How To Turn Open Innovation Into Action
Alongside dedicated internal open innovation strategies and processes, leading companies implement concrete open innovation actions that result in effective collaboration with startups. These actions can take many forms and shapes, ranging from building joint-innovation initiatives through Innovation Lab programmes, mastering collaborations to investing in them, and/or performing acquisitions and acqui-hires. Corporate Startup Stars tend to implement a mix of actions, creating significant value for startups and their wider ecosystems — at domestic, regional and global level.
The main models of interactions between corporates and startups are summarised in the overview below.
Many corporates start their journey to startup collaboration with ‘light-touch’ types of engagement to gain exposure to startups and wider entrepreneurship ecosystems, or use these for trend-spotting purposes. This typically results in setting-up a direct presence (leaner in the case of Antennas, more structured in the case of Outposts) in the world’s main tech hubs (such as Silicon Valley and Israel).
Innovation leaders are increasingly restructuring their internal programs of idea generation to go beyond mere HR educational goals and turn them into a source of origination. The integration with venture builders is key to scale the best projects into deployment.
Corporates engage with early stage startups adopting different schemes. Traditional corporate accelerator programs are now replaced/integrated by venture builders and startup studios where a few selected projects receive more dedicated hands-on support.”
Corporates become clients of a startup (typically later stage), providing crucial validation beyond revenue.
They purchase a first unit of a startup’s product, service or technology (procurement), and not its equity.
The eventual outcome is to scale the relationship from an initial pilot/proof of concepts into a full deployment and broader commercial relationship.
Innovation leaders typically invest through dedicated vehicles (Corporate Venture Fund – CVC). Others invest directly (off-balance) or may participate as limited partners (LP) into third party funds.
A startup acquisition might complete the innovation journey in case of strong strategic fit.
Not all of the actions above are, or need to be, simultaneously or linearly pursued by corporates. As an example, we reported that some corporates are not investing in startups, while focusing on exploiting collaborations through the Venture Client model. A larger number of companies decided to not set up any corporate accelerator program (or to dismiss existing ones), while others are not particularly acquisitive. In other words, there is inherently no silver bullet regarding open innovation, rather multiple evolving approaches to be constantly monitored.