The mysteries of CI

In the wider sense, CI is a managerial innovation² which, as I will show, is complex in that it mobilizes numerous internal actors in a large group and may “consume” those who are responsible for it. I use the term “consume”, at the risk of objections that the term is too strong. The approach demands a lot of energy and skill on the part of leaders. These latter must in fact open the minds of actors such as managers and collaborators towards new practices. This entails re-inventing the fabric of innovation, in fact creating a whole new setting, in the context of large groups as firms where the context for action is necessarily bureaucratic with little appetite for risk-taking. Start-ups are symbols of risks and uncertainties. CI may risk being perceived by some internal actors within large groups as a Trojan horse. In fact, CI brings start-ups into the citadel of the large group, thus disturbing the tranquility of its inhabitants. The citadel within its high walls is in fact a place which has accumulated the spoils of war over long years. The paradox is that it is still these same large groups who have wanted this to happen, for whatever visible or invisible reasons.

Top and middle managers and collaborators, although realizing the urgent need to adapt to the changes forced on us by digital technology, are however not natural facilitators and sometimes, unwittingly, act as brakes on conversion and mobilization. Paradigm shifts in work are scary, and this is nothing new. The awareness that the traditional firm and its business model are besieged by a myriad of innovating start-ups, and that it is necessary to have a dialog with the latter, is certain. However, between awareness and implementation, there is a path to be trodden. To this must be added that, for many, it is easier to comment on things for appearance’s sake, than to do them or to contribute to doing them, let alone helping to do them. Handshakes between start-ups and large groups, with photographers at the ready, are much more common than the establishment of real alliances.

The structure of CI, its manager and its team, will have to face many traps, tests and uncertainties to find their place and to try, despite everything, to reach the goal: to get their large group to work with start-ups. The leaders of CI, if they wish to succeed in their mission, therefore have the heavy task of being aware of the need to simultaneously manage the social and organizational aspects of their company’s environment. For this reason related to efforts at deployment, the sustainability of CI, the umpteenth reinvention of OI, is to this day still not certain without very broad awareness.

Confronted with so many statements, the reader will doubtless quickly wonder who the author of this book is. Also, before going further, I would like to share with you, transparently, my background; some facets of which, no doubt, have motivated me to carry out this research that is so time-consuming and sometimes of such a delicate nature.

Manager and researcher… and why not?

I must admit that, as a practitioner of open innovation and the leader of a corporate incubator in a large French group with international reach, I have often wondered how to accomplish my mission and to implement this structure. Numerous questions arose, and I have spoken to, conferred with and seen many people in order to forge my own opinion and to act. This has worked rather well, but I did not understand why and how I was acting. As I recall, I had two months in which to launch the CI. It is difficult to look at yourself while in the process of acting! Very soon, I wanted to take a useful step back, and naturally thought about writing up this reflection in an academic framework in parallel with my mission in the company. I like to say that it puzzled me a lot: how had I done what I did, and how could I do better subsequently? This first reflex, to combine the professional and personal, was implicitly guided by my desire for coherence, or in any case my belief that research work, just like my own job after all, could constitute one thing and even everything. This rapidly forged conviction was moreover supported by certain acquaintances whom I then had in the academic community, as an occasional teacher during my periods of leave.

In any case, for reasons I do not wish to go into here, I then restricted this reflection to the purely personal level. Reflections, interpretations and opinions are only those of the author of this book at a personal level, and I want to clearly emphasize this. When time is made up – very fortunately as well – of evenings, weekends and holidays, it can then become elastic for those who want it to be. This time has been and is very useful for me. I thus began, in a personal capacity, my research work and considered this approach to be a great opportunity to observe more “scientifically” the work of my peers, for the benefit of both academic and managerial realms.

Just like any demonstration based on empirical observation, I believe it is right to honor the CIs of my peers, who also convinced me that there was a problem to be solved. In any case, I, just like my counterparts in other major groups, had one in particular: we had launched our CI, but exactly how were we going to do it and transform things…? To our knowledge, the fluid start-up–large group relationship has not to this day been recognized, regardless of the context in which it is expressed. This is at least one of the few benefits provided by the countless commentators on start-up–large group relationships. Everyone can thus agree on the existence of a problem to be solved.

Peers in CI

The major feature of the first example of a corporate incubator (CI A) relates to the way in which it emerged. It was the direct fruit of the imagination of a CEO, who after its birth acted somewhat paternally towards it. Two other features may be mentioned. The first involves the youth of the incubation set-up at the moment when we began our discussions. The CEO and his ExCom took some time to decide on the launch. Far from being a sign of indecision, this was in fact a reflection of a carefully considered dynamic. I explored this case in its phase of emergence. Another feature relates to the diversity of missions that this incubator aims to undertake, under the impetus of this same CEO. This case thus presents three special features, with the CEO as the central lever. Its context is at the same time managerial (the “thing” of the leader), temporal (young CI) and concerning ambitions (the breadth of its missions). These are all fascinating aspects of reflection, to the extent that we might realize that, just like the approach of OI in the wider sense, CI may reveal itself to be plural. Different missions and ambitions may result in types of work which are themselves different.

The special feature of CI B relates to the fact that it is an incubator with quite considerable means, and at the same time it seems to face particular competition within the large group which supports it. It is a contrast which I find very interesting, as it again illustrates a personal belief according to which there is no correlation between available means and the ability to control one’s environment. Controlling one’s environment, or in any case avoiding submitting to it, supposes, on the contrary, an understanding of the mechanisms linked to the approaches which one implements. CI B shows us that money does not buy happiness when you want to re-invent the relationship between start-ups and the large group, in a framework of important internal competition.

To present the case of CI C, I will talk about “the company” to refer to the immediate environment of the CI, and “the group” to refer to a wider framework of which the company is part. In fact, this company was bought by a large international group, which is well-known and recognized for innovation. This company itself had a culture very much oriented towards innovation, and already practiced certain forms of open innovation – mainly of the inbound innovation type – when the decision was taken to launch a CI. To what extent would this multiculture of innovation favor the adoption of CI? This motivated me to consider this case, about which I would have said in advance that this fertile soil would doubtless comprise a facilitating element. I then supposed that this context would no doubt allow me to confirm a preconceived idea: after all, in a multicultural company which, furthermore, is already very inclined towards open innovation, it is easier to work with start-ups. I was then taken by surprise by this case, which confirmed that the work of introducing start-ups within companies remains something that requires decided effort. It seems to be something for which one almost needs a vocation.

The case of CI D provided important lessons in the context of my research, as the CI is led by different areas of the company involved, and it also developed intrapreneurship, beyond entrepreneurship. In contrast with the preceding cases, intrapreneurship is therefore not a wish or an aspiration, but a reality in addition to the reality of entrepreneurship. These highlights – structural distribution, entrepreneurship plus intrapreneurship – make this case a very interesting example to analyze in detail. We can doubtless imagine that these two-headed creatures are not neutral with regard to the managerial work to be carried out to facilitate the adoption of CI D.

As for CI E, note that it presents a configuration that I had never observed up to then. In fact, everything suggests that this CI is run as a start-up, which continuously and very quickly adapts its arrangements over time, to the point where we can justifiably speak of a pivot. This term “pivot”, as most insiders know, is often used when we speak of a start-up which changes its business model in the wider sense. The case of CI E is thus unique and fully reflects how adaptation, that is, the manipulation of the characteristics of a structure, constitutes the motor of managerial work. Adaptation expresses the translation in situ of the mechanism, in particular for its appropriation by internal actors of the large group. It is this aspect on which I will insist in the analysis of this case, and which led me to fully regard CI E as a real start-up.

I hope to have whetted your appetite for discovering a slice of the history of the five Trojan horses which these CIs comprise, and the implementation difficulties associated with them. It is also appropriate to expand somewhat on my intentions in the context of this introduction. The difficulties of which I speak are, on the one hand, not specific to these CIs, and on the other hand, not without solutions.

CI is a rehash of OI

We note that in the field of innovation, large groups have long-practiced pooling of resources and expertise by opening a certain section of their laboratories to third parties or external partners, so as to take advantage of collaboration and to create value for the different stakeholders. Producing innovation is expensive, at least in terms of time and resources. Collaboration with external partners may represent several advantages, in particular providing new knowledge, or cost savings depending on the project, as proposed in the seminal work of Chesbrough in 2003 on the concept of open innovation (OI).

Over the last decade, we have also witnessed a democratization of this notion of OI, to the point where the latter is today an umbrella term which refers to different practices. Among the reasons which contribute to this extension of meaning, we may cite the phenomenon of collaborative social networks and other digital platforms which have appeared in recent years, allowing people coming from different companies to share and to innovate together. We may even speak of a state of mind or a culture of OI (Duval, Speidel, 2014; Dabrowska, Savitskaya, 2014).

Concerning OI, the end of the 1990s (almost 30 years ago now) were characterized by the rapid development of structures that we describe in the wider sense as “incubators” of start-ups, as much in the United States as in France and in the rest of the world. Incubators are a relatively recent object in the field of management, and a few clarifications are necessary. The AFE³ describes an incubator thus: “a support structure for the creation of companies, an incubator has the goal of transforming an innovative idea into an efficient company”. This definition is, however, quite restrictive, as it assimilates an incubator and thus incubation to the transformation of an idea into a new company, which is far from being an end in itself and may be widely disputed.

Until the 2000s, the theme of “Incubators and support systems for entrepreneurship” (Filion, 1997), including incubators, was little studied, and some argue that there was no universal and common definition for the different types of incubation structures (Fayolle, 2002; Hackett and Dilts, 2004). This is all the more clear as social factors relating to nations as well as to available resources may come into play (Lalkaka and Bishop, 1996; Kumar and Kumar, 1997; Cariola, 1999), as do the activities, goals and people associated with an incubator (Albert et al., 2003). Specific adaptation work must therefore be carried out on each occasion by the leaders of these structures. In the context of my research, I propose a definition which, I hope, will summarize our knowledge to date.

The reality of OI, like the emergence of the dynamic of incubation of innovative solutions issuing from start-ups, has contributed to anchoring even more the context of large groups in business ecosystems (Moore, 1993, 1996, 1998, 2006; Iansiti and Levien, 2004; Peltoniemi and Vuori, 2004; Gueguen, 2008; Isckia, 2011, 2014). These ecosystems are populated with heterogeneous actors, generally blessed with complementary skills (Ben Letaifa, Gratacap and Isckia, 2013). The business models of the large groups are permanently decomposing and recomposing, under the influence of phenomena such as convergence, the arrival of new actors and in particular innovative start-ups which dream of nothing but reinventing the rules of business. The large groups are led to collaborate (Lawrence et al., 2002) with these start-ups through dedicated structures: CI, our famous Trojan horse, launched by the major groups themselves.

In the entrepreneurial literature, CI – for which I offer a definition here – is often a structure which arises to carry out tactical or strategic alliances with start-ups or even direct investments (capital acquisitions) in start-ups. CI thus characterizes a form of open innovation, today currently practiced in large groups but which still remains little studied in depth, as we previously noted.

I have chosen to concentrate on this particular form of OI, that is, CI, as the latter requires collaboration with many actors both internal and external to the company to carry out its primary mission: reinventing the fabric of innovation. To attain its goal, the leader or manager of the CI must necessarily forge close links with other actors within the company, in the face of numerous socio-organizational difficulties. This requires the manager of the CI not only to carry out their task of supporting start-ups, but also in consequence to stimulate and encourage the production of innovations produced by these same start-ups, to the benefit of the large group (and of the start-ups, to remain fair).

Collaboration with other entities within the group, potential clients of the start-ups, is thus indispensable because the CI is not intended to be a line of business. Building this collaboration remains the essential mission vested in the leader of the CI. This latter must find its place, or rather must negotiate its place, in the field (or, more simply, the environment) of the large group. The goal of this negotiation is the adaptation of the incubation (CI) process, in other words its institutional alignment within the complex organizational field of the large group. The outcome of the adaptation process conditions the institutionalization of the CI – its recognition within the organization of the large group – which becomes an additional motor for the fabric of innovation within the group, welcomed by the latter (in any case in words, and/or at least under pressure).

Analysis of CIs may consequently be extended to the modalities of adopting OI in the wider sense, thus rehabilitating what is the very essence of open innovation: an approach which requires subsequent work by managers, and not a mechanism or a funnel for the production of innovation, as certain OI authors suggest. Here, we see a problem which deserves our attention, lest we remain at the point of statements and vain incantations as to the importance of start-up–large group relationships.

The problem to be solved

My initial research subject, like the work which follows on from it, is precisely part of an overall schema where the company pilots its innovation process by mobilizing many internal and external actors and competences, in order to develop and establish the so-called “entrepreneurial” policies. These latter are embodied in various practices such as spinning-off, externalization of projects, alliances with external structures, investment, sale of technologies, sponsoring of external digital activities or even strategic watchfulness. All of these approaches are part of OI and present the latter as a way for the company to reappropriate an entrepreneurial logic which is sadly too often lost in large groups. This phenomenon is nothing abnormal and, according to Mintzberg, it is a logical consequence of organizational development (Mintzberg, 1982).

If the managers of these entrepreneurial schemes are supposed to be able to take advantage of the benefits of a large group, they must, however, manage several contingent factors, in particular negotiating with their various stakeholders the strategic position of their schemes within the organization of the group, their independence, their power and notably their capacity to mobilize internal resources, the sustainability of their mission and possible conflicts between the goals of external actors and those of the large group. These elements of understanding illustrate the social and organizational double challenge with which OI initiatives are faced, and justify the reason for which I put the emphasis on the question of “how to do it?”, because succeeding in such a challenge will require maneuvering with finesse, and it must even include a kind of self-sacrifice. On the one hand, it involves negotiating integration within the large group and being the extension of its innovation strategy, and on the other hand, it involves effectively collaborating with external actors, the start-ups. In other words, the leader of the CI must put in place a new paradigm of innovation in the complex context of the large group. We should also add, and this in no way simplifies things, that external and internal actors are far from perceiving reality in the same way, and I will return throughout this work to this difference in mindset.

The theme therefore seems simple (in its statement) and general in its expression, to echo the difficulties which large companies may encounter in implementing mechanisms for open innovation. My research theme was “the adoption of open innovation in large groups”, a sober subject which might be considered today an essential goal for many large industrial groups. As the reader will have understood, I have particularly focused my attention on one particular form of innovation used by large groups to manage their relationships with start-ups – in other words, CIs. My research question progressively transformed into: “what is the nature of the managerial work required to facilitate the adoption of a managerial innovation like the corporate incubator?”. This question could also be put in less academic and more direct terms: “how to do it when you’re the manager of a corporate incubator?”.

It should be noted that “how to do it?” could be understood to mean what types of start-ups to recruit, the services to offer them or even modes of operation. My research path has rejected these aspects as such. If I have mentioned them, it seemed to me, over time, that reflection on the question of “how to do it?” was much more fundamental and should carefully address the day-to-day managerial actions and practices enacted by the managers of these structures. I wanted to open the black box of the CI and look at what the people who run it really do, that is, the interactions between the direct and indirect actors in CI.

To address this research question, I have mobilized and progressively linked several notions and concepts. I could not avoid addressing them in this book, as their importance is such that they constitute a useful base for understanding certain results. This does not involve justifying the relevance of my observations and analyses, but rather, on the contrary, sharing concepts and notions which have echoed my thoughts. These notions and concepts, far from mere words, are very concrete and accessible and may prove useful to a wide number in multiple contexts or themes of reflection.

Armed with these concepts and notions, it was simpler (just a little) to open the black box of the actions and practices actually implemented by actors in order to have mechanisms of open innovation adopted within the business, that is, ensuring the spread of a form of open innovation (the CI).

The proposed concepts are perhaps not the only ones which may illuminate this black box. I would rather say that they comprise some major “pragmatic markers” which have allowed me to reach certain conclusions. I present them only in this introduction as information and for all useful purposes.

Pragmatic markers

During my journey, three notions emerged: institutional work (Oliver, 1991; Lawrence and Suddaby, 2006; Lawrence, Suddaby and Leca, 2009; Slimane and Leca, 2010), translation (Callon, 1986; Latour, 1994) and adaptation (Mamman, 2009; Ansari et al., 2010). It is useful to explain them simply because they will provide readers with useful landmarks to enter the heart of this book, and even to see beyond.

Structure of the book

Apart from the introduction, care has been taken that each chapter should be able to be read independently of the others. If our results are built through the analysis of differences and similarities and the identification of trends, nevertheless professionals and academics alike might want to concentrate on such or such a chapter. This decision thus aims to provide comfortable navigation between the chapters.

The first chapter, as well as the second, will allow us to have an idea of two notions which no doubt constitute a background for this book. The first notion is that of innovation, and the second is that of incubation. In fact, as this book deals with corporate incubation, it seems essential to somewhat clarify these two notions, these two families to which the corporate incubator belongs: the family of innovations and the family of incubation. In Chapter 1, we deal with the notion of innovation as a plural notion. It may involve goods and services, for example, as well as ways of acting. To understand even a little, this notion of innovation allows us to better grasp one singular feature: we may have to innovate from a managerial point of view to be better able to innovate in terms of products and services. Chapter 2 will allow the reader to gain understanding of the incubation/acceleration of start-ups. This does not involve starting from presumptions which are promoted in the news, but rather getting a little closer to the bottom of things. When we talk about incubation, what are we talking about? What forms does it take? The many questions for which I seek to provide answers issuing from extensive research, show the appreciation that I as a practitioner have had for this research. These first two chapters reflect the fact that through innovation in management (CI), we can innovate in other ways within the company.

The following four chapters allow me to take you into the mysteries of the corporate incubator. In the wider sense, Chapter 3 deals with managerial work and seeks to respond to one question: what is the architecture of work to be implemented within an incubator? By architecture of work, I mean that to have a corporate incubator adopted, it is useful to give it a strategy in terms of practices to implement. There are four types of managerial work that I will share with you. Then, in Chapter 4, I will discuss a structure. In summary, I discuss the characteristics of a structure, and in particular the characteristics of the incubator. In fact, we must understand the types of work to be implemented, and we must also know to what end – here, the corporate incubator – they will be applied. This leads us to Chapter 5, which describes managerial adaptation, which is closely linked in the literature to the manipulation of characteristics. Then, at the end of this chapter, I explain what the levers are that allow us to adapt a corporate incubation structure to its environment, that is, to manipulate the characteristics of the corporate incubator. After these successive close-ups, it only remains for me “to close the loop”, as some would say, to zoom out and discuss in Chapter 6 the adoption of the CI through, on the one hand, a theoretical model and – to reassure readers who are managers – on the other hand, a managerial model.

In the first six chapters, my goal is therefore to discuss the goal of the present book. As I mentioned, as a practitioner, it seems to me that on the basis of my professional dictionary, it has been possible for me to understand the meaning of the observations noted. I have not projected my own experiences onto it; on the contrary, the latter has allowed me to have useful understandings, along with the essential distance which my academic readings have brought and my wish to respect those who had the trust to talk with me about things as they are.

At this stage, my “dictionary” becomes yours, once you are armed with these elements of understanding managerial work and its mechanisms, it will be easy for you to then move on into other mysteries, sharing the daily life of five CIs, one chapter per case. My ambition is to allow you to share slices of life from these CIs, with their joys, their sorrows, their doubts, their ambitions and their pains, as if you were there. These CIs are all unique, as I explained previously: CI A is based in a French international group and is largely under the patronage of the group’s CEO; CI B is based in a French group and is in strong competition with other internal entities, but benefits from important resources; CI C is based in an international group and develops in a multicultural environment; CI D is based in a French company and is shared between two entities within this company; CI E, finally, is based in an international French group and functions in start-up mode (it continuously pivots). These CIs will be taken apart and the emphasis will be mainly on their defining characteristics. Their socio-organizational identity card is thus explained, because before all else we take the time to analyze the corporate context (core business, competition, innovation) in which each CI develops. Then, we discuss the “actors” of the CI. This refers to all the stakeholders who exercise or are likely to exercise influence on the work carried out by the CI’s leader. The notion of “structure“ is then discussed. It refers to the system of work or to the modalities of the organization of work within the CI, to the CI’s tools and system of communication as well as the system of authority and decision-making. The “tasks” of the CI, that is, the goals pursued and the manner in which the CI’s work is carried out, are then analyzed. Finally, the “tools” used by the CI allow us to consider the technological or otherwise dimension of the CI, and return us to the tools available to start-ups. The whole of this “socio-technical” analysis of the CIs presented is widely interspersed with direct quotations from their leader and countless anecdotes. This point of view illustrates the reality of CI, in its most touching and sometimes most terrifying aspects.

Finally, the conclusion of the work aims to particularly share several aspects of recommendations for managers and to inform their implementation of CI. These very concrete managerial recommendations illustrate the approach of the “architects” of the Trojan horse that CI constitutes. A complete bibliography will complete the book.