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Pursuit & Prejudice – Why Are Corporate-Start-up Collaborations Non-negotiable Today?

Pursuit & Prejudice – Why Are Corporate-Start-up Collaborations Non-negotiable Today?

29 Nov, 2018

Corporate-startup collaboration

‘It is a truth universally acknowledged, that a Corporate looking to grow and thrive, must be in want of innovation.’ Yet less than 50% of Forbes Global 500 companies are engaging with start-ups and even fewer are engaging with them effectively to deliver on successful or tangible outcomes.

Today, technology is changing faster than ever before, and it is unlikely that this pace will slow down in years to come. Despite rapid growth, some of the larger corporates continue with the prejudice that they have a stronghold on the market, and their continued success is guaranteed.

corporate startup collaboration

In the past, many corporate giants have failed to act quickly on their innovation plans, leading to suboptimal results. A textbook instance is that of Netflix and Blockbuster. When Netflix (a start-up) approached Blockbuster (a video rental behemoth) in the year 2000, for a partnership and proposed to run Blockbuster’s brand online, Blockbuster turned down the proposal. Netflix eventually powered its way to the top as it moved onto an online content platform, and Blockbuster filed for bankruptcy in 2010, following a series of challenges. A thriving corporate today could be the next ‘Blockbuster’ of tomorrow if it is not open to effective collaborations.

While many corporates are already pursuing innovation and are engaging with start-ups, they are not able to engage optimally and derive maximum value from such collaborations. Those without innovation programs risk becoming irrelevant in the next three years. To survive or to drive result-oriented innovation, corporates need to be on the constant lookout for innovation and should explore/create open innovation platforms. The open innovation paradigm is key as the ecosystem is brimming with innovations coming from universities, research labs, and of course, start-ups.

Key protagonists in the innovation story are Start-ups. Start-ups have a clear hypothesis on how technology and markets will evolve in the future and aggressively aim to prove the hypothesis – irrespective of setbacks. This is also because start-ups, unlike corporates, have a relatively small cost of failure. They are unencumbered in their thinking, planning, and execution, and relentless in their pursuit of innovation. For corporates, start-ups are their eyes and ears in a volatile, uncertain, complex and ambiguous environment.  Working with cutting-edge start-ups is one of the most reliable ways for corporates to discover new market opportunities and new tech-adoption trends.

But, where should corporates begin?

Every pursuit begins with introspection. Corporates, as a first step, must assess for themselves where they are on the innovation maturity continuum, which is illustrated below. This assessment needs to be across parameters such as business processes, organizational structure, talent, and activities. Factors such as collaboration with external partners, encouraging lateral thinking, empowerment of employees, digitalization of processes, data capture, data analysis, and data-driven decision-making are major factors in the assessment. Based on the evaluation, an organization is identified to be in one of the four maturity stages – Emerging, Co-ordinated, Transformative, or Disruptive stage.

Corporate Startup Collaboration

The most important thing for corporates is to be in one of the stages – irrespective of the maturity. The goal is to take stock of the innovation programs, identify which innovation-maturity stage they belong to, and evaluate how they can evolve. The plan should be centered around measurable factoring in external factors such as the technology landscape, geography, and the markets that the corporates are in. This helps in creating a systematic plan and approach to move up the maturity continuum.

“Only those who dare to fail greatly can ever achieve greatly.” ― Robert F. Kennedy

Potential roadblocks on the innovation journey

While corporates embark on the innovation journey, irrespective of where they stand on the innovation maturity continuum, challenges are a part of their reality:

Corporate Startup collaboration

1. Internal Friction: Most employees in the organization are under quarterly pressures to meet revenue and business targets. Mid to long-term innovation targets are expected over and above these targets. Dissonance occurs not only because timeframes don’t match, but also because innovation initiatives are not synergistic. This leads to internal friction between the innovation team and the rest of the organization. To succeed it becomes important to chart a plan for the intended outcomes and communicate them clearly across the organization and also align them with individuals’ priorities.

2. Changing Mindsets: In most cases, CXOs and leadership teams are enthusiastic about innovation projects and start-up engagements. However, their organizations are not ready to enable or execute the same. The ground reality is that organizations need to be exposed to innovations. This can be done through small projects that involve collaboration with university researchers, internal hackathons or the setting up incubator/accelerator programs that regularly expose employees to start-ups.

3. Undeliberated Approach: Corporates often take an undeliberated approach when it comes to collaborating with start-ups. In some cases, innovation is driven for marketing purposes – as a means to project commitment to innovation internally, externally, or both, but not to meet any business objectives. The consequence of this is that corporates sometimes have a narrow agenda and are not committed to reaping any tangible profits from such collaborations. To enable meaningful innovation, corporates need to take an outcome-based approach and align innovation plans with business objectives.

4. Underprepared Start-ups: Start-ups are brought into corporate innovation programs because they have a great product and an impressive set of initial customers, but they might be underprepared for scale. In order to succeed, corporates must be cognizant of this and have clear engagement models for start-ups. There are methodologies that can be used to assess a start-up’s readiness to work with corporates, and their ability to scale, which can be leveraged to develop engagement models based on the readiness.

Sometimes we need a reality check…

On a fine evening, the CEO of a big real estate corporation looks out of the window of a huge multi-storeyed building and sees a ‘WeWork’ brimming with customers. She ponders – ‘How is ‘WeWork’ scaling? Why aren’t we able to scale at that level?’ – A rather obvious thought. As traditional developers, the real estate company buys the land, builds the infrastructure, takes its time to deliver, while on the other hand, WeWork offers modern workplaces very quickly, cost-effectively, with no hassle. Here, the CEO of the real estate company – the incumbent corporate, saw ‘WeWork’ – the disruptor, as she stood worried at the window, but could not really understand the implications.

To stand at that window and watch your world get disrupted is not a comfortable position to be in for anybody. A large company which stops focusing on the outside and stops being responsive to the market is compromising its sustainability. Today’s successful corporates must overcome their prejudices and take a proactive approach to innovation by leveraging the start-up ecosystem in their pursuit of innovation to stay relevant and survive.

Looking to deliver on innovation outcomes? Looking to define a scalable innovation program?  Contact us at

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Ravi Narayan, Advisor, Zinnov

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