5 Reasons Corporations Seek Startups for an Innovation Infusion
A Question of Innovation…
Corporations may recognize that they could use a good dose of innovation, and some seek startups as a shortcut to creative thinking. They may become enamored by a startup’s product, service, or even social focus. However, they must understand that an investment in time and money needs a more solid justification. Whether the startup is well structured and set up for its success is what corporations should look for when entertaining ideas of how to “acquire” innovation. Does the startup’s activities align with the corporation’s purpose and needs? How can one tell a quality startup from a flash in the pan? Is all innovation created equally?
Incubated Startups- A Smart Choice!
According to our research, if the startup is incubated by a formal program, there is a greater chance of success. After all, the reputation of the business incubator or accelerator is one type of success predictor for the startup (and by extension: the investment made by the corporation.) We certainly have some advice based on our experience in the innovation landscape and based on our extensive network of incubators and accelerators worldwide. Yes, sourcing startups through programs is a better exercise in efficiency and risk mitigation. And yes, identifying which programs have the startups that align with a corporation’s business goals can be easy. (Ask us!)
Startups for Innovation: The Best Idea
Now, let’s understand the top 5 reasons looking to startups for innovation is the best idea. For corporations, having greater insight into why one is targeting startups is an important first step in setting expectations- and even rallying support internally. How can corporate innovation leaders explain why they are turning to startups as sources of ideas, product improvements, and new channels? What can they expect from collaborations and even investment? What can they communicate internally when spending time researching “what’s out there”?
#1: Crafty Creativity
Large corporations, over time, become bogged down by process and status quo. They develop portfolios and work to maintain them with steady growth. In today’s world, big corporations know they must innovate and to do that, they need to makeover their mindset. Though they may understand this intellectually, the reality of finding fresh ideas is another challenge entirely. An infusion of new employees does not always “do the trick”. What corporations often need is to access the innovation bubbling from fearless startups. These startups are lean, hungry, and crafty- and not afraid to think outside the box.
#2: Brand Botox
A corporation’s personality is captured in its brand, and realizing it may need a facelift can be a frightening realization. Where does one begin to brainstorm more attainable ways to modernize or even branch out? Often, looking within its own ranks does not produce an unbiased nor a creative approach. We find that looking outward is a solution. Startups become the key to finding innovative versions of a corporation’s own brand, with products or services that can become clever complements or extensions.
#3: Faster Solutions, Fewer Risks
Business incubators and accelerators in our Case Studies 2018 report were quick to point out one of the top reasons big corporations work with them is to increase speed to market (and with less risk.) In working with a startup, the company decreases the dangers to its own resources in case of failure. In the event of success, the corporation brings forth a new product or service in a faster way thanks to less bureacracy, leaner processes, and so on. This is likely the most CFO-friendly reason why corporate leaders seek startups as a way to source innovation.
#4: Exponential Expansion
We learn from our community of 1200+ incubators and accelerators worldwide that corporations consistently compliment startups’ ability to work quickly to scale up solutions. With less beauracracy and formality, startups have the ability to bring a minimal viable product to market, test it, then rework it as needed. They can more quickly react to market reception and adjust the offering. Corporations in turn, find ways to test ideas in specific geographies or customer segments- quickly, thanks to collaborations with startups.
#5: Finding the Pearl
It seems the startup ecosystem is abuzz with hot technologies and unique applications. An established corporation may not understand how to apply trends such as Artificial Intelligence, Internet of Things, Big Data, Gamification, and even Digital Health to existing products, services, and operations. According to our Innovation Landscape whitepaper, the majority of startups worldwide are working within these areas. As a corporation, the trick then becomes how to envision incorporating one of these industries- and where to begin. To find the pearl, many corporations approach startups for a consultation or idea session.
Corporations: Here’s How to Activate Your Innovation
UBI Global recognizes that corporations are faced with an ever-constant pressure to remain competitive. Seeking innovation via partnerships with business incubators and accelerators and even direct investments in and collaborations with startups are certainly ways to stay ahead. However, these actions must be guided. As part of our leadership in the global innovation ecosystem, we make it our business to know the actors worldwide and to identify the top players.
Interested in sourcing innovation, exploring specific industry sectors, or understanding particular geographies? We have an entire menu of tried and true options to help you Activate Your Innovation in a focused, efficient way. These services range from simple introductions to star incubators to in-depth, custom reports and even event participation or sponsorship such as in our upcoming World Incubation Summit in Qatar. Sourcing innovation via startups is smart; it’s smarter still with an experienced expert.
Contact [email protected] to explore the possibilities.
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