This article was originally published by Jošt Faganel based on his experience working with more than 100 corporate innovation teams.
Startups disrupt one industry after another. Ten years from now, the global economy will be driven by companies that do not exist today. A recent study by Yale University showed that 10 years from now, 75% of the S&P 500 index will consist of new companies - startups. In order for today’s industry giants to obtain their position, one of the routes is co-creation with the winners of tomorrow. Such collaboration gives new perspective to solving the challenges of tomorrow beyond the current boundaries, brings new capabilities not perceived to exist and introduces a new dynamic regarding how fast progress can be made.
Startup collaboration is on the agenda of every large company and has different forms and fashions: supporting startup accelerators, active startup mentorships, creating innovation spaces or hubs, running hackathons, organizing meetups on a specific challenge and many more.
At HighTechXL, we support and drive startup-corporate collaboration via a program we call The Launchpad. The name itself reflects our belief that by combining the two, when done right, you can achieve the moonshot targets of your innovation goals. By running 50+ startup-corporate collaboration initiatives within companies like ABN AMRO, Sodexo, EY, Friesland Campina, QLIP, ASML and others, I have learned companies are much more likely to strike the next big thing and stay relevant with such a collaboration if the following is taken into account:
When a match is made, neither party can hide their excitement. Practice shows this is the easy part. The challenges are in the follow-up. Aligning two completely different worlds, getting into co-creation mode versus a buyer-supplier relationship, building an internal team to work on the business case, getting out of the building and talking to customers and exploring how 1+1 can equal 3 ... these are the big challenges. The excitement masks the priorities and if not managed correctly, the relationship sometimes doesn't go beyond the first handshake.
Aligning two completely different worlds, getting into co-creation mode versus a buyer-supplier relationship, and exploring how 1+1 can equal 3 are big challenges.
The intention of partnering with startups as a corporate is not to get innovation going and outsource the hard stuff. It is to give inspiration, explore external perspectives on solving the grand challenges of tomorrow. The hard work doesn’t disappear with a partnership. Furthermore, ways to turn the capabilities of the startup into the next big opportunity needs to come from the corporate team. Driving the business case, building a team, engaging with clients, communicating and selling the business case to stakeholders and actually running the new business – that still needs to be done, and it's a collaborative effort between the corporate team and the startup.
Success in an innovation process is a very relative thing, and a pilot or signed partnership agreement does not mean the collaboration was successful for either. The goal of the process is to create a win-win situation. The startup needs the opportunity to scale, and the corporate needs the opportunity for new business. These goals are hard to achieve, and the steps we make in the process of exploring new business brings important learnings. So, even if we learn the partnership or pilot will not work, we did learn what direction not to pursue and/or what capabilities are required to complement the business case we did validate, and we do that in a quick and lean way. So, we are one step closer to the next big thing.
My recent blog post, “Investing in Corporate innovation is never a loss,” touches the "people" aspect of an innovation process, which is also very relevant in a startup-corporate collaboration process.
Do these learnings or guidelines guarantee the startup-corporate collaboration will create the next market disruption? No. However, taking into account these guidelines and managing the process so it allows a collaborative approach, iterative learning, fast decision making and building up the skills to get the job done significantly increases these possibilities.
Next week at The Next Web Conference, I will host a roundtable session as part of The Boardroom track, where I look forward to discussing both the startup and corporate perspectives and learning from each other how to increase the probability of disruption in such collaborations.
Interested in corporate innovation? At HighTechXL we've been working with corporates for the past three years, supporting them to build their businesses. Find out here how we can help you take your company to the next level through innovation and entrepreneurship.