Open Innovation is Booming.

Open Innovation has been a fast growing trend in the last few years, in particular with its focus on corporate collaboration with startups and scaleups.
This is now visible in every industry, where the rate of innovation is accelerating, and technological advancement is driven by multiple organizations, often lean and fast-moving startups. making it more difficult to keep the pace of innovation internally.
Nonetheless, corporates can leverage the speed of the startups, and take advantage of their knowledge to complement their internal R&D processes.

This report provides an overview of some of these activities.
It outlines how the ‘Corporate Startup Stars’ – the firms judged to be the best in the world at working with startups – approach open innovation and startup collaboration. It also touches upon trends that we have observed in their open innovation activities, such as a shift in focus from very early stage startups to later stage ones (scaleups), or the evolution of corporate accelerators into venture builders and startup studios, and the broader adoption of the Venture Client model with the deployment of more resources for supporting corporate divisions and business units in working with startups.

The Corporate Startup Stars awards Mind the Bridge and ICC (International Chambers of Commerce) organize annually are intended to recognise and celebrate open innovation with startups, and to inspire others to follow suit.
In the same way, we hope that this report will not only celebrate the best practices that we observe, but help other firms make their innovation journey go faster. The analysis that follows is based on the data gathered for the Corporate Startup Stars Award 2020, where the information has been directly provided by the participating corporates.

by Alberto Onetti, Chairman, Mind the Bridge
by Marco Marinucci, CEO, Mind the Bridge

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.

Innovation Lab
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.”

Venture Client
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.

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