What is an Innovation Outpost?

Innovation is the source of competitive advantage for companies of all sizes. But what does that word really mean? Innovation isn’t only about exploring new business models based on the next disruptive technology. It’s about finding more efficient ways to execute the current business model as well. Enterprises are under constant pressure to be ambidextrous: to relentlessly execute existing business models while extending and exploring new business models that will disrupt industries, deliver value, and establish competitive advantages. To use the words of Business Innovation Factory’s founder Saul Kaplan in a recent Strategyzer Strat Chat, “companies have to peddle the bicycle of today’s business model while simultaneously exploring a portfolio of new business models for tomorrow.”

One of the more popular approaches that enterprises take to foster innovation is to set up research & development centers outside of their corporate headquarters. In fact, this trend has caught on with the top companies in the world. Per a recent white paper from Capgemeni and Altimeter titled The Innovation Game, 38% of the world’s top 200 companies have set up innovation centers. Over recent history, the majority of companies who have taken this approach find themselves setting up Innovation Outposts in Silicon Valley (SVIOs).

The objective of an innovation outpost (IO) is to accelerate innovation by monitoring new technologies, products and services, and/or companies as the next wave of disruption, and to take advantage of these innovations by integrating them into their go-to-market or by investing in startups. One of the issues we see is that setting up shop in Silicon Valley doesn’t make sense for every company. In some cases tapping into innovation ecosystems outside of Silicon Valley makes more sense. Based on the business, it’s goals and objectives, leadership mindset, and available funds, there are other ecosystems to explore.

Although Silicon Valley is the undisputed global epicenter of technology based startups, ecosystems like Chicago offer unique opportunities for enterprises to experiment with innovation outposts.

(Note: we recommend reading Evangelos Simoudis and Steve Blank’s thought provoking series on this movement.)

Why Chicago?

Moonshot Horizon is the innovation services company for digital products and services. We are based in Chicago – and are proud members of 1871. As such, we believe there’s an opportunity to put this ecosystem to work for our clients and the thousands of budding startups looking to leverage all that the Chicago startup ecosystem has to offer.

Here are a few statistics that support Chicago’s role as a major player in the technology startup scene – both globally and in the US:

Regardless of the statistic this much is clear: Chicago is significant in the startup ecosystem game and 1871 is it’s star player.

How does an IO work as-a-Service?

We help enterprises determine the best way to plug into the Chicago startup ecosystem as a source of innovation. Rather than go-all-in/invest in setting up a physical IO (which can be costly and difficult), enterprises can partner with Moonshot to experiment with what setting up an IO means. We help organizations think through the right model for building innovation as a sustainable capability within the organization (IO or otherwise) and execute it end-to-end by leveraging the principles of autonomy, creative tension, strategic alignment, and modular design found in the Rapid Innovation Model framework.

The value of IO-aaS is focused on our clients, but it doesn’t stop there: we’ve established a symbiotic relationship between our clients, the startup ecosystem and our service offerings.

  • Our clients:
    • Pinpoint trends and capabilities that could could lead to the disruption of industries in which our clients serve
    • Identify opportunities for our clients to be disruptive by entering adjacent markets to the ones they currently serve
    • Create and introduce new and disruptive products and/or services for new markets
    • Match speed of innovation with scale of execution with large existing resource pools
  • The startup ecosystem:
    • Global enterprises share industry knowledge, data, and technology with startups
    • In exchange, startups provide enterprises with their disruptive ideas, technologies and business models
    • Establish a symbiotic value exchange between 1871-based startups and our roster of global enterprise clients
  • Moonshot’s service offerings:
    • Incubate first-of-kind “blended” Horizon-3 services into our go-to-market
    • Leverage the investments in “horizon 2” capabilities
    • Identify opportunities for resource acquisition (products, services, people)
    • Leverage innovation outpost to optimize and transform Moonshot’s internal Ways of Working/Operations
    • Differentiate recruiting and attract top-tier talent

Wrap Up

We recently came across a great piece in the Harvard Business Review titled Big Companies Should Collaborate with StartupsWe’ve included an excerpt as it articulates the opportunity perfectly:

“Ironically, startups and established companies would both improve their success rates if they collaborated instead of competed. Startups and established companies bring two distinct and equally integral skills to the table. Startups excel at giving birth to successful proof of concepts; larger companies are much better at successfully scaling proof of concepts. Startups are better at detecting and unlocking emerging and latent demand. But they often stumble at scaling their proof of concept, not only because they’re often doing it for the first time, but also because the skills necessary for creating are not the same as scaling. Startups must be agile and adapt their value proposition several times until they get it right. According to Forbes, 58% of startups successfully figure out a clear market need for what they have.

In contrast, big companies often end up launching things they can make, not what people want. Successful established companies are focused on increasing scale and are often better at scaling proof of concepts than creating new products from scratch. They have huge advantages in procurement, distribution, and manufacturing, as well as sales and marketing advantages. But they have a challenge not only creating a proof of concept, but leaving it alone until it is ready to scale.”

There is a lot at stake in fostering the relationships between enterprises and startups. Moonshot’s Innovation Outpost-as-a-Service does just this.

Mike Edmonds

Mike Edmonds

Managing Director, VP Product