Interview, Fireside Chat
Fostering Innovation Within Companies: An Inside Look at GS Accelerate
- GS Accelerate is an internal innovation engine at Goldman Sachs launched 3.5 years ago to validate cross-divisional or nascent business ideas lacking an obvious home within existing business units.
- Since inception, the program has received nearly 2,000 submissions from approximately 3,000 employees across the firm.
- GS Accelerate has made 15 investments from the firm's balance sheet, resulting in 7 live products currently utilized by employees or clients.
- Tanya Baker and Hassan Malik, who co-lead the program, state that large corporations do not inherently lack innovation but struggle when ideas lack a clear path to validation or require cross-unit collaboration.
- The program identifies that successful corporate innovation requires three pillars: a belief that ideas originate at all organizational levels, a focus on external market trends, and patience to endure experimental failure.
- Independence is a core operating principle for funded teams, granting them autonomy to select their own teams, technology tools, milestones, and agendas once the core kernel is established.
- Sponsorship is provided via a board of directors comprising senior leaders from across the organization to offer guidance, networks, and client introductions.
- Teams receive patient capital with a focus on 2–3 year horizons rather than immediate quarterly returns, acknowledging that truly special client solutions require extended development.
- All businesses in the program are restricted to a two-year maximum tenure to force early validation and determine their future home (integration, spin-out, or partnership).
- Daniel Kobanat joined the 2020 cohort to externalize ClearFactor, an enterprise software platform he developed internally to automate inter-application communications.
- The solution faced initial barriers to externalization due to its deep embedding in Goldman Sachs' infrastructure, which GS Accelerate funded to holistically extract and repackage as a standalone product.
- ClearFactor is scheduled to launch as a pilot later in 2021, targeting the externalization of an internal asset into a monetizable product for other enterprises.
- The program's 2021 investment themes are Financial Cloud, Financial Services Digitization, and Sustainability, chosen based on explicit client demand and strategic priorities.
- Financial Cloud aims to leverage Goldman Sachs' infrastructure to better serve clients, following co-CEO Marco Argenti's 2020 public declaration of focus in this area.
- Digitization targets the modernization of legacy, pre-internet business processes to improve scale, self-service, and efficiency in areas like transaction banking.
- Sustainability initiatives support the firm's $10 billion commitment over the next decade to invest in and support 1 million Black women, alongside broader client decarbonization goals.
- Hassan Malik notes that the firm acts as a symbiotic partner to fintechs, engaging in a multifaceted relationship that includes advising, investing, acquiring, and spinning out businesses.
- Innovation themes may evolve as industry tides shift, though the current focus is heavily driven by client discussions regarding sustainable investing, analog-to-digital conversion, and cloud capabilities.