Getting smart at the start

By Sarah Homewood and Rachael Micallef | 8 April 2015

Launching a startup lab or incubator is all the rage, and now that some of the first mover agencies and corporates are through the first cycle of startup ventures, many more will follow – but they need to make sure they are in it for the right reasons.

Data powerhouse Quantium is the latest to launch a startup project. Forerunners are Telstra and Mondelez. On the agency
side, M&C Saatchi has had its ‘lab’, Tricky Jigsaw, in place for coming up on a year.

SapientNitro MD Marcos Kurowski says that starting with an actual business problem for a client then working backwards
is better than looking to startups for inspiration around how to innovate and explore.

“If you’re trying to play and invent, I think that as an established company you’d want to do that in a different kind of way than exposing yourself to a lot of different startups. Where we see a real opportunity for success is in trying to solve a
specific and real problem. From that point you have a basis for a constructive and collaborative conversation,” he said.

“The startup world is driven by such a different culture, if you’re a big brand what you tend to try and look for in terms
of innovation is stuff that can really scale. Brands want easy innovation they can pick up, while startups are looking to get up
and running.”

Annie Parker, who runs Telstra’s Muru-D scheme, told AdNews that brands need to really understand what they want out of a partnership with a startup before committing.

“If they’re in it for great ideas and they want to get early insight into the grassroots of innovation, then fine. But if you just want to make money, from really early stage startups like this, it’s not going to end well for both parties. I will also counsel
people to be sure you’re in it for the right reasons,” she said.

The contrast is often drawn between the speed at which corporates operate and the pace of startup culture, but brands
need to be realistic about how long it will take for a startup to succeed, Parker explained.

“It would be limiting for corporates to expect startups to report back on their ROI metrics in the first couple of years,” she
said. “Typically the average shelf life of a successful startup is around eight years.”

Iain McDonald, co-founder of Amnesia/Razorfish, said that the main issue with brands getting involved in the startup space
is that they expect startups to fit into their regular campaign metrics.

“The problem is that every brand in Australia I’ve seen claiming the ‘startup culture’ is largely paying lip service. All too many claim to be forming a live band but end up hiring karaoke machines. When you break it down, the underlying methodology is still campaign approach, campaign budget, campaign targets,” he said.

Muru-D differs from Mondelez’ mobile futures scheme, with Telstra’s incubator giving startups seed capital for a stake in
their business. Startups are also free to take up other funding, but Parker warns that brands giving a cash reward upfront could cause a startup’s creativity to be stifled.

“The dollar figure at the very start is a difficult one to balance out, because you don’t want to stifle the creativity, and you don’t want to stop the hustle,” she said.

McDonald adds that true startup culture focuses on the idea rather than the dollar figure invested. “If you’re going to act like
a true startup then you focus 99% of the energy on the idea and find any feasible way to bring it to life,” McDonald said.

“There are no limitations, especially at the start. If the idea needs more money than you have, then you find a way to get more money, not reduce the idea to match the budget.”

M&C Saatchi group innovation director Ben Cooper, who leads the nine-person Tricky Jigsaw unit, said the budget on programs such as Muru-D, while small, still helps get ideas out in the open.

He compared it to M&C’s Incubator internal program, which allows staff to bring five ideas to the table. Winning ideas are
given $5000 to get them started.

“I imagine a brand isn’t going to stop at that [predetermined] figure, it’s just a great way to kickstart ideas. They’re probably
going to say ‘That one’s awesome, let’s chuck a million at it.'

“In many ways it’s a signpost to do things differently – and that’s not a bad thing. Backing different thinking can only be good.”

Meanwhile Y&R Group has built an “innovation factory”, with a core team of two, which allows anyone in the group to pitch ideas.

Y&R Group CEO Jason Buckley said he believed innovation must have a commercial objective right from the beginning.

“Otherwise it’s not innovation – it’s just having fun,” Buckley said. “Often an innovative solution can be a lower-cost solution
for clients than a traditional solution ... innovative is meant to solve something in a better way.

“Having commercial realities in place along the whole process is important to really make sure these things happen,” Buckley said. “A great idea will get stalled if there isn’t proper process and steps along the way.”

Innovation lab is somewhat of a buzzword, says The Hallway’s head of technology, Brad Bennett, but notes that it can be a
necessary way of working because nine out of 10 innovative ideas don’t work.

“That’s part of innovation, you have to try, fail and try again. But if we did that for our clients, no one would have any clients.
So we have to build creative ideas in a way that has enough risk that we get noticed, but not too much risk that we are likely to fail, so that we can keep a client’s business,” he said.

This story appeared in the latest issue of AdNews (2 April). Subscribe to AdNews in Print, or get it now on iPad.

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