Finding the right startup for my corporate innovation project
A recent study by Imaginatik and MassChallenge highlighted the growing importance to corporates of working with startups. It revealed that 82% of executives viewed collaborating with startups as either “somewhat important” or “very important” to their strategic objectives.
Indeed, a recent paper from the The European Academic Network for Open Innovation highlighted collaborative innovation as the most popular form of open innovation in practice today. It’s the most popular with good reason too, as working with startups allows corporates to gain access to cutting edge technologies without incurring the expense and risk of conducting the R&D yourself.
Working effectively with a startup can be incredibly difficult however, whether down to the inherent cultural differences between them and a big corporate, or the challenges in identifying the best startups to work with.
Selecting the right startup
Let’s start with how you select the right startups to work with. This process is akin to finding the perfect date. You need to find the right startup, with the right technology, at the right stage of their journey to provide an effective partnership. You will need to consider four main factors in your search:
- How developed is the product? Startups can operate at everything from pure research based technologies to fully developed products and services that have an established customer base. You will need to consider what stage of the journey you want to invest in, and the support you can offer at each stage.
- What do the founding team bring to the table? Numerous studies have highlighted the tremendous value the founding team bring to the success of the startup, and it’s perhaps no surprise that ‘acquihires’ are increasingly common. The talent available at the startup is a fundamental part of their value proposition.
- What IP do they own? Intellectual property protection is vital to many new technologies, and proffers considerable competitive advantage to whoever holds it. If a startup has that legal basis therefore, it can be incredibly valuable.
- What level of financial backing do they have? In any partnership between a corporate and a startup, the goal will be to scale up the technology. This will require financial as well as human resources, so it’s important to understand how equitable that investment split will be, or whether the corporate will need to shoulder the burden.
Working with them
After you’ve selected the startups you want to work with, it’s important to appreciate some of the cultural and structural differences between them and you. This will enable you to work effectively together. There are six core differences that need to be understood:
- Appetite for risk – With 90% of startups likely to fail, they have an inherent appetite for risk that is alien in many corporate environments.
- Strong sense of purpose – Employee engagement inside corporates is widely reported to be very low, but that is seldom an issue inside startups. They will likely have a strong sense of purpose that ignited the project in the first place, and that will bond the team together tightly.
- All hands to the pump – Whilst approaches such as holacracy and agile have grown in popularity in the corporate world, in the startup world such methods are de rigueur. The small nature of the team means that job titles are largely meaningless and everyone contributes to their fullest.
- Agile by default – Agile is arguably the hottest buzzword in business today, but for startups the idea of testing out MVPs and adapting based upon your learning is the norm.
- Innovating to survive – It’s an established fact that startups innovate much better than large corporates, and much of this is down to the simple fact that innovation is crucial to their survival.
- Being broke is an advantage – Lack of cash can often be used as the go-to excuse in the corporate world, but having to bootstrap is the norm in startups. This lack of cash forces startups to focus on what really matters.
Whilst many companies are actively engaging with startups, the ability to do so well remains a source of competitive advantage. These tips should ensure your own efforts get off on the right foot.