Here’s a brutal truth about corporate-startup engagement:
Corporate-startup engagement (CSE), in one form or another, is a hot topic.
However, with terms like accelerator, incubator, open innovation, hackathons and corporate venturing frequently mentioned, but rarely defined, it can be confusing for individuals who are assigned to the role of innovation management.
Thus, to successfully scout the right startups for innovation initiatives, first you’ll need to understand the different types of ways your organization can engage startups.
In this article, we’ll share the five crucial steps to successful CSE extracted from our whitepaper: A 5-step guide to corporate-startup engagement.
Whether you are an executive, a strategy leader or a corporate innovator, you’ll learn actionable strategies that will help facilitate the engagement process with startups, and ultimately help drive more value for your organization.
Step 1: Understand the different types of corporate-startup engagement models
Many companies have no trouble attracting hundreds of startups willing to collaborate with them, but often struggle with choosing the best engagement model to maximise the ROI of their initiatives.
Before jumping into the details of how to choose the most suitable type of corporate-startup engagement (CSE) initiative, let’s take a look at what common types of CSE models are available in the startup ecosystem:
- Reverse Pitching
- Third-Party Accelerator Program/ Incubator
- Corporate Accelerator Program / Incubator
- Corporate Venture Capital
- Open innovation challenge
- Partnership / Proof of Concept
Step 2: Define your objectives
There are numerous exciting engagement models but the challenge is to find the right model for your organization. Before selecting an engagement model, you’ll have to define your objectives for collaborating with startups.
Here are the four key company objectives that drive corporations to engage startups:
- Change Management/Digital Transformation: How do we make our organization more innovative, agile and willing to take risks?
- New Business Opportunities: How can we solve key business problems in a quicker and more cost-effective way?
- Branding and Marketing: How can we position ourselves as an innovation-driven company?
- Trends Watching: How can we create awareness of new market trends and emerging technologies?
The clearer the objectives of your challenge, the more successful your initiatives will be.
See corporate-startup engagement framework in relation to company key objectives on our whitepaper.
Step 3: Allocate the right resources
Once you’ve decided what objectives you want to achieve, it’s important to understand the different types of resources required to bring a program to life.
Here are the four main types of resource commitment for corporate-startup engagement:
- Cost: the budget for a venue, programs, manpower, prizes, etc.
- Time: the amount of time it takes to organize and plan the program
- Effort/Manpower: from C-level decision makers to employees who are a part of the engagement efforts, mentoring, judging process, event logistics, set up, facilitation, etc.
- ROI: the chances of achieving the objectives you set out
Notably, a long-term commitment is necessary in most cases to achieve a respective return on investments.
See details of our resources commitment graph of different corporate-startup engagement models in our whitepaper.
Step 4: Learn about the details of each engagement model
5. Corporate Accelerator Program/Incubator
An incubator or accelerator that is run by a corporation. It aims at developing potentially profitable ideas and offers supportive environments for entrepreneurs, startups, and scale-ups, whether from inside or outside of the company.
7. Open Innovation Challenge
A competition that encourages startups to put forward their most relevant and innovative solutions to solve a corporation’s problem. It can be open to a wide audience of internal and external stakeholders.
Step 5: Choose the right engagement model
To find the most suitable corporate-startup engagement (CSE) model for your organization, it is necessary to understand the options of different engagement models, define your innovation objectives and resources available, and weigh the pros and cons of each model.
Even with many options available, one thing is sure – CSE is happening more and more each day, and the results are looking more promising than the older models of both innovation and entrepreneurship as a solo sport.
Corporations will need to find their best route to match, add value and integrate if they wish to capture opportunities.