While employees remain an essential asset for any organization, the innovation game can certainly benefit from outside players. 

It’s important, however, that these external partners are not just “yes men.” They need to offer something truly different to what your company can already deliver internally – and even challenge your pre-conceived ideas of what works and what doesn’t. For corporates, where bureaucracy and rigid processes may have allowed inertia to take hold, the best source of this disruptive, original thinking is often a different type of company altogether, a company with a different culture, with a different outlook, and crucially, that values different ideas – namely, a start-up or scale-up.

Looking to the little guy

It’s long been known that start-ups take a different approach to innovation than bigger firms. They may not necessarily have better people working for them but start-ups are less likely to be burdened by sprawling organizational complexity, workplace silos, or constant budgetary pressures. This makes it easier for disruptive ideas to gain traction. Unsurprisingly, big businesses are starting to take notice of how start-ups are operating. According to a recent survey by Unilever, 80% of corporates believe that start-ups can have a positive impact on a larger company’s approach to innovation.

Bigger businesses working with start-ups can benefit from being exposed to a different company culture: one that is less risk-averse. Where large corporations are focussed on managing processes for large scale execution, startups are focused on building the product. Process people are different from product people.

At corporates, there is likely to be an existing business strategy generating consistent profits. As a result, it is easy for them to adopt the mantra of, “if it ain’t broke, don’t fix it.” However, this risk-averse attitude can only work for so long. More agile firms, whether small, medium, or large, may slowly start eating away at your market share. When you suddenly decide that the time is now right to start innovating, it may be too late. 

While corporates prefer the slow and steady approach, start-ups are forced to pursue a growth mindset from the very beginning – without it, they won’t acquire new customers and they won’t secure investment. This growth mindset delivers other advantages as well. In pursuit of growth, start-ups embrace problem solving and pursue radical solutions to customer challenges. And, when things don’t work out, start-ups quickly shift to new ideas. They are not afraid to fail. 

How to make working together work

Once businesses start to look outside their own sphere of influence, it becomes clear that there are a lot of smart people based outside of their company and a lot of innovative solutions already being launched and tested. Nevertheless, there is a shortage of collaborative efforts between start-ups/scale-ups and corporates that actually lead to successful pilots.

At Innoleaps, we have a three-stage program for corporates looking to partner with start-ups/scale-ups. The first is the “scout stage”, where organizations look for existing start-ups that are already active within the same industry vertical. Leveraging external accelerators, like our sister company Startupbootcamp, can provide a great way of identifying smaller firms that have relevant insights to share. Similarly, corporates might decide to launch their own call for external ideas.

Corporates should then move on to the “validate and test stage”, where they cooperate with selected start-ups to develop rapid proofs of concept. This can prove particularly useful for organizations that are not accustomed to delivering new products at speed in the way that many start-ups are. Finally, the “launch and scale stage” is where corporates look at potential joint ventures or even M&A opportunities with selected start-ups in order to launch and scale new products and services. 

It is really important for corporates to think carefully about which start-ups they partner with, and how outside initiatives can be integrated into existing end-to-end processes. At the same time, start-ups should view working with corporates as an opportunity to develop in new ways as well. 

Whilst start-ups excel at speed and agility, they perform poorly in terms of scale, where corporates have the competitive edge. It stands to reason, therefore, that many larger organizations and start-ups could work together to form a mutually beneficial partnership - one where both sides learn something new about the innovation process. 

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