Daniel Collado-Ruiz and his team reported that more than two thirds of the top 100 corporations are engaging startups one way or another. The problem in this trend is that collaboration is often not successful. It often stays at a superficial level, and does not make a lasting impact in the corporation. The lack of success is not particularly surprising, when considering the differences between corporations and startups. These differences are highlighted in the “Differences in Best-Practices” figure.
There are however three main reasons in favor of collaboration efforts. They are shown in the “Reasons for Corporations to Collaborate with Start-Ups” figure. As to how to move a Corporation towards collaboration, eight guidelines have been developed. They are (1) ENGAGE 10 TO 15 STARTUPS PER BATCH. The most effective Start-Up programs engage enough startups to have a noticeable impact in the organization, but not enough to overload or distract the organization. (2) YOU NEED 3 MONTHS TO GET DEALS DONE. Start-Up collaborations vary in length, somewhere between 2 and 6 months, with most of them falling in the range of 3 to 4 months. (3) BRING THE STARTUPS ON-SITE. The biggest difference between Start-Ups is where they take place. When there is focus on learning and preparing the corporation for the future, it is critical to have as many of the employees in the corporation exposed to the startups. (4) MAKE SURE THE STARTUPS LIVE LONG. One often cited concern of corporations when working with startups is whether the startup is a reliable partner for the long-term. One strategy often used to ensure the startups’ survival and focus during the Start-Up collaboration is making sure they receive investments as they enter the relationship. (5) THE ACCELERATOR IS THE TIP OF THE ICEBERG. For innovation to reach the market, and for employees to learn, most corporations must do homework in all functional areas (marketing, manufacturing, technology, IP), both before and after engaging with startups. (6) MAKE YOUR EMPLOYEES ENGAGE THE STARTUPS. To get the benefits and employee skills, employees need to be exposed to the startups. That way, they experience first-hand how startups work, which leads to skills development and identifying opportunities. (7) ENSURE THAT THE LEARNINGS STICK. For the Start-Up to make the organization learn, corporations need to put additional focus in engaging more employees, sharing internally, analyzing what can be improved and enabling change management in the organization. Such actions can be complex, but they are also needed to renew the organization. Corporations must define people responsible for managing change emerging from the Start-Up, and involve key players from different departments in the change. (8) FIND THE RIGHT PARTNER. Organizing a corporate Start-Up collaboration is a big and complex task. It involves very specific knowhow, and corporations rarely have it in-house. Most corporations who embark in this journey on their own end up failing to get much innovation, and Start-Ups end up not getting real value out of participating in it. Use of Collaboration Brokers is a recommended best practice.
Corporations can choose to collaborate with startups in many ways. Smaller scale initiatives like competitions or incubators give branding benefits, but tend to fall short on innovation and learning. Investment and acquisitions are positive from the innovation side. But corporations wanting to renew themselves generally should opt for a systematic Start-Up collaboration program.