Large organisations are engaging startups in growing numbers, due in part to a realisation that companies have not been built to respond to the accelerating pace of change in a timely manner, and that short of restructuring the entire organisation from the ground up, partnering with startups who are unencumbered by bureaucracy, short-term shareholder demands and employee incentives, is an easier way to tap into emerging technologies, business models and talent.  

This makes sense for most large organisations given that startups tend to explore disruptive innovations - usually low margin, small market and high risk to begin with - don’t support short term and often large company growth targets, but if left unchecked, may be the source of dwindling market share a few years down the track (here’s looking at you Blockbuster for passing up the opportunity to buy Netflix for US$50M - the company is today worth 140 times that).

Below are eight ways that corporates can connect with startup ecosystems and engage startups to work collaboratively towards their mutual goals - some light touch and others that require a more serious commitment of time and money.

1. Corporate Startup Accelerator Program

A corporate accelerator program pairs the domain expertise, resources, brand, distribution channels and networks of a large organisation together with the talent, speed and unencumbered nature of a startup, in order to leverage their respective strengths to take startups from zero to one.

Programs generally run for about 6 months while the startup incubation periods tend to run for 8-13 weeks.

Cost: 9/10

Pros:

• Gain financial exposure to disruptive startups (often corporate partners will take equity in the startups at the start of the program or may nominate to invest at the end of a program)
• Diversify across a number of startups and concepts (generally 8-10 startups go through an accelerator program)
• Identify opportunities to integrate new technologies into the core business
• Get across emerging trends
• Build relationships with talent in the startup ecosystem
• Provide employees with educational opportunities as part of the accelerator
• Improve brand
• Support talent acquisition and retention
• Give employees an opportunity to mentor startups on their domain

Cons:

Requires a considerable amount of effort to source quality entrepreneurs and nurture them throughout a 13-week program which necessitates legals, branding, funding, workspace, mentors, event management, workshops and diligent guidance throughout (a growing number of organisations with domain expertise have been established to run accelerator programs on behalf of large corporates).

Examples:

1. Barclays Accelerator
2. Mills Oakley Accelerator
3. DBS Accelerator

Recommended Reading: Corporate accelerator programs

2. Reverse Pitching Event

You’ve heard of startups pitching their ideas right? Reverse pitching essentially turns the table on startups and asks corporates to pitch the problems they want startup teams to solve and offer a pathway to funding and partnering.

Cost and Effort: 5/10

Pros:

• Tap into lots of potential solution to defined problem
• Build relationships with the startup ecosystem
• Improve brand

Cons:

• Limited pool of applicants - you might be limited to startups in your geographic area which may not cast a wide enough net to find quality startups
• Limited diversification  - corporates usually elect one or two teams to work with so while an idea might be good on the surface, it’s all in the execution - this is why venture capitalists invest in ten startups expecting that one will deliver a significant return
• Poor problem definition - in more cases than not large organisations (and startups) define the problem they’re solving incorrectly and if it’s defined incorrectly then what do you expect from  the solution?
• Incremental focus - by focusing on problems we can see, chances are they’re problems that our competitors have too, and that any solution will only amount to incremental innovation which is where large organisations excel. Use startups to explore disruptive innovation.

Examples:

1. ReversePitching.com
2. Launch Tennessee

Recommended Reading: Why Your Startup Needs to Reverse Pitch

3. Open Innovation Program

An open innovation program poses a simple request of startups, entrepreneurs (and employees, customers, partners, academia and the general public) - “give us your ideas on topic X”.

These programs tend to be run online, supported by an idea platform like Spigit, and can often elicit hundreds of ideas which then lend themselves to subsequently engaging with the people behind the top ideas.

Cost and Effort: 7/10

Pros:

• Access a very vast pool of ideas from people and organisations all around the world

Cons:

• Paralysis analysis - too many ideas makes it difficult to evaluate and select those worth pursuing (for more on how to combat this read this article on how to run an effective idea submission program)
• Usually there is limited to no pathway to take ideas further after an idea challenge
• Teams aren’t committed to their ideas and fall apart after the challenge
• Winning ideas are the result of countless iterations and all about execution - the first idea, those submitted to the program, rarely look the same when they break through so you need to be prepared and flexible on how the ideas evolve
• Building on the previous point, there’s usually no mechanism to build upon ideas other than simple commenting

Examples:

1. P&G Connect+Develop
2. Shell Gamechanger
3. GE Open Innovation Challenge

Recommended Reading: 4 Ways to Win at Open Innovationand Inside Procter & Gamble’s New Model for Innovation