Established companies and startups will collaborate more in the future
Established companies are increasingly working with startups to augment their business and create new offerings. This trend will continue as more organizations recognize the benefits of corporate-startup collaboration. Unilever Foundry, a global platform for corporate-startup collaboration, predicts corporates and startups will work side by side by 2025, (see Unilever article ). Here are a few key reasons for established businesses to collaborate with startups:
1. Increased pace of development
Startups are the early adopters and advocates of new methodologies such as lean and agile, design thinking, and growth hacking. Internal innovation at established corporates can be slow, expensive, and distracting from core business. Established businesses who collaborate with startups can utilize their fast and lean approaches around new initiatives and innovation projects.
Startups can’t compete with the sales and marketing power of established organizations, so they have to find new ways of connecting to customers. The result is a faster go-to-market strategy where they gain immediate feedback and insights, and then adapt and optimize accordingly – practices upon which large corporates can leverage.
2. More cost effective
Outsourcing innovation initiatives to startups can be a key strategy in optimizing resources. Choosing if and when to bring resources in house, an enterprise can experiment cheaply with minimum investments
Collaborating, instead of acquiring startups, allows for flexible experimentation in working with new cultures, products and technologies and the possibility to disengage at a cheaper cost. Collaboration can also provide valuable insights into the potential strategic and cultural fit of a startup– to better understand if an acquisition is appropriate and at a cheaper price ahead of scale-up.
Enhance business processes
Startups excel at finding and working with new technologies, ideas and opportunities - utilizing big data, machine learning and AI. These new technology solutions can enhance business processes, resulting in more productive and impactful ways of working. And by leveraging the agile capabilities that a startup has, a corporate more efficiently solve existing business problems.
3. Improved strategic overview
Enhanced data capture methodologies utilized by startups can foster smart trend analysis. More established enterprises can utilize these trends in their tactical planning.
Overview of competitive threats
Startups are on the cutting edge of new happenings, events and changing market signals as they need to work lean and have differential market placement. Being ahead of the game allows for the elusive first mover advantage and an overview of the current market place which a corporate can capitalize on in collaboration with startups. Also, keeping startups close, keeps potential competition close.
More Personalized Customer Solutions
A key advantage in working with startups is being able to get closer to the customer/market through their nimbleness and focus. By gaining more immediate insights into customer needs and behavior, startups can help large corporates offer more tailored solutions with higher stickiness.
Expand features, markets, channels
By leveraging cutting edge technologies and capabilities that a startup has, a corporate more easily, inexpensively and quickly, expand into new markets and add new features to its products/services. A corporate can also leverage its distribution channels by filling them with new, innovative startup products. These new features can reach different markets, thus creating additional channels for an established company to capitalize on.
5. Talent development
Working on projects with startups enables employees to become familiar with agile behaviors and growth hacking - gaining new aptitudes and skills. Working with startups also opens up a whole new startup/tech vocabulary within the organization so that it becomes more current.
Factors such as high energy and intensity, being change vs fear oriented, and being inclined towards seeking collaboration and sharing, are all aspects of a startups’ approach that can augment established business cultures. These approaches can instill a more entrepreneurial mindset internally, increase intrapreneurship, and reinvigorate creative thinking, challenging of the status quo, bias and less risk aversion.
A more entrepreneurial culture can also allow an established company to reach and source more entrepreneurial talent to help with continued innovation.
6. Public Relations
Supporting the startup ecosystem encourages job creation, talent development, and promoting entrepreneurial endeavors which stimulates the economy. These factors are viewed positively in the community. Collaboration can also supplement a company brand via its association with innovation – thereby attracting more early adopter customers and talent.