Designing the Successful Corporate Accelerator (ft. author Jeremy Kagan)

Driving corporate innovation is a problem for a lot of the companies I’ve advised and covered as an analyst, and that’s why I wanted to have Jeremy Kagan on the show. In addition to being a friend for a number of years now, he’s the co-author of the new book Designing the Successful Corporate Accelerator is designed to give readers the tools to design, create, and manage successful corporate accelerators that achieve results time and time again. The book is a combination of market research, interviews with accelerator leaders, and Jeremy and his co-author Jules Miller’s actual experiences launching and running accelerators.

As always, we welcome your feedback. Please make sure to subscribe, rate, and review on Apple Podcasts, Spotify, Stitcher, and Google Play.

Transcript

Jeremy Goldman: [00:00:15] So driving corporate innovation is a problem for a lot of companies I've advised and covered as an analyst. And that's why I wanted to have Jeremy Kagan on the show. In addition to being a friend for a number of years now, he's the co-author of the new book, designing the successful corporate accelerator, which is designed to give readers the tools to design, create and manage successful corporate accelerators that achieve results, time and time again.

The book is a combination of market research interviews with accelerator leaders and Jeremy and his coauthor, Jules Miller's actual experiences launching and running accelerators. I think you'll really enjoy this conversation. So let's jump right in. 

So Jeremy, welcome to future proof. 

Jeremy Kagan: [00:01:02] Thank you, Jeremy. And I do want to point out that in the best future. There's all Jeremy's so this is a great example of where we should be going. This is, 

Jeremy Goldman: [00:01:11] I think we've had a few Jeremy's on, which always makes me feel a little awkward, but we haven't had another Jeremy and Goldman on, and there are quite a few actually out there, some of whom I'm connected to already.

I feel slightly special still, but I know we're going to have a little, some of this in the intro, but in terms of how you define yourself, who are you, what do you do on a day-to-day 

Jeremy Kagan: [00:01:32] basis? I'm Jeremy Kagan. So if you can tell us apart by our voices, but my day to day is actually as a professor and a consultant and entrepreneur.

So that generally means I used to run the Lang center for entrepreneurship at Columbia business school, which was basically where the curriculum and things like office hours and mentorship live. And then the Lang fund for venture capital as well as our corporate innovation efforts. And that brought me into a lot of contact with all the Columbia accelerators, et cetera.

But the reason I was there is because I'm a professor there, I teach digital marketing. So I've written a textbook on digital marketing and I've written a book on corporate accelerators now. So two sides of myself. And as a consultant, I do those two things. I help companies with their growth strategies and I help companies with their innovation strategies.

And to me in a nutshell, 

Jeremy Goldman: [00:02:22] Very succinct. And  I think that there are a lot of people aren't as familiar with the idea of corporate accelerators, why are they so important to the future of innovation? 

Jeremy Kagan: [00:02:33] This is a good starting point to lay some groundwork, actually, because we wrote the book, which is called designing the successful corporate accelerator, because so many people aren't and the reason is they're trying to make accelerators.

And one of the great sort of analogies we use in the book is it's like a cargo cult. So an accelerator is basically a cohort based learning experience where a bunch of very new startups, usually a, Really maybe only a couple of founders in a room get together and in a group have a shared experience where they learn some basic business stuff, how to pitch.

And at the end, it's often something you'll see a demo day where they it's almost like their coming out party and investors get to see the polished and better stories. The refined business models venture backed and accelerators are doing it because it's early stage investing. They want to put a little money into these companies and ultimately make a, venture capital style returns.

Where corporations often mess this up is that they try to mimic that. It's very exciting to think of. Let's put some free snacks and a bunch of glass window and offices, and, a bunch of desks crammed together. And maybe pre COVID of course, but the idea of doing all the trappings of an, of a venture backed accelerator, which is motivated by investment success for a corporation, which really shouldn't be motivated by the same things.

Mean if you think about it, if a company puts a hundred thousand dollars to work and gets a hundred X return on That's still doesn't move the needle for a big billion dollar corporation. It's almost not worth doing. If it takes 10 years to get yet, if they can impact one of their own business lines, stay competitive, be more efficient.

There's a whole range of good reasons to do it. That would be a much more effective approach. So we look at it as you might remember there was something called cargo cults in world war II. Oh, yeah. And cargo cults were crazy in the South Pacific. These tribesmen who'd never even had been, in touch with civilization would see these airplanes, these big silver, birds dropping crates, full of goodies, like food and machinery.

And so the tribes been with using their limited context would build what to them look like. Wooden versions of these airplanes and fake landing strips, it's really quite complex what they tried to do to encourage these gifts from the gods to come down. And in a way we look at like corporate accelerators are sometimes like that.

We're trying to do all the things that look like an accelerator in the hopes that we'll get the benefits from innovation. And it just doesn't play out that way. Unless you have a clear view of your goals from both a broad perspective and a practical tactical perspective. 

Jeremy Goldman: [00:04:59] Yeah, that makes a lot of sense.

And I think that, that was going to be a question I want to even ask you about the different types of accelerators and what makes corporate accelerators different, but you're right. Ultimately it's all about building on things that you've done historically. And and yet I find that easier said than done in terms of just creating one, launching one, How does one create a corporate accelerator that's going to be successful?

How does one even start to think about that? Cause that seems intimidating to me. 

Jeremy Kagan: [00:05:28] Yeah, and it is, can be challenging. A lot of companies get into it for the for sort of one goal, which ironically, I don't think it's a bad goal, but it's the publicity of being seen as an innovative, and that can happen really quickly.

You put out a big press release, you do a ribbon cutting with the CEO on a cool space, but that's that can't be the only goal. So the first thing you have to do is a very clear goals of what you're. Doing this for, and if it's to bring innovation into the business units, if it's to capitalize on things that the company may be can't use in its existing business lines, the important thing is to set goals and then corresponding metrics so that, when you're succeeding, you don't play a game and don't keep score.

And in this case, the success metrics can't be. Return on investment of 10 X in 10 years, that's not really as appropriate for a corporation. The second thing of course is involving senior stakeholders from the very beginning, as well as having direct lines of communication into the lines of business.

So often we'll have senior people involved, but it's the chief innovation officer. Who's got his own little area and none of the people in the billion dollar businesses that have driven the company to success. And were consulted on what they could use for their businesses, or there's not even a method of bringing these potentially groundbreaking innovations into them for consideration.

And so I think there's often a misalignment there, and this is also the last thing is really just giving yourself the time to succeed, because there's a saying in venture that's very true, especially in corporate accelerators, that lemons ripen early. So you're going to fail first. The stuff that's going to work may take a while and it may not be obvious right away.

So this stuff that's going to bomb usually bombs quickly. And then there's stuff that we won't know for a few years. And sometimes it could be a huge impact. Sometimes it can be very successful, but not for the company's business, which is a mixed bag. And sometimes it'll just be a modest success, but it could be very impactful on the company's innovation strategy.

So I would say the summary would be a clear goals. High level, cross the board and involvement from key stakeholders and the time to succeed. 

Jeremy Goldman: [00:07:34] Okay. So you mentioned something about the 10 X like you can't measure something in a certain way. This is one question that I get a lot, people often say everything has to pay for itself.

It's just a question of what time horizon you're going to be looking at. So do you agree with that? Or would you say that, you can't really put a price tag on this type of innovation? 

Jeremy Kagan: [00:07:54] There's a lot of stuff. That's more difficult to put a price tag on things like cultural change and your investors and stakeholders, understanding that you're really trying to be an innovative company because we find that there's definitely those halo effects where your suppliers might not come to you with their more innovative solutions.

If they don't feel your culture is accepting of trial and potential failure of new things. So there can be follow on effects, but I think We look at the companies that are still around. Those are the ones that successfully innovated even through crises. So you're looking at a survivor bias, the ones that aren't here anymore, the ones you don't want to be, you don't want to be the guys who keep doing what they're doing.

The, we don't know the name of the biggest buggy whip manufacturer in the world anymore, but we know all about car companies and even Tesla. So this is understanding that if you don't innovate, you're going to disappear. That's really the challenge here. 

Jeremy Goldman: [00:08:46] Yeah, I think when you put it that way makes a lot of sense.

Are there different models towards a successful corporate accelerator? Because it's just one thing that I'm thinking about is there essentially a, here are the 10 steps, go ahead and do them this way, or are there different companies that, that have taken different successful approaches?

Jeremy Kagan: [00:09:05] There's definitely different approaches and it depends on not just the company, the industry and the kinds of goals they have. So for example, two opposite approaches might be a very early stage venture studio type approach where companies that are driven by a lot of innovation. May want to start at very early stages perhaps a Verizon, which might have an accelerator around developing technologies in its ecosystem.

So if you're investing a ton of money in 5g, you might say we may not figure out every good use for 5g, but we certainly know that the more people are using it, the better it is for us. And so that's a play on, generally raising the bar on usage for that underlying technology. The opposite end of the spectrum might be a company that says, we're an established player.

Maybe it's a consumer products company that says we need promising products that are maybe further along that already have traction with a a segment of customers where are huge assets of distribution and mass marketing strength. We'll be valuable at taking this to the next level as well.

So that might be maybe like a Johnson and Johnson or somebody like that wants later stage partnerships that can use their established strengths and assets. 

Jeremy Goldman: [00:10:13] I think that it's really interesting just to see in terms of these different approaches to how people are building these things.

And that also makes me think about the fact that people can, have one or two missteps and in terms of creating any type of program. And I know you talked a little bit about those, but if there was anything that you would caution people, to try to avoid. Doing in order to have a successful experience, implementing a corporate accelerator, what would those one or two things be?

Jeremy Kagan: [00:10:42] It's a challenge in most companies to find support for a successful failure. And when I say successful failure, I'm deliberately saying that way, because there's an example we always like to talk about, which is if you get a guy from your company or a woman with a cool idea from your company and you put them in a, in an accelerator environment, And this is when you know, the accelerator involves people from the existing organization.

For example, if somebody takes six months and spends a million dollars and realizes definitively that they've come up with a really bad idea and you shouldn't waste time or money on it, that's a success in startup world when failing fast is about learning what you shouldn't do as much as what you should do.

So it's often hard for that person to feel rewarded, we should promote that person. We should thank them and move them on to the next idea. Cause they just saved potentially tens of millions of dollars in a disastrous launch of a product that no one wants. And yet that's a hard kind of thing for companies to 

Jeremy Goldman: [00:11:37] recognize.

And yet, by the way, just to challenge that because I feel like I got to challenge everything. So what if you have one. Guy or gal, whatever. They've had that they've done that six times and they don't necessarily have the intuition about which projects to champion. Surely the batting average, so to speak or on base percentage should matter for the typical innovator now.

Jeremy Kagan: [00:12:00] The thing is you mentioned on base percentage, actually the baseball analogy is pretty good because you're in the hall of fame. If you only get 40% success, right? So we're looking at people who are going to have a lot of things. And especially at the earliest stage, the most speculative stage we're trying to do, it's not simply a yes or no question.

One of the great things about venture world when it's done properly is you're hitting a milestone that confirms the reduction of a particular risk. Market risk or technology risk and says, okay, it's now worth it. It's still a good bet to go forward to the next level and the size of the financial bet.

And the time may increase as you go. But the earlier you can figure out something doesn't make sense. The better off you are. So it is more of a spectrum, but if you're trying to say one black and white thing, it's. Accepting the fact that when you're testing things, won't work, that's actually part of the testing process.

Accelerators allow companies to take a portfolio approach, paradoxically, this is better. You can try 10 things that can raise the bar in your consumer division rather than one that if it doesn't work, you're out. 

Jeremy Goldman: [00:13:01] It's interesting because that actually makes me think about innovation.

That's not quite innovation, and I'm thinking, innovation should essentially solve a problem push things in the right direction. How do you ensure that you're not championing the wrong products and innovating in the wrong direction? I joke about new Coke, but in all seriousness, when you were talking before about, doing something cutting edge, just because it's cutting edge because it's going to get you.

Some headlines in a trade publication, not the right reason to do something. So how do you ensure that you're not doing those types of things? 

Jeremy Kagan: [00:13:35] I guess there's two kinds of mistakes you can make when you're doing innovation in a company there's false positives and false negatives. One is having a really great successful product or project that has no real match with the company's lines of business.

That's a. Bittersweet. It's a great company, but it has no business, in your broader corporate environment. So you've maybe spin that out. So that's a success, but what we're trying to avoid is a new. Coke type embarrassment by doing the startup techniques that allow us to test and validate those things.

And the good thing is we can both have successes that wouldn't be venture successes. A small success for us might be enough as well as, a product line extension or something like that, a different way of selling an existing product. But new Coke was a disaster because we spent $200 million there marketing something that people didn't want.

Now, if we'd been able to test it in a small way, like traditional sort of lean startup methods, we might've found that people didn't want it. And instead of investing in a nationwide rollout, it would have been a smaller test that when we proved it didn't work, we would have saved that embarrassment.

So I think that's really the question. This is about learning more quickly. So we have less at risk as we go forward and we're placing our bets and things that are more likely to succeed. It doesn't mean we'll win every time. 

Jeremy Goldman: [00:14:51] I love the way that you put that though, because you're right. I think that the testing mentality where you could have always had it, but tools are available so much more now that it's almost is there as much of an excuse to not really, invest in that type of analysis and listening to the customer beforehand Another question I wanted to ask is, I've seen a lot of corporations doing their best to innovate and build accelerator programs a hundred percent.

In-house not bring anybody else in to help. Then I've seen some models of partnering with an external firm, let's say, or consultant that has done this before. And I'm wondering, does any one particular model, have you seen that type of let's build it?

In-house let's not speak to anybody. Do those typically perform well or is it a better move to partner within external accelerator or consultancy or something? 

Jeremy Kagan: [00:15:41] That's a multifaceted question. There's no easy answer there, but the general rule of thumb is you're going to get the best results.

If your goal is to truly change your culture by tackling the hard problems yourself, and really baking it into what you're doing and making it, a corporate wide thing. But the reality is most companies it's like moving a battleship that doesn't happen quickly. And so often to get up to speed, what companies can practically start to do is.

Partnering with people who know how to spin these things up and then putting key personnel in there to absorb the learning. The mistake people make when they do that though, is they say, Oh, it's being taken care of by one of these great companies. So , it becomes like a separate project and none of the cultural change, the practices, the innovation thinking diffuses into the organization.

So . The best way is to do the hard work, but it also is slow and full of mistakes. The sort of alternate ways to buy it off the shelf, the accelerator as a service, I've consulted on building accelerators, but there's some great, networks out there like Techstars and plug and play and highlight beta.

500 startups. These are guys who are doing this as a service already for companies where you can say, I'm interested in this area and they've got the flow of new companies, which is a critical piece, getting great companies aware of your accelerator. They know they've already tried and done the trial and error on what does it take to invest in what is the format need to look like?

And how do you manage that? And they take the pressure off of learning. All that allow you to spin up the accelerator much more quickly. The thing that often drops off the table, there is the transfer. And so there's a lot of kind of consultants who there's the old joke about consultants that a consultant is someone who borrows your watch to tell your time.

Yeah. 

Jeremy Goldman: [00:17:19] Oh, I love that one. Yeah. Yeah. I heard that personally from multiple people when I ran my agency. 

Jeremy Kagan: [00:17:24] Yeah. And when you want to do is make sure as a company that you're transferring that knowledge, it doesn't mean that you necessarily would even stop using that company. But if you build one accelerator and you learn how to do it, and you could build another one in a different geography on your own to test it out or try a different model, remember there's all spectrum of other tools too.

So this is just one piece of the puzzle. You may do corporate venture capital. You may have an internal skunkworks where you're building it up. Like Citibank has internal entrepreneurs and residents. And it allows them to test new ideas on their own. So bringing in all these pieces of the puzzle together and making sure it doesn't happen in a vacuum, but there's attention paid to that knowledge transfer is a critical piece of that.

Jeremy Goldman: [00:18:03] So building on that, are there differences between corporate accelerator programs and market to market, like do cultural differences, play into innovation and how people think about innovation, from one locale to another.

Jeremy Kagan: [00:18:16] There certainly are, but I think the biggest challenges, understanding that we're now in an environment, which is great for entrepreneurs, but also  a lot more noisy. There's tons of accelerators out there. There's a lot of attention being paid to the early stage. So it's not really all that.

Newsworthy, frankly, to announce the third energy accelerator what companies have that they really have to focus on what they bring to the table. That's unique. And that's the ability to partner with that company and to really get things to market with a big client or potential client more quickly.

So I think the that the cultural differences are really between venture accelerators. And corporate accelerators and understanding what strengths they bring to the table, but the environment of the lean startup method and a lot of the newly routinized and accepted practices around building a modern startup.

That's actually a great foundation to build on for everyone. So we've got that out there and that's good. 

Jeremy Goldman: [00:19:05] So building on that cultural question from before, I was thinking, what type of culture does the type of company, or the type of employee for a corporate accelerator, what type of culture do they gravitate to? What do you have to do as a massive corporation?

To be that type of company that's going to attract the right talent to your corporate accelerator. 

Jeremy Kagan: [00:19:28] To the corporate accelerator, remember that's like separate companies for the most part that are in the corporate ecosystem. So these aren't people who are becoming your employees necessarily, but what's great is that it's that interface between the startup world and innovation and the more stayed traditional corporate environment.

Jeremy Goldman: [00:19:45] So just sorry to, so then to. Build on that and then maybe have a, maybe this is a bad analogy thinking of it in terms of NCAA basketball programs and you want to attract the right people. And is there, let's say, I don't want to pick that any particular company, but IBM comes to mind, are there certain kind of cultural elements that might persuade or dissuade somebody from being affiliated with your  corporate accelerator. Even knowing that they're not going to actually become employees. 

Jeremy Kagan: [00:20:15] Definitely a challenge as a corporate accelerator in that many companies just see the hassle of working with a big, slow moving company.

As not even worth starting and many find and get burned by  these sort of partnerships, and I can tell you an example from my own experience my startup made a game-changing deal. This was the deal that was going to really raise us to the next level I was going to be rich. And I'd be, on this podcast talking about my vast success in fortune, but the truth is we partnered with a very large cable company.

And it was a deal that was giving me access to 6 million small business customers for my startup. It was a great unbelievable opportunity and a couple of months into this beautiful contract with a rollout plan that was going to start in six key markets nationwide and then spread the 30 something.

They got an acquisition offer from one of their equally slow moving and large competitors. Everything froze. For more than a year, like literally could not get emails, returned, nobody wanted to do anything. And of course, since this is a big company, they have a once a year rollout of innovations. So we kept trying to hit that window.

I actually sent an email saying if a bookcase has fallen on you and you need help getting it off, just send anything back and I'll come rescue you. But what had happened was nobody knew if they had a job, nobody knew what was going to happen. And then the acquisition ultimately fell through. So the party starts, we're excited, I'm getting emails returned, and the launch plan goes back in place.

And then another acquisition offer came in that company ultimately did buy them and. Basically towards the end of this three-year contract, where mind you they've been paying the monthly minimum every month for us doing relatively little, I get a a letter saying we're not going to renew the contract from the new company because they were going in a different direction.

So this game-changing partnership wasted, essentially. It wasn't like we weren't doing anything else, but for three years, We had this as this city on the Hill that could make us a huge company in a successful example of a partnership. And it really burned a lot of time and energy for us. So that's an example of how companies have different motivations.

It just failed. 

Jeremy Goldman: [00:22:22] Yeah, I think I've definitely seen a few of those in my day. I want to ask you in researching this book, did you uncover any accelerator programs that you admire or companies that have a general sophisticated approach towards innovation that you want to put on people's radar?

Jeremy Kagan: [00:22:38] I can tell you there's a couple of bright lights out there. I think there's people trying a lot of new things and there's different approaches.

So yeah. I think Verizon is doing a lot of great stuff with their 5g labs and approaches there because they realize they're building infrastructure and this allows them abroad palliative startups to interact with, because what they're providing is that underlying support. And so I like what they've been doing in that respect,  Citibank has a very good.

Multiple pronged approach, where they have opportunities for their own innovative co employee citizens to maybe take a six or 12 month sidebar doing something innovative. And this is not just great for them to explore new ideas, but it retains the most creative employees since they have an opportunity to use that outlet for their entrepreneurial energy.

They've got a vast program there in FinTech, of course, is an area of incredible change right now. So while I can't You just say that everything they're doing is smooth and silky. It's really great that they've tried to take a portfolio approach to that giving opportunity, everything from investing to empowering their own employees outside entrepreneurs and in many things in between.

So those are two good examples. I can think of others. Of course. In some cases it's Consumer goods companies are partnering much later and taking positions like is later stage investors and then putting those companies through their distribution network. 

Jeremy Goldman: [00:23:57] I just was going to say, I have to steal that line smooth and silky.

I've never heard that before, but I feel like maybe we're going to start to describe this podcast as that. 

Jeremy Kagan: [00:24:05] From an old razorblade commercial, I believe so. 

Jeremy Goldman: [00:24:07] And then just to leave you throw it there. Are you something, cause I, I find a lot of people are gonna really learn from your approach towards developing these programs and just your overall, sophistication around the innovation ecosystem.

What is one particular technology that you're paying close attention to at the moment that gets you excited? 

Jeremy Kagan: [00:24:29] There's so much exciting stuff happening right now. I personally think that mixed reality is very impressive. And e-sports and influence marketing. So e-sports is is just an example of the broader creator economy, where these are the new celebrities and the new professionals, and they're able to monetize and brand themselves without the gatekeepers that used to exist in the movie studios and the television networks.

So a great example is there's a YouTuber named Mr. Beast and he was a. Guy fascinated about going viral on YouTube. He did a video about himself counting to a hundred thousand, which sounds boring, but has so many millions of views. But he's now become a real entertainer and has been leveraging his fame and his base of consumers in ways that seem a little strange to some expect to some extent, but are really good.

So for example, he did a really innovative thing. He launched beast burgers, the Mr. Beast burger chain. And it's essentially, he partnered with a ghost kid kitchen company and launched a delivery only burger chain menu in 300 cities across America. And it instantly became an incredibly successful restaurant tour.

So leveraging that kind of platform he's built across YouTube and other social channels to build essentially a personnel driven personality driven business. That was just so impressive to me. 

Jeremy Goldman: [00:25:49] I, for one, I'm really excited to go check out a cake and burgers once you decide to jump on that, but no pressure.

Jeremy Kagan: [00:25:58] I got to tell you, like e-sports, as a whole just is showing us so many things that are very cutting edge, but you know that a lot of people say why would I watch somebody play a video game? That sounds so boring. And have you ever watched golf? 

Jeremy Goldman: [00:26:09] I was just going to say I would much rather be on a Twitch stream than golf any day personally.

Yeah. And 

Jeremy Kagan: [00:26:15] I'm not saying that there's people who love golf and if whatever your sport is, if you love watching someone who's really good at it, show you the way to do it. It's the same thing with video games, maybe a little sillier in, in some ways. After all, we're talking about some worlds that are swords and sorcery or, W whatever, but when you think about it, that way, any sport that you don't have a passion for seem silly to watch.

And so just think of it more broadly and I think people get it more when they think of the more traditional sport that they hate and how they would never watch that. At least then it becomes in the same criteria, 

Jeremy Goldman: [00:26:46] I know we got to let you go, but I think this is a, it's a, obviously it's a fascinating guy that people can learn a lot from just like they hopefully learned a lot from this conversation.

So Jeremy, thank you so much for making the time. Really appreciate 

Jeremy Kagan: [00:26:59] it. I really appreciate you letting me come on and, spout off of my opinions on these things. I hope if you're, if you can hear this and you have a Barnes and noble at least visit the copy of my book and your local Barnes and noble, because it made my mom very proud when I took a picture next to it.

And if you're thinking about, getting involved in innovation accelerators, this is a great time to do it. There's so much opportunity. So get off the fence. It's time to take the punch. 

Jeremy Goldman: [00:27:22] Amen. Thanks again to Jeremy for making the time. I think you can tell I'm really into the conversation and frankly he knows his stuff more than most people in the business.

So it's a really great to learn from him if you'd like what you just heard. And this is your first time here. Be sure to subscribe Apple podcasts, overcast, Stitcher. The choice is yours. And if you're a longtime listener, please remember to rate and review future-proof as that's the number one way. We get the show in front of people, just like you special.

Thanks this week to associate producers, Jason stack, and  once again, I'm Jeremy Goldman and you've been listening to future proof.