As businesses continue to struggle in a fast-paced digital environment, more and more major companies are launching physical “innovation centers” in hopes of driving innovation by leveraging an ecosystem of startups, venture capitalists, accelerators, vendors, and academic institutions.
This is the key finding of a new report released today by Altimeter Group and Capgemini Consulting. The report, “The Innovation Game: Why and How Businesses are Investing in Innovation Centers,” is based on interviews with 200 leading brands and uncovers that many traditional corporations are ill-equipped to rise to the challenge of digital innovation.
“For CMOs the message is clear,” said Brian Solis, principal at Altimeter Group, in an exclusive interview with CMO.com. “Your job as a chief marketing officer is no longer just about marketing. It’s about digital. It’s about technology. It’s about innovation, and you have to be plugged into that environment, into that network, because it moves faster than your culture back at your headquarters today, and it’s much more real.”
According the study, CMOs seem to be rising to the challenge, with 38% of the leading 200 companies having set up physical centers (61% of which are in Silicon Valley) to drive digital innovation. However, while innovation centers are receiving substantial investments from organizations, 80% to 90% of these centers fail because they aren’t properly focused. The report advises that organizations clearly define the purpose of these innovation centers and make sure they are aligned to the overall needs of the business.
The two main focuses of innovation centers are gaining access and exposure to the latest techonlogies (65%) and deeper understanding of customer needs (35%).
“Leading companies have built labs that they’re using to test out new technology, and they’re studying digital customers in real time so that they can take all of those insights back to affect marketing, sales, and service strategies,” Solis said. “Companies with innovation centers are so far ahead of any other organizations.”
So what’s actually happening within these centers? The majority of research and innovation happening within innovation centers match up precisely with CMOs’ biggest priorities: mobility (63%) and big data/analytics (51%). Of course, less mature technologies also have a place in the innovation center, with 3D printing (5%), virtual reality (13%), and robotics (13%) being explored as well.
“Emerging technology is being explored within innovation centers because for CMOs, the expertise that you have and expertise that you need are two different things,” Solis explained. “This is another big reason why a lot of these innovation centers are opening up. CMOs need people who could essentially hack the future of marketing and customer experience.”
According to Solis, organizations exploring the option of an innovation center must look within for someone to lead this effort. Most of the time, it’s someone who is focused on the future of customer experience. This could be the CMO or another executive.
“They really act like they would be that black sheep anyway,” Solis explained. “They do a tremendous amount of homework and rallying to get support for this. It usually does start with something like the Disneyland Silicon Valley tour as a way of bringing stakeholders for them to see just how different it is, and then using that momentum like judo to take that energy and apply it in a new direction.”
Click here for the report’s full findings, or view the infographic below by Altimeter and Capgemini, which summarizes the key findings: