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Five open innovation mechanisms for successful startup-corporate collaborations

Nesta has long argued for the benefits of startup-corporate collaborations. We believe that large corporates can be hugely beneficial partners for startups, just as startups and scaleups can be innovative game-changers for corporates.

It is, however, difficult to get it right. Many firms talk much more than they do. Some firms are not good partners, either engaging in deliberately predatory activities or else accidentally causing harm by leading-on startups with the prospect of a deal that is never concluded.

For that reason, we believe in recognising examples of good practice. On November 22, Nesta and Mind the Bridge will announce the SEP Europe’s Corporate Startups Stars Awards 2018, intended to recognise large firms who - in our view and that of expert judges - work well with startups and scaleups. At the same time, we will publish an updated version of our Snapshot of Open Innovation in Europe, summarising the activities of the awardees.

Before that, however, we would like to share a list of open innovation mechanisms used by corporates, including some of our awardees, to collaborate with startups:

Mechanism #1: Challenges

As Nesta’s own Challenge Prize Centre explains, challenges can be a good way of getting novel solutions to problems, from unexpected sources. Asking startups to provide solutions to a specific problem, or rewarding those that come up with solutions is a good way for corporates to attract and test startups. For this reason, challenges are becoming an increasingly common form of engagement by corporates. Sector or society-centric, challenges take various forms to fit corporates’ objectives. Challenges offer many advantages, including the opportunity to pre-select startups for future collaboration activities (e.g., procurement, corporate accelerators).

Mechanism #2: The network-based approach

Connecting people with similar interests but various professional backgrounds is a way to expand one’s network, gain new knowledge and find inspiration from a panel of various actors. Unlike challenges, the network-approach’s primary focus is not to solve specific issues, but to built a large network of stakeholders, including academics, policy-makers and organisations. A real ecosystem builder, the network approach takes many forms; dedicated hubs, thematic events, online platforms. It is a valuable technique to boost collaboration, and take a deep-dive into target markets and upcoming trends. Benefits are about building human capital, be it finding new investors, new collaborators, new market insights or building a strong network support which, for startups, helps increase their survival rate. Its most famous form: co-working spaces and industry-specific accelerators (e.g., fintech accelerators).

Mechanism #3: Customer immersion

Often associated with procurement or investment, customer immersion can in fact be applied in multiple settings. By facilitating access to their clients and customers, corporates can help startups test, improve and promote their product or value proposition, while also providing corporates with insights into what their customers are likely to value.

Mechanism #4: Concept testing

Getting insights from a Minimum Viable Product (MVP) is often less expensive than developing a product with more features. For this purpose, concept testing is a valuable asset. Many startups need the necessary tools and expertise from corporates to assess whether their product prototype is marketable without having to actually introduce the product into the market. Gaining traction in Europe in recent years, we are witnessing a surge of corporate tools - digital and non-digital - that allow startups to test their ideas before they spend the money on creating the product.

Mechanism #5: Intrapreneurship

What if the next startup founder was already in your company? Often mistaken for an internal sourcing of ideas, intrapreneurship has become part of the open innovation process. Intrapreneurship is more than a hands-on experience for employees. It can lead to the creation or onboarding of a startup, or it can enable corporations to seek advice from external startup founders to develop a new idea.

What’s up next in open innovation?

What other trends are we seeing, or think may emerge in the near future?

  • Collaborative mechanisms for intellectual property management: either as part of mentorship, research or clearinghouses programmes.
  • Industrial mash-ups: partnerships will not be secluded to innovation units and product development. Instead, collaborations will trigger a transformation of the organisational structure of corporates and startups alike to create a new framework of operations.
  • Tolerance of failure will expand beyond the borders of investment and find applications regardless of financial engagements.
  • Entrepreneurship education could evolve beyond mentorship or intrapreneurial programmes towards a two-way learning curve. Applications can include reverse mentoring events or reverse pitching challenges. In these initiatives, startup conglomerates take the leading role in hosting events and raise awareness among corporates about entrepreneurial opportunities and prospective partnerships.
  • Emergence of tailor-made mechanisms for industries: each industry will develop its own working collaborative mechanism. Sandboxes are just a first step.
  • Digitally-enhanced mechanisms will not be limited to online platforms (e.g., social networks, forums, dedicated websites,). IoT technologies, blockchain, robotics or artificial intelligence will play a major role in the creation of new open innovation mechanisms.

Europe’s corporate-startup collaboration trends to be disclosed on November 22.

As corporates become increasingly interested in scouting, nurturing and partnering with innovative startups, open innovation methods continue to grow and diversify.

Which models were used most by European corporates in the past year? Discover the answer on November 22 in our Startup-Corporate Stars 2018 Snapshot Report.

Author

Jessica Febvre

Jessica Febvre

Jessica Febvre

Intern, New Technology and Startups

Jessica was the New Technology and Startups intern in the Policy & Research team

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Jonathan Bone

Jonathan Bone

Jonathan Bone

Senior Researcher, New Technology and Startups

Jonathan is a senior researcher in the New Technology and Startups team.

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