Drive Corporate Innovation with Crowdfunding

This work by Marcelo Bernardes (@marcelobern) was originally posted on LinkedIn.

I have been tinkering with the concept of using crowdfunding to drive corporate innovation and I believe it can be done. While companies like IBM are experimenting with an internally focused corporate crowdfunding approach (HBR, Time), I believe a customer focused corporate crowdfunding approach can deliver far more value. So, let me share with you how you can unlock this value in your organization.

Standing on the shoulders of giants

In the article from Henry Chesbrough, he explains that: "You have to fight – and win – on two fronts (both outside and inside), in order to succeed in corporate venturing". This internal and external duality is a natural way to describe the corporate entrepreneurship challenge, and it is complementary to Peter F. Drucker's five simple questions (Amazon):

"What is the mission?
 What are our results?
 What is our plan?
 Who is the customer?
 What does the customer value?"

Please note that in the context of Henry Chesbrough's article, corporate venturing refers to: "new ventures inside a company", also known as intrapreneurship or corporate entrepreneurship (Wikipedia).

Borrowing a page from the startup play book

For a startup, crowdfunding (Wikipedia) can deliver the following advantages (Fundable, MDDIonline):

• Funding: reduce the financial risk
• Market validation: will people buy it?
• Networking: identify potential investors
• Free publicity: potential media coverage
• Fail quickly: avoid "backing the wrong horse", and learn in the process

Now, let us explore how these points should translate to the corporate (or enterprise) crowdfunding world.

Winning the war in the external front

The war in the external front is won by addressing the following Peter F. Drucker's questions:

"Who is the customer?
  What does the customer value?"

And so, corporate crowdfunding should:

• Stack up projects against each other to gauge customer interests, needs, and desires of a much broader audience.
• Validate the market for innovative projects, and identify potential customers, before any significant investment is made.

For more information about current market research practices and resources, check this Inc article.

Winning the war in the internal front

The war in the internal front is won by addressing the following Peter F. Drucker's questions:

"What are our results?
  What is our plan?"

And so, corporate crowdfunding should:

• Collect enough field data to prepare or fine-tune a business plan, setting more accurate expectations of project results.
• Identify sufficiently motivated customers to "share" the project cost, thus reducing the project risk early on.
• Gather data to prioritize projects, allowing the organization to focus on those projects more likely to appeal to the broader customer base.
• Lead to a better understanding of the customer needs, helping identify critical cross-functional resources early on.

For more information about challenges associated with innovation within corporations, check this WSJ article or @InnovateWithin.

Success depends on flawless execution

Due to the very public nature of a crowdfunding effort, those looking to implement corporate crowdfunding should avoid:

• Intellectual property exposure: consider engaging your legal team and filling the necessary patents up-front.
  
• PR backlash: failure to deliver on such public commitments is likely to lead to a very negative press and social media repercussion (check this previous article for examples)
• "Too much customer focus": what would have been the customer feedback if five years ago Amazon had asked their customers about possible interest to buy cloud based services? So, it is important to use the corporate crowdfunding data to complement your strategic planning, rather than replace it. Specially when pursuing disruptive innovation and opportunities to break into new customer segments.

While this approach can be used for both B2C and B2B scenarios, B2B corporate crowdfunding should address specific needs, which I will cover in a future article.

What is your take? Can corporate crowdfunding fuel corporate innovation? Are current market research processes able to address these new trends? Feel free to use the comment box below to share your experience and point of view. And please follow me, if you would like to be automatically notified when I publish new articles.

Read next: Leadership: attract & retain millennials or fail!

 

This work by Marcelo Bernardes (@marcelobern) is licensed under a Creative Commons Attribution 4.0 International License.

(Image courtesy of Toa55 - FreeDigitalPhotos.net)