Cisco reinvents the corporate incubator

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Cisco reinvents the corporate incubator

Cisco is claiming to have cracked the secret to creating start-up-like innovation inside a billion dollar corporation. The networking giant created an emerging technology business group last year that looks for new ideas that have the potential to turn into a US$1bn market within five years.

Its target is to yield 20 new ventures by 2012.

Marthin De Beer, executive vice president for emerging markets at Cisco, described the current pipeline as "tremendously positive".

Nearly 18 months after the initial launch, an internal Cisco wiki has already yielded 400 ideas for new businesses.

The group has already launched TelePresence, physical security or video surveillance, digital media and signage and an IP interoperability and collaboration systems server for emergency services. 

Cisco chief executive John Chambers said earlier this week that he expects to promote TelePresence to a regular business group this year. 

Company incubators have a poor track record in delivering actual business results, according to De Beer.

Innovators and entrepreneurs tend to suffocate when they work for large corporations, and executives often prove less supportive when incubators start creating products that threaten the firm's core business and profit margins.

But De Beer is confident that Cisco will be able to break that spell. "We looked at what other companies have done and why they failed," he said in an interview at the N etworkers at Cisco Live user conference in Anaheim, CA. "Our biggest innovation is that we innovated in the process of innovation."

De Beer also cited a corporate culture that is open to change and executive buy-in. Chambers, for instance, has been a vocal supporter of the products that came out of the group and especially TelePresence.

The group is also unlikely to run into any of the existing businesses, because it invests in areas adjacent to Cisco's core business of routing and switching rather than the switching space itself.

Cisco declined to disclose the budget for the group, that employs a staff of 400. The group is part of the research and development organisation headed up by Charlie Giancarlo, Cisco's chief development officer.

Ultimately Cisco is aiming to have three or four businesses promoted to a regular business unit, turning them into what Cisco calls an 'advanced technology' or 'foundation technology'.

The latter group is currently limited to the core business of routing and switching. Advanced technologies are considered high potential groups of more than $1bn in annual revenues and will receive the focus of Cisco's investments.

They include recent acquisitions such as the WebEx collaboration software and Scientific Atlanta, a maker of TV set-top boxes.

The group is also claiming an unexpected success in the labour market. Cisco's start-up group, claims De Beer, is proving an attractive employer to people looking for a compromise between the uncertainty and excitement of a start-up and the security of a large corporation.
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