Harnessing the innovation of start-ups involves having a clear purpose, a system of risk management and bringing stakeholders and suppliers together, according to Vodafone.
Warrick Cramer, CEO and director of Vodafone's innovation hub, Tomorrow Street, based in Luxembourg, told delegates at the SM Forum in London how he had to break the mould to build a lasting innovation model that start-up suppliers and Vodafone would benefit from. Tomorrow Street has been running for just over two years and along the journey Cramer has learnt some vital lessons that ensure a solid foundation for innovation.
1. Purpose drives innovation
Cramer strongly believes in leading innovation with a purpose. For Tomorrow Street, he said, that was building an environment that could nurture start-up companies, help them navigate the business, and then support them in building a go-to-market strategy.
“It wasn’t just about bringing innovation to Vodafone and then executing it across our markets, it was about having an impact,” Cramer added.
2. Manage risk and adapt
Risk management was central to the model behind Tomorrow Street and it was achieved through proofs of concept, “realistic, scalable agreements”, and transparent communication of any gaps suppliers may have had. Before Tomorrow Street started working with SMEs, it was seen as incurring too much risk. However, Cramer explained that often processes aren’t adapted to work with small businesses' structure and resources. “We’d hit them with a 300-page procurement agreement and then we’d expect to go through all the multiple markets in one go and, realistically, someone that’s only given £200m revenue is not going to be able to service 26 countries,” said Cramer.
3. Positive environment
Creating an environment that gives start-ups more control encourages them to come on board. Cramer insisted on taking 0% equity from start-ups. “The minute we take equity everyone is going to overlay all their governance and processes which will slow the company down,” he said.
Instead, Tomorrow Street works on a “success moral”. “If my team doesn’t drive value into the start-up then we don’t get paid.” This outcome-based structure reassures small suppliers and allows flexibility that SMEs can benefit from.
4. Bring together contacts
In order to build a successful innovation centre you need to make sure you have the correct people in place and utilise collaborative relationships. Cramer contacted the prime minister of Luxembourg for support with Vodafone’s project, which resulted in a joint venture with the government.
Creating a platform to bring stakeholders, suppliers and institutions together helps develop productive discussions in areas of innovation and connects start-up suppliers with corporate decision-makers, Cramer said. The Arch Summit, hosted by Vodafone, is running for the second year and involves more than 200 start-up suppliers.
☛ Want to stay up to date with the news? Sign up to our daily bulletin.