Working with startups is something many organizations strive to do in order to tap into the innovation and ingenuity such partnerships can bring. For instance, an Accenture study from a few years ago found that large companies are keener on collaborating than their smaller peers. Even with this enthusiasm however, few big firms do it well and struggle with integrating any “external” let’s say working process into their core business.
What’s more, when entrepreneurs were recruited into large companies, the vast majority left because of the way their entrepreneurial instincts were stifled.
From the entrepreneurs perspective, there is little incentive therefore to share their ideas and expertise with the large companies, with many believing that any benefits to doing so were heavily weighted in favor of the big company.
Research from INSEAD suggests that the most common way of currently working with a startup is via a corporate venture fund. Whilst this is no doubt a valid way of working with a startup, there are other, less expensive avenues that can be explored.
The report outlines the virtues of having soft interactivity with startups and engaging in their ecosystem. This kind of open-ended interaction helps to build the bridge between large and small that may encourage ideas and expertise to cross-over.
The report discovered a number of core strategies used by large companies thus far:
- Challenges, competitions and hackathons – these kind of events have become a staple of open innovation, and a growing number of large companies have held competitions in recent years.
- Launching an accelerator – this is obviously much more involved and requires a lot more involvement. 64 companies currently in the Forbes Global 500 are offering such a service to startups.
Even these are no guarantee of success, however, as illustrated by a recent paper from IESE Business School. The researchers conducted interviews with nearly 100 chief innovation officers from around the world to try and understand what corporates have in mind when they’re working with startups, either directly or via an intermediary.
The paper suggests that many corporates use proximity to their core business as the primary criteria in assessing whether to work directly with a startup, with internal capability and access to curated opportunities also important. In other words, they’re looking at whether the engagement will improve their core business, and whether they have the skills and resources internally to cultivate an effective relationship.
The research found that intermediaries are increasingly being used to help with startup engagement, with indicative examples the cases of private accelerators and research centers.
If an enabler is used to act as an intermediary, the capabilities of that intermediary are the primary concern, alongside the existing ecosystem of curated stakeholders. In other words, will the intermediary have the team to cultivate effective relationships with the entrepreneurs?
The researchers state that every day, the corporates are less unique. They advise thus, that they should complement their efforts with more than just consulting firms. Since corporations are to a greater extent working with start-ups and offering similar benefits to entrepreneurs, teaming up with enablers can improve their value proposition, thereby aggregating value.
Of course, not all intermediaries are effective. Not only do sponsors often regard the incubator as proof of their innovation prowess, but startups often regard acceptance into the incubator as job done. It’s a conflation of being busy as being productive when the two are certainly not the same thing.
A second paper from IESE, which was published last year, provides some insight on the major problems faced for a successful corporate-startup partnership. The researchers interviewed over 120 chief innovation officers to understand how they engage with startups in their organization, together with some of the challenges they face. The findings indicated that:
- Business unit heads do not fully embrace the value a start-up’s involvement could bring into the business. They still are not familiarized with this idea. If business unit heads are bought into the importance of working with startups, then it’s much more likely to integrate their technology into the workflow of their unit.
- They struggle to find the right startups to partner with, especially when their units are operating in business environments where there aren’t a ready supply of high profile startups beating a path to their doors.
- For them it is hard to confront with any future mid to long term potential conflict of interest between the interests of the startup and their corporate venturing unit. Differences with respect to this aspect, often emerge because of fundamentally different ways of measuring performance at both entities, so it is important to understand these as early as possible so they can be addressed.
Media Motor Europe and the partners of its consortium can be an efficient enabler to both the offer and the demand sides within the media industry, addressing the above identified challenges.
It builds a European ecosystem composed of deep tech startups as well as media corporations and safeguards the involvement of high profiled start-ups through competitive open calls and their selection after evaluation.
It employs a wide network of relevant professionals and experts to render the selected start-ups curated stakeholders for media corporates and nurture the grounds of potential engagements. Their involvement into Media Motor Europe’s dedicated 6-month coaching and training cycles to the start-ups, facilitates the assessment on behalf of media organizations’ business unit heads via putting the startups’ offerings on the right track towards meaningful pitching with a clear value proposition and valid performance metrics under both technical and business terms.
The inclusion of major European broadcasters and media houses into its partner consortium and ecosystem paves the way towards the setting of a language of common understanding between corporate executives and the founders with a focus on value integration under specific terms.
