As new technologies such as faster networks, artificial intelligence, quantum computing, robotics and nanotechnology rapidly transform our society, large global corporations are looking for ways to adapt and innovate quickly, so that they are not left behind.
For retailers, banks, insurance companies, or even long-established manufacturers, technology is critical to a prosperous future. They may need to test out a prototype of a new digital app, connect with startups that can help them adapt to new technologies or invest in new emerging materials.
Increasingly, they are looking to Waterloo’s technology community to help supercharge corporate innovation, and Communitech is the organization that can help access talent, research and resources.
We spoke to Simon Chan, Head of Corporate Innovation Thought Leadership at Communitech, about the value of corporate innovation outposts and how Communitech’s programming can benefit companies looking to innovate:
Q: How did Communitech’s innovation outposts come about in the first place?
CHAN: Communitech has been around for about 21 years, helping start-ups to start, grow and succeed, but about seven or eight years ago, we also started seeing enterprise organizations come to us to get a better understanding of how start-ups were approaching innovation and how that could help them solve customer problems.
People were hearing about start-ups having the advantage of moving fast and being innovative. That captured the imagination. There was this idea that bigger corporations are slower to react, and there was a growing demand within corporations to adapt and move quickly.
You could see the start-up DNA in companies like Apple and Facebook and there was lots of talk about disruption. Traditional organizations started paying attention to this tech movement.
Canadian Tire was actually the first to start an innovation outpost here in 2013. As you can imagine, people wondered: ‘What is this traditional retailer doing here?’ The purpose was to understand the emerging technology trends, and also to attract talent. The following year, companies like Manulife and TD came in and created outposts or innovation labs, with the same things in mind.
Q: What do these innovation outposts look like?
CHAN: If you come and take a look at the space here, the labs are all open so people are free to move back and forth. There are private meeting rooms as well, but the whole idea is to encourage open collaboration where organizations can move freely to talk to each other and learn best practices across multiple industry verticals.
It’s a very open environment.
Q: Can you give an example of how a company might use an innovation outpost?
CHAN: Each lab will take a different slant based on what their organizations need. Some labs will focus on the digital user experience testing, for example. They want to reach out to customers and take them through various techniques like design thinking to really understand what their needs are. They will use the lab to build prototypes for that, see how the customers react and what works and what doesn’t. Then they will take that concept back to the core organization to build that out and scale the solution.
Q: How does the presence of these enterprise companies help the start-up ecosystem? Are these enterprise companies using the services of the start-ups?
CHAN: Yes, absolutely. We help organizations that are interested in partnering with start-ups, whether it be buying in their services or investing in start-ups. That helps our start-up ecosystem, because they get access to companies that they could potentially test different pilots with.
Also, for the start-up companies that are already scaling, they get access to distribution and the large enterprise organizations that they can sell into. We act as a bridge builder to bring those two worlds together.
Q: Are there other ways that Communitech is connecting these enterprise companies to the technology ecosystem in Waterloo?
CHAN: If the enterprise organizations are looking for research, Communitech can help connect them to researchers at the universities as well. If they are in the field of advanced manufacturing, we can connect them to Catalyst137 (an innovation, testing and commercialization facility for internet-of-things hardware).
We are like a guide or trusted adviser. We try to understand the need from an innovation perspective. Not every organization is going to want to meet with start-ups. They might be more interested in talent attraction, or they may just want to sponsor an event that brings the ecosystem together and that helps them from a branding point of view.
Q: How are these innovation outposts staffed?
CHAN: We make a very strong suggestion that the organization hire the lab leader from outside of their organization. We think it needs to be someone who is not currently working at the organization because we believe it’s important to bring a different perspective from what’s in the core organization, a fresh perspective.
We do have a firm that we work with to help them with the hiring process, but ultimately, of course, who they hire is the organization’s decision.
The labs tend to be populated by graduates and co-op students from local post-secondary institutions like the University of Waterloo and that again brings a fresh perspective.
Q: What is the process for starting an innovation lab? Is there an application process?
CHAN: Typically, what happens is that they come here and see it first. That is usually the first step. Once they understand what the benefits are of being physically here — whether it is access to talent, or to see and sense what start-ups are doing — then basically we work them through a proposal in terms of what a lab might look like, what type of space they want and, obviously, the costs.
We have the space at the Tannery building in Kitchener, and we also have the Communitech Data Hub location in Uptown Waterloo that is more focused on AI and data. CIBC is an example of a company that has a lab there.
Q: Can you give an example of how many jobs and other business results an innovation outpost might generate?
CHAN: There is a TD case study that shows that in the last four years at Communitech, TD cycled through more than 150 co-op students. They’ve produced about 300 prototypes. They also ran 14 hackathons, had 1,600 workshop attendees and 2,300 lab visitors in the last four years. So that’s just some data from one of our core partners.
Q: Do these enterprises with innovation outposts stay in Waterloo ?
CHAN: There are different types of landing scenarios. There are what we call ‘lean labs,’ and some companies just want to come in and test it out for a year. But, for example, Manulife and TD have been here for five years. Some organizations have stayed for an extended period of time.
There are also companies that have created satellite offices in the region. TD is an example of that (In 2015, TD expanded its presence in Waterloo with a technology development centre). I think it’s fair to say that TD is an example of a Toronto-centric company but they saw the talent here and so they expanded.
Q: What are the benefits for Waterloo of these innovation outposts and the programming around them?
CHAN: It builds a profile on a global level, not just for Communitech, but for the whole community.
These are global multinational brands like Deloitte, Manulife, TD, CIBC. That obviously has a halo effect on the region and speaks to the talent we have here.
And then also, there is the talent retention. As we produce graduates with talent in the region, those graduates see that there’s investment here from large organizations, so they stay.
For Communitech, the presence of these large organizations provides private funding that helps us grow our overall programming and services for our start-ups. So that helps build out services to help entrepreneurship grow in Canada.
In terms of economic development, we hope to see more capital from outside this region and outside of Canada come into Waterloo as investment into start-ups, scale-ups and in the form of satellite offices for enterprise organizations.
Q: How many of these innovation outposts do you have?
CHAN: We have approximately 20 on-premises labs, but Communitech also works with over 30 other corporate partners that are off premises. Those don’t have a physical lab location, but we will go to them and work with their executive teams, leaders and practitioners.
Q: In what ways would an off-site company use Communitech’s programming?
CHAN: What we have seen is that best-in-class adaptable organizations are connected to a world class tech ecosystem. Obviously, we are a bit biased, but we think Waterloo has a world class ecosystem that connects to Silicon Valley, Tel Aviv, Singapore and other places.
Also, best-in-class organizations have an innovation system that creates repeatable results, because innovation isn’t just a one-time project. You have to be innovating constantly and there has to be a balance between innovation and also understanding the business.
We talk to organizations about being an adaptable organization. We have programming for onsite and also offsite companies to help organizations understand, based on our last seven or eight years of experience, what the core components of an innovation system are. These are typically workshops and coaching for executives, leaders and practitioners. And then from there, we help them fill out other pieces of their innovation systems.
What we might do, as an example, is help them take a business problem and walk it through an innovation process, just like a start-up would. Basically, it’s a design thinking workshop where we work on a specific business problem and we help the organization understand the customer problem and work their way backwards to the various potential solutions.
Q: What is the value for companies in getting this programming from Communitech?
CHAN: We have been doing this for a number of years and we have seen what works and what doesn’t. Every organization is different, but there are common mistakes that we’ve seen organizations make and we can help them see those a lot faster than if they were doing it on their own.
Innovation isn’t something you can do alone. You need somebody to help you do that.
Q: Is the development of new emerging technologies such as artificial intelligence sparking even more interest in the innovation outposts?
CHAN: Yes. The Communitech Data Hub in Waterloo is a good example of that. Because of the interest in AI and data, we opened up the Data Hub, and CIBC is the core enterprise organization in that space. There are also start-ups and scale-up companies at the Data Hub as well.
So that is an example where we follow a technology trend, see that AI and data is important, and we address that through innovation outposts and programming specifically around it.
It also helps grow the start-up companies and scale-up companies that are focused on AI and data.
The other technology trends that are now strong in the region are around quantum computing, autonomous vehicles and cybersecurity.
Q: Is there anything you would like to add about the role of Communitech to economic development in the region?
CHAN: Just to give you some numbers, we see about 16,000 visitors to our Communitech Hub every year. Those are people visiting from across the globe. We hold over 250 events annually. We are also putting on our True North Waterloo conference for the second time this year. That is a global conference that that was very successful last year. The premise is to bring together the global community not just around technology but also to promote ‘tech for good,’ because we not only want innovation, but we want it to benefit society. Our enterprise organizations buy into this as well. That event is happening June 19 and 20 this year.
Are you exploring the possibility of locating, relocating or expanding your business? Want to know more about establishing an innovation outpost, research and development office, or other options for leveraging the Waterloo ecosystem to supercharge innovation in your company?