Covid-19 has brought corporates’ ability to innovate (or not) into sharp focus.
In June, McKinsey surveyed 200 of the world’s leading businesses on crisis innovation. The report found that over 90% of respondents believed the pandemic would change the way they do business over the next five years, but only 21% felt they were equipped to actually deliver that change.
For many corporations, partnering with startups could be the way to kickstart innovation — and for many startups, corporates could be the key to unlocking new revenue and scaling opportunities.
They haven’t always been the most natural of partners, but here are a number of mutually beneficial reasons why smaller innovative outfits and tier one companies are a great match.
Startups can help corporates speed up innovation
Innovation is difficult for many large organisations; red tape, isolated teams and fixed mindsets can make new projects falter before they get off the ground. By partnering with startups, corporations can give their innovation efforts a boost.
Jeremy Silver, chief executive of Digital Catapult, the UK’s authority on advanced digital technologies, believes the most innovative corporations in the world are the ones willing to collaborate with other organisations to push boundaries.
“That sense of being open to what others are able to produce, and realising that innovation doesn’t necessarily always happen in your own backyard, even if you’re a leader in the field, is really important,” says Silver.
Northern Ireland-based manufacturer Seagate produces more than half of the world’s share of hard drives. But the 43-year-old company came to Digital Catapult after spending three years struggling to speed up a 1.8k step component fabrication process.
That sense of being open to what others are able to produce, and realising that innovation doesn’t necessarily always happen in your own backyard.
After screening proposals from 27 businesses in Digital Catapult’s network, Seagate began working with Flexciton, a startup that uses optimisation technology to improve productivity in fabrication factories. The partnership was a success, reducing Seagate’s production cycle and wastage.
Startups can prove they can scale
Partnering with corporates also offers startups a chance to prove an idea is scalable.
“The opportunity of doing a deal, and having a contract, whether it's a pilot to start with, or a longer term relationship over time is incredibly powerful,” Silver explains.
“You can prove that your solution can scale. Other investors can see your early stage business has got the mature management, and the sophistication of technology, to work with a large corporation. It’s therefore likely to receive further investment off the back of that collaboration.”
The opportunity of doing a deal, and having a contract, whether it's a pilot to start with, or a longer term relationship over time is incredibly powerful.
Bodyswaps, a startup that offers immersive VR training for practising soft skills, joined HTC’s Vive X programme in late 2019. Vive X is an ‘extended reality’ ecosystem, which helps founders scale through investment, strategic support, expertise and networks.
After receiving an initial investment of £325k from HTC in 2019, Bodyswaps raised a further £470k from VCs in 2020, and has recently developed software to help college and university leavers develop their interview skills.
Startups can help corporates change their mindsets
Startups and corporates often struggle to align on their processes. Tier one businesses need to please internal management, shareholders and board members, leading to a slower pace and conservative mindset. By collaborating with startups, corporations can open themselves to new opportunities, and become more agile.
“Tier one companies need to open their minds, and acknowledge the opportunity they’ve got,” Silver says. “Together, we can explore how we use our scale and capability with your energy and new insights. How can we bring that together?”
In March, Inken Braunschmidt, chief innovation and digital officer at Halma, a British corporation made up of 40 safety equipment SMBs, told Sifted: “The most important thing you need to do first is to shift the mindset. Without this crucial change of perspective nothing else will work.”
This change in mindset has become a centrepiece for organisations which are focused on innovating with emerging technologies.
The company consciously made steps towards this shift back in 2016, launching a group-wide digital transformation programme, and running leadership programmes to develop “outside-in thinking”.
Halma partnered with startup ecosystems, like OurCrowd, to generate new ideas and develop new business models: “As the mindset shifted, we created a pull effect that meant our companies wanted to innovate and experiment more. Now we have set up accelerators where our companies can connect with each other, as well as external partners, to generate new ideas and develop new business models.”
This change in mindset has become a centrepiece for organisations which are focused on innovating with emerging technologies. By engaging with programmes run by innovation experts like Digital Catapult, corporates can signpost that they are open to new solutions from smaller companies, delivering results for complex business problems.
Startups and corporates can broker lasting change
Due to Covid-19’s rapid spread last year, the UK’s National Health Service needed staff to quickly learn multiple new medical processes — from properly wearing PPE to managing a ward with large numbers of infectious patients. Digital Catapult brokered a deal between a number of key stakeholders, including Microsoft and VR startup Hammerhead Interactive, to provide key workers quick and accessible pandemic training.
The partnership produced around 20 VR video training courses in collaboration with the Leeds Teaching Hospital Trust and Health Education England. Since going live in March 2020, the training has been viewed 1.6m times. Other trusts around the country have also adopted mixed reality, with training programmes now available for student surgeons, dentists and doctors.
Silver notes these types of collaborations can bring real and lasting change, creating better outcomes for businesses and their customers.