Why big companies turn to accelerators to help them work with startups
By shifting the focus from innovating alone to doing it with startups, companies appear to pull a rabbit out of the hat. To no avail as enterprise-startup collaboration requires mindset changes, new lingo and a lot of ‘gives’ and ‘takes’.
Accelerators will provide the rudimentary tissue in making partnerships go well.
The corporate side of it
There are many types of programs companies pursue when looking to intensify innovation.
They first focus internally on educating employees and getting governance and processes in place before spending resources on external innovation programs or connecting with the startup scene.
That is why many of the steps companies have taken thus far go by the name of a digital transformation. They are defensive using data, customer insight, and tools to support the current business model.
Nevertheless, innovation is more than just cool new apps or a Data Management Platform. Plus, an incremental mindset does not move the needle. It creates temporary advantages, at most.
In my work, I see Innovation Labs, Incubators, Accelerators and Extreme Education Accelerators, and I peek into many corporate kitchens – insurance to utilities, industry, and retail. I also fuel corporate innovation as an ‘Entrepreneur in Residence,’ and help corporate venturing teams on mapping the right course of action.
What I learned is that the challenge for large companies is not a shortage of ideas but the politics that flow from a focus on ideas. Managers have the habit of jumping to immaterial questions like: Where does the idea sit? Whose budget will support it?
The relevant issue is how corporate companies can keep up with the relentless pace of digital technology and its aggravated effect: The radical altering of industry boundaries!
Whereas some sectors move faster than others, the bumper sticker answer to this strategic conundrum is that companies should become more entrepreneurial.
It has often led to the question: Can a company also act like a fast-moving, startup?
The usual answer is: No, for all the obvious reasons.
That is why I have become doubtful of corporate startups. Unless bolstered by clear ground rules and faithful obedience to Lean Startup best practices, corporate startups will likely collapse because of politics.
Some companies strive to break free of this dynamic that chooses closed over open innovation. They seek next practices, not best practices, through enterprise-startup collaboration, for example.
Evidently, startups have become part of the innovation route large companies are taking now that the low hanging fruit is gone and going it alone may prove too little return.
Especially if you are trying to impact health care, food, energy, transportation – this kind of innovation requires partnerships and ecosystems made up of highly interconnected participants, among which talented startups.
The startup side of it
I still meet many people that quit a predictable corporate career in favor of a risky startup life. Coupled with the constant surge of new technologies this will likely result in a steady flood of new business ideas and people taking a stab at it.
There is a drawback, nonetheless: There are too many startups. Way too many. Corporates, customers, and investors struggle to make sense of which startups matter in a crowded startup environment.
The more startup pitches I see, the more convinced I am that startups need to ally with corporate companies. It often takes years to go from an initial insight to an actual impact. Being cash-constrained, it is much easier when you have access to real prospective customers and the resources of a big corporation behind you.
The accelerator side of it
From an accelerator point of view, the heat is on with over 2000 accelerators worldwide. Also, accelerators are under pressure to innovate and to rethink the way they operate and differentiate.
Accelerators have communities, and those communities can be leveraged. They are plugged into startup ecosystems worldwide and are typically top notch in scouting and curating talented, entrepreneurial people and startups.
They also speak the startup lingo. In general, this brings about trust making them a logic point of entry for enterprises that consider partnerships with startups.
The net effect of it all?
Companies, startups, and accelerators will seek each other out to work together more often. Amsterdam based accelerator Rockstart, for example, has noticed a rapidly rising level of interest from companies wanting to cooperate and innovate with startups.
Some companies will remain focused on short-term, applied innovation: High-impact, immediate-return technology or process improvements. If they were to source it from startups, then the best way forward is by framing ‘challenges’. Accelerators will facilitate the process by seeking out startups that fit the problem parameters and by designing the proper experiments to validate the startup’s solution.
Regarding longer term, transformational challenges, accelerators can take on the role of neutral Ecosystem Coordinator enabling companies and startups to work together on novel solutions in a well-thought-out manner.
To make an ecosystem with startups and corporations work, you need propositions that all stakeholders can buy into which complicates the process. There will be ‘gives’ and ‘takes.’
Accelerators will then bring the natural capacity to provide the right operational structure, success metrics, and a playbook that fosters a trusted exchange and validation of ideas and tasks.
- Collaboration trumps as a result of the remorseless driving force behind the Digital Economy and the massive uncertainties that flow from it.
- Accelerators are not only best positioned to provide the rudimentary tissue in making enterprise-startup partnerships take off: They will become fundamental to corporate innovation outcomes.
Contributing author Sander van der Blonk is a partner at Rockstart, heading the Corporate Practice and is an angel investor in technology startups. He works with innovation teams, venture boards and corporate startups that are targeting disruptive opportunities in Marketing Technology, Consumer Web, Digital Health, Advanced Analytics, and Internet of Things. This is a republished piece from August 14th, 2017.
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