The Push for Faster Innovation

While the potential of AI is widely recognized, corporates are still in the planning stages going from many ideas to honing focus, while caught in a whirlwind of decision-making. It’s been over a year and a half since ChatGPT launched (November 2022) and while most large companies are still talking, thousands of startups and platform companies have emerged to create massive new vertical value.  The rapid evolution of AI technology presents a challenge as businesses struggle to adapt legacy technology stacks and align large matrixed teams—a process that demands considerable time and strategic planning.

Corporates need to think more like startups and adopt an agile ”test and learn” approach that not only keeps up with current technology but also adaptable to customer feedback, demand, and the evolving startup/vendor landscape. 

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Tangible examples have shown how disruptive brands we love today began by taking the first step with an idea that evolved to eventually find success by adapting their business models and products based on feedback and killing bad ideas that weren’t working:

1. Slack: Slack’s development began as an internal tool used by Tiny Speck during the development of Glitch, an online game. When Glitch was shut down, the company realized that the messaging tool it had developed could be valuable to other businesses and pivoted to launch Slack as a standalone product.

2. PayPal: Originally, PayPal was conceived as a software for transferring money via PDAs (Personal Digital Assistants). After multiple experiments and iterations, the company shifted focus to become an email-based payment system, which rapidly gained popularity and disrupted the whole payments industry which Visa and Mastercard had to catch up to.

3. Airbnb: The concept for Airbnb could not have been conceived by a giant like Marriott or Hilton whose corporate structure would have made it difficult and risky to consider peer-sharing homes. It took a group of non-hospitality experts willing to test different concepts and break a few rules to evolve from a bed and breakfast concept to the global rental platform it is today.

In these cases, innovation was not just in the ideas but also in the speed and agility required to experiment and evolve from the first idea to a $1B+ business. For most corporations, getting there requires not only a whole new way to approach development but also a radical change to the organization OR a more effective practical one by working with external partners who can turbocharge the process.

Venture studios are a powerful solution to enabling larger corporations to take their first steps with emerging technology. 

Team up with a seasoned venture studio like PSL that brings a wealth of experience in venture building and creating founding teams, starting with a proven experimentation process to ideate, validate, and pressure test ideas to get to venture-scale “unicorn” ideas. Along with the process, this requires the expertise to distinguish viable ideas from less promising ones. This collaboration isn't just about generating ideas; it's about rapidly bringing them to life through successive cycles of ideation and validation. When you’ve done the repetitions, you gather more data points for decision-making and start to find patterns in the wins.

A Proven New Venture Machine

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Ideation and Validation (to Kill or move to Spinout)

Engage in rapid experimentation across initial ideas, each beginning with ideation, customer discovery, and moving to validation with a Minimum Viable Product (MVP) or prototype. This process allows for real-time feedback from actual customers, advisors, and investors, honing the idea into a real value proposition and a market-ready business model.

The first step of corporate innovation and partnering with a studio involves developing a “portfolio” of 10-12 innovative ideas. Each idea undergoes a thorough validation process, testing against real market conditions by connecting with customers, investors, and analyzing market trends. This cycle should only take 6-8 weeks and is repeated until 2-3 ideas emerge that show potential for venture-scale and market viability, demonstrating a clear pathway to success where there is a willingness to play and pay then pairing these ideas with the right founder and teams.

This mechanism becomes a much more efficient and practical way to discover real market potential. 

Creation to Spinout

Moving towards building a new venture product and venture, the focus shifts to the creation and further development of the validated ideas with the founding team which should take 8-12 weeks. During this stage, each project reaches a critical decision point: proceed to spinout focused on a path to early market entry with customers and VC funding that can take 4-12 weeks. This go/no-go decision is pivotal in determining whether an idea will evolve into a standalone business or integrate into an existing corporate structure to maximize its market impact.

Each decision point across steps from ideation to validation then creation to spin out requires venture-building expertise and knowing how to answer critical decisions for a company’s success - is the idea venture scale and commercially viable, who would be a good founder, who would be good investors?

An “externalized approach” using studio teams can lead to more innovation by fostering a proactive environment of talent and a proven process that continuously challenges the status quo and encourages creativity and problem-solving at all levels of an organization. Building a foundation for sustainable innovation by integrating feedback loops, reducing time spent planning, and optimizing resource use.

Taking the First Steps towards Innovation with PSL

As a leading venture studio, PSL has become proficient in taking ideas, validating and killing over 400 of them to get to the 35+ companies launched (to be launched here soon). Our team of relentless experimenters, builders, and investors can guide large organizations like we have done with Fortive through the venture-building process. In addition to our team, we bring our connections to the startup and venture community to amplify the work we do with our partners, bringing more insights and talent to the project. 

Reach out to corporate@psl.com to start putting your strategies into action this summer!