The Thanksgiving holiday has given me the opportunity to consider the critical new role of collaboration in innovation. This role was emphasized to me during a single day, November 17, in Silicon Valley. In the morning, I attended the Cloud Computer Expo and speaker after speaker, from Cisco to HP, discussed how OpenStack software was critical to their success in cloud computing and was transforming cloud computing industry. OpenStack software to enable cloud computing is being developed under the management of the OpenStack Foundation in a collaboration of over 150 companies. The OpenStack project was started by NASA and Rackspace, but was recently reorganized as a foundation to take over the funding and management of the project www.openstack.org (as a matter of transparency, I represent the OpenStack Foundation). I think that such collaborations will be increasingly critical for the future because many business problems are too complicated to be effectively solved by a single company. For example, the auto industry has joined with the consumer electronics industry to form a collaboration for entertainment systems in automobiles, the Genivi Alliance http://www.genivi.org/.
At the end of the day, I attended the Sierrra Ventures CIO Summit cocktail party (yet another good reason to have Sierra Ventures as an investor) and Jed York of the 49ers was discussing the role of technology in the new Santa Clara stadium (it sounds like it will be spectacular). Yet he also focused on the need to encourage collaboration with the Silicon Valley community to take advantage of the possibilities presented by the technology infrastructure of the new stadium.
From cloud computing to sports, collaboration has become central to business success in the 21st century.
The Wall Street Journal recently noted the increasing importance of the corporate venture capitalists in the innovation ecosystem. http://blogs.wsj.com/venturecapital/2012/10/31/corporate-vcs-here-to-stay-this-time-study-says/tab/print/.
They base their conclusion on a recent BCG report which describes the change in corporate venture capital. http://www.bcg.com/media/PressReleaseDetails.aspx?id=tcm:12-120570. I have seen three of the four cycles in the BCG report and I agree that this cycle is different because of the critical role of innovation in large companies. Innovation has become essential for large corporations and corporate venture is a significant tool to manage innovation. As the BCG report notes in conclusion: “Considering the benefits that venture investing offers when best practices are employed, the real question is whether corporations can afford not to join the game.”
The BCG report focuses on the return of corporate venture capital, but another critical trend is the rise of Chief Innovation Officers (such as Debby Hopkins at CitiBank and Marie Quintero-Johnson of Coca Cola). These executives coordinate their company’s innovation strategy using tools from corporate venture to internal piloting, internal research and development, collaborations and mergers and acquisitions. The role of the Chief Innovation Officer was described in a very perceptive analysis by James Mawson in the September 2012 edition of Global Corporate Venturing www.globalcorporateventuring.com.