How corporations work with startups to create disruptive innovation
Across all industries, startups are at the forefront of the innovation economy. Consistently challenging the status quo, implementing creative solutions and driving productive work practices, startups have the uncanny ability to cause disruption wherever they form.
Disruption, as innovators define it, is the gold standard of innovation, and we invariably observe startups as the leaders in this area. Whether it’s Uber rattling the taxi industry or Airbnb creating a space for affordable holiday accommodation, startups are creating new industries and products directly serving the needs of today's savvy consumers, helping to transform themselves into multi million dollar entities seemingly overnight.
It’s no wonder really that large corporations want a piece of that innovation pie, with many established organizations implementing direct practices, such as lean startup techniques, to help them ‘work like a startup’ in an attempt to achieve innovation at a rapid pace.
However, rooted processes which are entrenched in large corporations often cause a huge hindrance in adaption of startup thinking; budget approval hierarchies, decision making delays and traditional-thinking approaches cause stagnation in innovation.
Another major issue for corporations looking to become the next innovation powerhouse - exceptional talents are running to startups. In today's dynamic workforce the job security benefits offered by larger corporations are no longer the major selling point they once were in the work market. Talented workforce are seeking stimulating and fulfilling work opportunities they feel they can find in the startup community and corporations are at a huge loss.
So on top of the process-driven headache corporations face within their innovation developments, they are also finding that they cannot recruit the right talent to help accelerate innovation forward.
If you can't beat them, then acquire or partner with them
However it is not all a lose-lose situation, one thing that large corporations have in their arsenal over startups: Budget! And they can use that budget to buy into or partner with startup innovation. Many corporations recognise the innovation potential of startups and decide to acquire, partner or integrate for a number of reasons, including acquisition of products, talents or IP.
The benefits of acquiring a startup for an organization are clear.
Acquisition of or partnering with a startup with a brilliant idea dramatically increases the rate of innovation within an organization. Startups often have the ability to streamline thinking, which helps to set a clear path for innovation without unnecessary process-driven obstacles. Rate of innovation is increased and cost-effective solutions are produced, which services to benefit a corporation’s innovative initiatives.
Corporations know that the right talent can be hard to find, acquiring or partnering with innovative startups means acquiring access to talents which are concotting all those disruptive products and services. In today’s dynamic marketplace product life cycles are short and unpredictable, however talents can only develop and grow with time, inevitably making them the most valuable asset within an innovation department.
But let's not just sit-back and praise the almighty innovation superpowers of startups. Startup fail, and they do so time and time again. Often within the core of any startup is a great idea, however the ability to scale the business is not there. Startups can be great in one area of business, but lack the structures to build-up the business to something more viable. And that's really where corporations come in - corporations are great at the multifaceted nature of business and with their support they can really help startups develop innovations to the next level.
Finding the perfect match
So it’s clear corporations need startups and startups need corporations. But where do they find each other?
Many large corporations employ startup and technology scouting programs within their innovation departments to help them identify innovations in the marketplace to acquire or businesses to partner with. These programs may be carried by internal or external consultants charged with scouring the innovation streets to find solutions to their product development problems.
However there is a fundamental element of this scouting process which is missing. Sometimes scouting managers focus too much on going out to find startups and less on having startups come to them. Startups want the opportunity to partner with corporations but lack the avenues to approach them.
Open calls for innovation are great solution for corporations to source startups, by having them come directly to them through a platform which automatizes the process of startup evaluation and selection. Open calls allow corporations to extend their scouting search on a global scale, and reach markets they otherwise may not have access to.
Acquiring and partnering with startups is no easy feat. Corporations invest a significant amount of time and resources in ensuring they find the perfect startup match. By utilizing an effective software platform, paired with an efficient scouting outreach service to undertake a startup scouting program, innovation managers can be ensured they are making the right acquisition or partnering choice.
Making it work
To ensure acquisition or partnerships with startups are successful, corporations need to take note of some crucial steps.
One core step is ensuring that they buy-in to the startup happens at an early stage. News of innovation spreads like wildfire. Once competitors catch wind of an innovative startup, corporations can all but be certain that budget for acquisition or partnership will soar. Therefore identifying a startup before it becomes a hot commodity is important and conducting an open call is a great solution to catch those under the radar startups which one day can become highly valuable assets to a corporation’s portfolio.
Setting up the right internal processes for integration with startups is also key. Even when corporations find the right startup match, they can still face difficulties integrating or partnering with the startups effectively. To make these initiatives effective corporations need to set up the right set of processes for streamlining startup integration. This is an essential internal structural component which should be in place before acquisition or partnership occurs.
Lastly, there is a fundamental reason why a corporation decides to acquire or partner with a startup, and usually it's because that startup offers something unique that the corporation is not capable of producing. Therefore it is essential for corporations to allow the startups to be startups. The startups’ core business model is what makes it so innovative, and corporations should try not to change the model to the point of no recognition.
When corporations effectively balance the relationship with startups they can tap into disruptive innovations which shackup the market. To do this, scouting the right startups through an open call platform, along with putting the right organizational structures in place to ensure integration and partnerships are successful is key. With the right approach in place corporations acquiring or partnering with startups can become innovation powerhouses.
Need help with conducting your open call for startups? Find out more here.