Established corporations are using startups to enhance their own capabilities and to discover new competitive advantages to promote innovation. This is a growing trend as more corporations recognize the benefits of corporate innovation startups as outlined below:
• Speed Up Innovation – internal corporate innovation startups efforts tend to be slow, expensive and distract from core priorities. Working with startups provides access to new ideas and ways of thinking and accelerates innovation in leveraging their own assets and technology.
• Faster to Market – startups use lean and agile practices to speed the execution of their business plans and are able to go to market quickly. This helps them to determine what will be successful. While they can’t compete with the marketing power of established corporations they can find new ways to engage with customers and market through the use of innovative strategies and tactics.
• New Business Practices – startups are often early adopters of new ways of doing business and adopt new philosophies and methodologies to do so. Access to startups offers corporations the ability to observe and adopt new business practices and techniques they might otherwise have not considered. Working with startups enables employees to become familiar with and to immerse themselves in these new practices and to internalize and adopt them.
• Tailored Solutions – often startups have not discovered a new product so much as recognized a customer need and have found an innovative way to meet that need. By being in proximity to startups corporations can gain new and valuable insights into customer requirements and behaviour and use this in their own product development and delivery.
• Resource and Risk Mitigation – outsourcing research and development to startup companies allows a corporation to try new things while allocating a minimum of resources to the effort and thus minimizing the negative consequences of failure. Through the use of external resources the corporation is not burdened with having to build and operate a new infrastructure, which can be expensive and time-consuming, but rather wait until the startup’s innovation has been proven before taking it in-house and allocating funds and resources to its continued development.
• Develop Talent – by engaging with startups corporations can develop their own talented employees. Through interaction and observation of the startup teams these employees can hone their own skills and broaden their perspectives to gain new insights into how innovation can be achieved.
