If you listen to the news or read industry journals, you've seen it many times. Companies need a digital transformation to ignite innovation in their businesses. If companies don't embrace this, they will lose their edge to disruptors in their industry. Most often, the disruptor is a startup.
In these scenarios, the disruptor triumphs over the existing companies and goes on to make millions or billions such as Microsoft, Amazon, or Netflix. The old-school corporations are left in the dust. It almost sounds like a movie where the underdog wins against staggering odds. But, does innovation have to be the result of an "us versus them" mentality? Is there a scenario where both sides can benefit?
The business landscape changes daily with new technologies and concepts coming online. Rapid change makes it difficult for large and small companies to stay relevant. That's why corporate-startup collaboration is viewed as a way for businesses to sustain growth. These collaborations are beneficial for both large and small companies. Corporations can learn new ways of working, adopting newer technology, and sustaining an innovative culture. Startups gain access to larger markets, more investment dollars, and reputation credibility.
When we think of collaboration, we think of employees within an organization working together to achieve a goal. Collaboration among businesses is the same. It simply means organizations working together for their mutual benefit.
Collaboration between incumbent players and startups is the way forward for sustainable growth for the future. A model where startups bring innovation to existing players without disrupting the industry. These models can include incubators, accelerators, corporate venture capital, and research and development.
The company started investing in startups who were developing new technologies for the ever-changing energy industry. They created the Shell Ventures Division to invest in startups that played in areas of the industry in which Shell was not active. The Shell TechWorks partners with startups that have solutions for existing or future engineering challenges that align with Shell's business strategies. Both parties benefit.
Shell explores new market segments and technologies without distracting from its current business focus. Startups benefit from the depth of support and market presence of a large corporation. It's a true win-win.
German wholesaler Metro put together a group of innovative restaurant owners who were willing to test products developed by startups. Metro usually pays for the pilot, but the business is directly carried out by the startups. This way, the three parties gain:
Metro is also able to collect massive data on which solutions address customer needs.
Another way to encourage collaboration is to tap into the research and development efforts at institutions of higher learning. Taiwan Startup Institute manages a program that turns professors into startup founders. Corporate teams act as mentors to academic-based startups. The arrangement helps startups chart a clear path and build a solid foundation. The program gives corporations new avenues for growth through cutting edge research and development.
For example, Professor Ching-Yuan Lin was able to launch an advanced transmission and gear production technology with a cyber-physical system component through the program. The concept attracted major funding and illustrated the importance of collaboration between businesses and educational systems.
Corporate and startup collaborations have grown to almost 3,000 in 2018, with a total value of $180 billion. However, nearly 75% of these initiatives fail to deliver expected results. The majority of collaborative efforts fail to satisfy either the startup or the corporation.
What do relatively new businesses expect from a collaborative relationship with a larger company? According to the Boston Consulting Group, startups are looking for:
Of these five benefits, only reputation and product development received a satisfaction rating above 50%. Overall, startups do not feel they are realizing the expected benefits.
The same study found that corporations feel their key challenges are building a culture of innovation and acquiring talent to execute innovative ideas. It's no surprise that the five top expectations for corporations include:
Corporations were also satisfied with the progress towards a digital transformation that was brought about because of the collaborative efforts. Overall, corporations were more satisfied with their collaborative outcomes.
Corporations and startups begin from different mindsets and without an understanding of what those mindsets mean, successful collaboration will be hard to achieve. Startups fear running out of money because of the lengthy sales cycles and vendor assessments of corporations. Established businesses fear a lowering of their reputation because of a startup's inexperience.
Corporate employees are conditioned to follow standardized processes, expressing concerns for the overall quality of a startup's product. Startup employees view themselves as disruptors and find it difficult to compromise with what they perceive as the status quo. If collaboration is going to work, both sides need to make sure their expectations align.
Mutual understanding of the challenges facing each participant is crucial to a positive outcome. Specifically, collaboration requires participants to define the following:
Without a shared understanding of these four points, collaborative efforts will fail to achieve their potential.
Our mission is to increase the economic viability of Southeast Asia through our innovative platform. Using our tools, we want to share our insights on corporate innovation, especially the positive outcomes of collaborations between corporations and startups. We want to provide hands-on training that can ensure the success of collaboration.
RISE has worked with hundreds of corporations. We have formed close relationships with corporate executives and other key figures in the innovation landscape. We have facilitated over 1,000 startup- corporate relationships. Our experience has taught us a great deal about the unique and innovative ecosystem of the region. We want to share that insight across the region.