Communitech photo: Anthony ReinhartLean, agile and engaged: The Communitech corporate innovation model Iain Klugman October 8, 2015 Columns, View from the ‘Loo Photo: That’s me (far right) talking with Steve Blank, Ian McDonald of TD Lab (second from left) and Saj Jamal, VP Marketing for Communitech (far left). When the Canadian Tire logo was hoisted to the rafters of the Communitech Hub in 2013, more than a few eyebrows were raised along with it. What would a 91-year-old retail chain – known for its Monopoly-like paper money and the rubbery aroma of its stores – have to gain from hanging a shingle in the heart of Waterloo Region’s startup community? And speaking of startups, what was in it for them? These are fair questions, and ones we’ve grown accustomed to fielding as other venerable brands, including TD Bank Group, Manulife, Canon and Deloitte, have opened outposts in our high-energy facility in downtown Kitchener’s Lang Tannery complex. Thomson Reuters – a global media and information giant with $12.6 billion in revenue and 53,000 employees – will join us in a few days. The short answers to these questions, respectively, are innovation and customers: Big companies get to tap into Waterloo’s legendary tech talent, develop ideas far more quickly and tune their workplace cultures to the new economy, while our startups get access to the buying power that big brands represent. The long answers have yet to be written – corporate innovation is an emerging field with many would-be players – but Communitech intends to be holding the pen, and not just reading along, as this story unfolds. The reason is as stark as it is simple. The life expectancy of big companies is dropping fast, as disruptive technologies and processes, fuelled by a new era of entrepreneurship led by a new breed of entrepreneur, sweep the planet. In the 1920s, a company on the S&P 500 could look forward to an average lifespan of about 65 years. Today, that number is closer to 15 years. “Most of the innovation and disruption are coming from new entrants – young, fearless, and not afraid to take on the status quo,” Steve Blank, the respected Silicon Valley thinker, wrote recently. “Existing corporate strategy and structures have proven unequal to adapt to this changing economy. . . It is the strategy lessons from startups that will light the way for the massive restructuring of all corporate structures by the middle of this century.” As smart corporate leaders sense this shift, a good many are looking both inside and outside their companies for new methods to ensure their long-term survival, and to thrive on the opportunities it presents. Communitech, situated in the heart of Canada’s most dense startup community and right next door to the country’s corporate and financial capital, is ideally positioned to help these large firms – not only by providing offsite facilities where they can try new approaches, but by plugging them into Waterloo Region’s greatest asset: an entrepreneurial ecosystem teeming with world-class talent, built on a strong local culture of collaboration. In an age when innovation has become a buzzword so common as to be almost meaningless, it would be easy for any large company to open an off-site skunk-works, tick the ‘innovation’ box and call it a day. The Communitech model goes far beyond this cursory approach – what Blank calls “innovation theatre” – and seeks to help each company to meaningfully impact its trajectory, based on close examination of its internal culture, market conditions, business goals and readiness to embrace change. We do this by applying the Three Horizons of Innovation framework (first put forward in 1999 by Baghai, Coley and White) in our early discussions with potential partner companies. Simply put, the Three Horizons enable established companies to connect the present with the future, by imagining new business models that could disrupt them down the road and adapting their innovation activities accordingly. At Horizon 1, the status quo dominates, as a company makes incremental changes to how it already operates. On the other end of the spectrum, at Horizon 3, all options are on the table as the company seeks to disrupt itself with entirely new models. Horizon 2 is where things get really interesting, as the company transitions from the familiar world of business-as-usual to the necessarily messy and unstable world of experimentation, rapid prototyping and iteration, where they begin to make bets on unproven ideas. If the hallmarks of Horizon 2 sound familiar, they should – they describe what startups spend most of their time doing. And in Waterloo Region, we have more than 1,000 startups, in a community of just over half a million. Our corporate innovation partners work in open spaces designed to encourage collaboration with each other and hundreds of startups in the ecosystem. (Communitech photo: Anthony Reinhart) This is what makes the Communitech corporate innovation model unique among those we’ve studied around the world, many of which involve companies trying to innovate offsite in isolation, or alongside companies similar to themselves, within industry-specific verticals. At Communitech, when a large company docks with us, it docks with an entire community of engaged and creative entrepreneurs who are working hard – and often, collaboratively – to solve real and relevant problems quickly, across all industries. That is why the physical spaces we provide to our partners in the Communitech Hub – where more than 100 of the region’s startups are resident – are open to one another. Each corporate innovation space is typically headed by one or more representatives of the large company, who oversee a team of developers. Many of those developers are co-op students from the University of Waterloo, Canada’s most innovative university, long a producer of top talent for Silicon Valley and the world’s leading tech companies. By situating our corporate partners in this open, dynamic space, we have effectively created a collider for people and ideas, in which unplanned collaborations – between startups and large companies, and between the large companies themselves – have become commonplace. These activities have already produced tangible results. Earlier this year, Canadian Tire Innovations opened a “Digital Garage” across the street from the Communitech Hub, where prototypes can be further refined. Just this month, TD Bank Group announced a new 120-employee facility in Waterloo that will focus on technology, following on from the innovation lab it opened last year at the Communitech Hub. Our startups and SMEs, meanwhile, have been building business relationships with these big brands – brands they would not have been able to easily access in the days before our corporate innovation program launched. Vidyard, a fast-growing video marketing and analytics firm, has found an equipment supplier in Canon Canada, which has in turn become a Vidyard client. Their respective executives met at the launch of Canon’s innovation lab in our Hub last year. MappedIn, which builds interactive indoor wayfinding technology, found a customer in Canadian Tire, which has installed MappedIn products in some of its affiliated retail stores. Their relationship started due to a similarly serendipitous collision. By design, our program also ensures our corporate partners become active and engaged supporters of our ecosystem – from startup festivals and hackathons to women-in-technology sessions and accelerator programs – that strengthen and build upon our entrepreneurial community. As books go, we’re still writing the first chapter on this emerging story – but we’re excited to draw on nearly 20 years of working with startups as we drive the narrative forward, guiding our corporate innovators to greater competitive advantage through a leaner, more agile approach to business. And, if we raise a few more eyebrows along the way, all the better. Iain Klugman is CEO of Communitech. View from the ‘Loo looks at the issues, people and events that shape Waterloo Region’s technology sector.