How can corporations accelerate innovation thanks to a startup-friendly approach?
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Since the flourishing of the French tech scene a few years ago, a lot of large corporations seem to have regained an interest in innovation. Year on year we see an increase in the number of partnerships between startups and corporations. Both the French and the European ecosystem actively promote this exchange, and many events and public actions demonstrate how much this is seen as a strategic priority. Unfortunately, behind the curtain, the corporate vs startup relationship feels more degraded than most like to acknowledge. Corporate mentality is still conservatist, and startups face resistance in their efforts to share innovative solutions with them.
European corporate leaders must be more aware of new sources of innovation and they must accept that they have a responsibility to find and nurture innovation. This role, well embodied by their Asian and North American counterparts, is not yet ingrained in the mindset of French and European enterprises.
How can European business leaders shift to an innovation-centered mindset and transform their proclaimed support for the startup ecosystem into action?
Understanding the project to avoid cannibalism
Nothing is ever easy when it comes to innovation: more often than not corporate needs are not perfectly aligned to the solutions proposed by startups. While the two have clear points in common, they don't always match perfectly from the offset. What tends to happen is that the enterprise imposes an alignment over its precise needs, and the startup is forced to bend and jeopardise its original long term vision.
That’s where corporate / startup synergies fail. Innovation shouldn't mean alignment to the needs of the stronger partner, but should instead be a shared journey of exploration.
So how can the balance of power between young startups and large corporations be offset in order to achieve real positive synergy? Large corporations should be mindful not to take charge of the startup projects as if they were their own. But engaging them in a pedagogic conversation about their role, and showing the benefits they could draw from a healthier cooperation with startups, isn’t an easy feat.
Guiding startups on their search for the go to market
If they acknowledge their power and the best way to use it, large corporations have the vision and the experience to truly help startups in their growth.
Thanks to their size and resources, they are able to push the startup forward by helping them refine their scope of action and identify their competitive advantages.
At the same time, as first clients, they can benefit from the advantage of early adopters: they can influence and validate the project in a way that takes into account their needs and objectives.
The relationship of synergy should begin by encouraging growth where the startup is capable of creating the most value, rather than where the corporation thinks they need such value. Helping to find and validate this sweet spot before asking for a solution to its pain points will mean corporations draw the most value from innovation, and startups can shape viable final products efficiently.
That is what sustainable support for startup innovation looks like!
Contract and revenue generation
We see a growing number of corporations building investment funds and incubators to identify and promote innovation in their industry. Unfortunately, it should be remembered that capital investment is only a line of credit which in effect only puts the startup in debt, rather than being practical help to validate their vision and solution. Becoming the first client of a startup is a much more powerful step to support and benefit from the ecosystem: through contracts and client generation, startups can build trustworthy and credible partnerships to help them refine their solution. Long term engagements of this kind make for much stronger relationships than collaborations based on a single first project, and have much higher potential to deliver value for both parties.
Removing entry barriers
When it comes to new clients, European startups are scared of dealing with large corporations. The amount of paperwork that they would have to deal with is usually way beyond their capacity. While big companies have entire teams to deal with their contract management, for a startup coping with the heaps of documentation, the endless safety questionnaires, compliance, checks, contract details and other agreements can put all sales efforts on hold and take weeks to complete. This is a major practical obstacle to the cooperation between big companies and startups.
Effectively, startups end up missing out on the most promising prospects because of lack of time, resources or knowledge regarding contract management. One of the solutions that some corporations have adopted in recent years is the creation of “startup desks” - entire teams that are dedicated to ease the process and making it accessible to younger players. Such a comprehensive solution shows the intent to remove the limitations to real innovation and to build a smart ecosystem that can benefit both ends of the partnership.
There are many other approaches and solutions to build a more favorable ecosystem to startups and innovation, and if we want the European economy to remain competitive we must hope that the leaders of large companies will embrace the challenge.
Without a conscious mindset shift, the proclaimed desire of large companies to work with startups will remain half-hearted, and innovation will continue to be threatened by an aversion to risk-taking.
The European ecosystem is still too stiff and resistant to innovation makers, but if we succeed in this shift to a more welcoming ecosystem, then nothing is impossible!