that could develop a threat and finally lead to a disruption of the corporate company.
(5) The company could discover innovative products or services that could disrupt the whole industry or market the corporate company operates in.
(6) The company could discover innovative products or services that could be created and could invent new markets (Enterprise Garage, n.a. & Blank, S., 2015).

Innovation Theater

The next chapter presents a brief introduction to Innovation Theater as a form of Innovation Outposts (Simoudis, E., 2015).

Steve Blank invented the term ‘Innovation Theater’. (Goh, F., 2017). Innovation Theater ”has been used to describe companies trying to look innovative to one or more of their various stakeholder constituencies – essentially putting on a show for appearance’s sake (Evans, N., 2017)” in form of press releases, hiring a chef or launching accelerators (Evans, N., 2017 & Simoudis, E., 2015). This form is likely to happen in industry categories such as hospitality, transportation, and finance. Airbnb became more valuable on paper than Hilton Worldwide within seven years, and Uber surpassed Ford and General Motors within six years, to name a few examples (Griffith, E., 2016).

Abbildung in dieser Leseprobe nicht enthalten

Figure 1. Innovation Theater (Kuznicki, M., 2018).

Prevention of Innovation Outpost Failure

The next chapter presents causes why Innovation Outposts fail and how to prevent a failure of Innovation Outposts.

The failure of Innovation Outposts is caused due to the following reasons. Innovation Outposts could fail when they reach the form of Innovation Theater and are only used for publicity purposes. The failure of an Innovation Outposts could be determined even before the implementation because it is not established as a long-term commitment and does not get the required executive support. After the implementation of the innovation lab, it could fail due to missing transition between employees of the headquarter or even whole isolation of from the rest of the company and the innovation outposts and lacking further activities after the discovery of an innovation. During the work at the Innovation Outpost, there is no building of a local network and no development of an innovative and entrepreneurial spirit (Enterprise Garage, n.a. & Di Fiore, A., 2017).

The development of an end-to-end corporate outpost strategy is essential to avoid a failure of the Innovation Outposts. The strategy does two paces simultaneously: (1) ‘Sense and Capture’-approach and (2) ‘Integration and Propagation’-approach. The second method is the critical one since it reacts to the identified threats and potential opportunities of the startup ecosystem and ensures that the value is transferred to the company.

(2) ‘Integration and Propagation’-approach

The approach consists of three objectives. The first objective ensures mapping out local relationships and building social capital. It avoids the risk of losing the social capital to the local team. The second objective is the capturing and evaluation of intelligence and insights from the startup ecosystem by codifying and sharing the information through formal processes and protocols. It can be done through a company newsletter or a blog on the intranet organized by the outpost team. It avoids the risk of losing valuable information or that it stays within the Innovation Outposts. The third objective is the acceleration of the deal-making process. In a hyper-competitive environment, the deal-making processing between the Innovation Outposts and the company has to be completed much faster. It requires a full integration of the local team with the company’s deal processes. Due to delays, the company could miss out opportunities (Simoudis, E., 2015 & Di Fiore, A., 2017).

In general, the company has to implement a two-sided model to ensure a return on investment. The model needs to be characterized by integration and propagation (Di Fiore, A., 2017).

Real-World Implementation

Successful Strategy Integration of Innovation Outposts

The next chapter presents company partnerships, 1) Walt Disney & Verizon and 2) Lending Club & Google, which integrated successfully an Innovation Outpost into their strategies.

Walt Disney Studios partnered with Verizon at Disney’s Studio Lab to consider the possibilities of 5G connectivity. The studio lab was launched in 2018. Since then, it has discovered new technologies such as drones for location scouting, virtual reality for movies and collaboration tools. The next-generation of wireless broadband offers Disney to produce movies that are in remote locations and turn the traditional movie poster in theater lobbies into digital promotional assets. Verizon can test its new technology on media and entertainment applications. Digital movies can be downloaded within ten seconds with a 5G connection instead of within five minutes with a 4G connection (Roettgers, J., 2019).

Lending Club partnered with Google to make low-interest financing processes easier for eligible partners of Google. It allows Google to purchase loans which will be serviced by Lending Club by investing its own capital into partner networks to grow its business. Google gets access to Lending Club’s automated credit verification service. Google’s business partners benefit from low-interest financing and no fees. The partnership is part of Google’s incentive program for partners. They have started with a pilot program that will be offered to reseller partners in the United States (Lending Club, 2015).


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On the Frontier of Innovation
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ISBN (eBook)
frontier, innovation
Quote paper
Friederike Berg (Author), 2019, On the Frontier of Innovation, Munich, GRIN Verlag, https://www.grin.com/document/505692


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