CIOs ‘hackathon’ guide: What corporates can learn from startups
Business Management

CIOs ‘hackathon’ guide: What corporates can learn from startups

“Over the last four years, we’ve had an opportunity to meet and work with some of the most exciting retail startups from around the world,” says John Vary, innovation manager at the John Lewis Partnership. “Getting an early glimpse of emerging technology is immensely useful, but the real benefit for us is in having our staff working closely alongside startups.”

To the casual observer, the John Lewis Partnership is a very traditional UK retailer. Reassuringly upmarket, its public face is one of well-appointed department stores and supermarkets, located on prestige sites across the UK. Established in 1864, the department store chain in particular is something of a British institution.

But it's an institution that is determined to stay ahead of the game in a rapidly changing retail landscape where ability to innovate is the key to ongoing survival. To that end, John Lewis has, for the past four years, been running an Innovation Lab, (JLAB) in which groups of startups are invited to develop solutions to improve the store group's customer experience. The carrot for the companies taking part is the opportunity to develop a relationship with John Lewis managers and possibly – just possibly – go on to become a partner or supplier.  

And John Lewis is not, by any means, the only major business making a determined and structured effort to tap into the technologies and business models emerging from the tech startup scene in the UK and around the world. There are a range of strategies in play, including innovation labs and accelerators (more or less the same thing), hackathons and corporate venturing. 

The common factor is that these initiatives allow corporate businesses to get up close and personal with third parties who are not only bringing fresh ideas to the table, but who can also – typically - get prototypes and trials up and running in weeks, rather than months or years.

Arguably this close contact represents something more than a simple transaction in which an agile minnow sells a solution to a slower moving corporate. In theory at least, major businesses have an opportunity learn from startup culture.  

A corporate gateway to speed and innovation

John Lewis's experience suggests that lessons can indeed be learned – not least in terms of project timelines.

“Because startup survival often hinges on how productive they are week-to-week, the approach to resourcing is often extremely efficient,” says John Vary. By their nature, large corporates can sometimes be slow to move. Working with these agile young companies certainly provides guidance on how we can accelerate our own internal procedures.”

Vary says contact with startups has already had an impact on John Lewis. He cites testing in stores as an example. “In JLAB’s first year it would have been incredibly difficult to set up an in-store trial for a third-party product at short notice. I believe it would have taken months. However, last year we were able to arrange an in-store trial for JLAB 2016 finalist, Digital Bridge, at our Cheadle Branch within a couple of weeks,” he says. 

Sebastian Peck – recently appointed as director of Jaguar Land Rover's (JLR) innovation unit InMotion agrees that working with a startup exposes corporates to faster and perhaps more exhilarating project timelines. “In a company like Jaguar Land Rover a development cycle tends to be between one and seven years,” he says. “We're working with startups that are launching new products in one to two weeks.”

But even that seems slow when compared to the frenzy of product development that takes place at the average hackathon, as coders come together to build solutions over two or three days and nights. In recent years, UK companies such as Gatwick Airport, Sage, British Airways and Barclays have embraced the hackathon concept, either sponsoring them directly or taking part in events organised by third parties. Toby Stone is chairman of Hack Partners, a company that organises hackathons for the rail sector. He says there is real value in corporate IT people mixing with a wider community of coders.

“One benefit is that you can see how a group of people approach a problem.” he says. “Exposure to thinking out of the box can be useful.”

Startups and corporates have different levels of accountability

But there is a caveat to all this. Corporate businesses – accountable to shareholders, often under scrutiny from regulators and certainly subject to judgement in the court of customer opinion – often move slowly because it's a good idea to do so. There's too much at stake to allow them to launch a product – and particularly a customer-facing product prematurely. 

So as Richard Wilding, director of innovation and new ventures at defence group BAE Systems points out, large companies can learn from the agility, focus and rapid decision making of startups, but only to a limited degree. “It's not appropriate for a business like ours to act like a startup,” he says. “There are lessons to be learned but those lessons are applicable only to a section of our company.” 

Wilding has overseen BAE's involvement in sponsoring the Cyber London (Cylon) security accelerator. As he acknowledges this is an area of technology “where nobody has all the solutions.” By working with, and mentoring, Cylon participants BAE has had an opportunity to establish partnerships. For instance, if a small company is developing a tool that could complement the wider suite of cyber security solutions offered by BAE, there could be opportunities to collaborate in the longer term.

Beyond that basic remit, Wilding says the learning opportunities are cultural and perhaps not always direct. He cites the example of BAE product managers who are tasked with understanding the cyber security concerns of their customers while also being able to articulate the technologies that are available. “They are working with startups during Cylon,” he says. “They might come back to me and say a particular startup couldn't really explain why a product was useful. I'll say to them 'how would you explain it?' This is a really useful exercise. It's like holding up a mirror.” As such, it's a means for product managers to hone their own communications skills. 

The wider gains can be impressive

From an investment perspective, building a portfolio of startups can provide a cash-rich corporate not only with the chance to experience startup culture first hand, but also to have a stake in the future. As Sebastian Peck explains, Jaguar Land Rover is looking ahead not only to electric cars and driverless vehicles but also to an auto market that could be disrupted by social changes such as car sharing and new digitally-delivered services. As such, InMotion invests in a broad range of mobility-focused tech companies in areas such as car-share platforms, data analysis, and insurance-tech. Peck says InMotion provides a lens through which to see “Where the industry is going and where the frontiers will settle.”

There is a balance to be struck. As Wilding stresses, as a matter of trust and ethics, it's important that big businesses are not seeking to poach ideas from their smaller counterparts. 

But startup culture can rub off. As John Vary says: “Working with these agile young companies certainly provides guidance on how we can accelerate our own internal procedures.”

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Trevor Clawson

Trevor Clawson is business and technology writer, specialising in fast-growth technology companies and corporate innovation. In addition to writing for magazines, newspapers and online publications, he is the author of a number of business books.

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