In today's fast-paced tech world, established corporations often struggle to keep pace with the latest innovations, while startups take the lead by introducing inventive solutions, placing larger corporations at a technological lag. Yet, this divide can be closed through collaboration between these entities. What hurdles emerge in corporate-startup collaboration, and how can companies establish effective innovation programs that yield successful pilots?

How to deal with disruptive innovations

When companies focus on meeting the needs of their existing customers and sustaining their current business models, they start to struggle to embrace innovations that initially seem less promising and not relevant to their current business strategies or customer demands. However, disruptive innovations have the potential to evolve and improve rapidly, eventually surpassing existing technologies in performance and satisfying the needs of a broader customer base. By the time established companies recognize the significance of these disruptive technologies, it may be too late for them to catch up or adapt, leading to a loss of market share or even business failure.

This concept, called “The Innovator’s Dilemma” introduced by Clayton Christensen, underscores the challenge for successful companies: to balance sustaining their current success with the need to embrace innovations that might disrupt their industries. It emphasizes the importance of being adaptable, open to exploring emerging technologies and understanding the potential for disruptive innovations to reshape markets and industries.

Why corporations collaborate with startups

Not all tech solutions can be developed within corporations. Collaborating with specialized companies dedicated to those specific technologies can often be a wiser choice. Corporations often collaborate with startups for various reasons:

• Innovation: Startups are hubs of innovation, often more agile and flexible than larger corporations. Collaborating allows corporations to tap into new ideas, technologies, and approaches.
• Access to talent: Startups often possess specialized skills and fresh perspectives that larger companies might lack. Partnering provides access to this talent pool.
• Market expansion: Working with startups can open doors to new markets or customer segments that the corporation might not reach independently.
• Speed and agility: Startups are known for their ability to move quickly. Collaborating allows corporations to expedite processes, develop and launch products faster, and adapt to market changes more efficiently.
• Driving disruption: Startups are disruptors, challenging traditional business models. Corporations collaborate to stay ahead of industry changes or even create disruptive innovations themselves.

Test before you invest

It all begins by identifying a challenge or area of interest for a corporate. Plug and Play then scours the startup landscape for potential matches. When mutual interest sparks, the corporate collaborates with the startup. However, before moving into full production, uncertainties and risks loom large. The key question arises: Is it viable for production? How can the risks be mitigated?

Validating the idea and testing the riskiest assumptions become imperative before full-scale production. This validation occurs through demos, proof-of-concepts (PoCs), or pilot projects, each serving distinct purposes:

• A demo offers a swift overview of the startup’s relevant solution features for a business.
• A PoC involves testing the feasibility of the startup’s solution in a controlled setting, allowing evaluation of the partnership.
• A pilot means deploying the startup’s solution in real-world conditions to prepare for wider implementation.

Explore a wealth of insights and expert guidance from Plug and Play and our corporate partner COWI on how to set up KPI-based programs for corporate-startup collaboration:

Three phases for successful corporate-startup collaboration

Successfully bridging the gap between corporations and startups necessitates a well-defined roadmap and a nuanced understanding of the distinct phases involved in collaborative ventures.

• Preparation phase: Essential groundwork, such as establishing confidentiality through NDAs, defining project scopes and plans, ensuring compliance and technological readiness, finalizing legal agreements, and gaining budget approvals.
• Execution phase: The project kicks off, encompassing testing procedures and data collection crucial for subsequent evaluation.
• Evaluation phase: Results undergo comprehensive analysis, evaluating their business value. Successful outcomes pave the way for defining subsequent steps, including potential actions like securing commercial agreements, establishing joint ventures, or even considering strategic investments.

Optimal team structure for effective corporate-startup collaboration

Corporate team:

• Innovation team lead: Project owner and primary liaison, responsible for compliance with streamlined processes and agreements.
• Business unit stakeholder: Product owner advocating for business needs and assessing project outcomes.
• Technical expert: R&D representative focusing on testing specific aspects such as data validation or solution accuracy.
• Other functions: Legal, Procurement, IT, and relevant departments involved in the collaboration.

Startup team:

• Startup lead: Usually Head of Business Development, representing the service provider and ensuring seamless project execution.

How Plug and Play can help

Plug and Play simplifies corporate innovation by aligning large corporations with cutting-edge startups. This collaboration aims to enhance operational efficiencies, reduce costs, explore new product avenues, and infuse innovation at the core, leveraging access to over 50,000 startups.

By partnering with Plug and Play, corporations can accelerate their digital transformation. This collaboration facilitates connections with the right startups, networking opportunities within industries, access to the latest trends, and direct engagements with startups. The advantages of these collaborations include improved operational efficiencies, enhanced customer success, the development of new product lines, and the establishment of strategic partnerships.

Ready to start innovating? Consult our seasoned experts to build your own corporate innovation strategy.Reach out to us today, and let's get started.