The Corporate-Startup Partnership Maturity Curve
Since I started to be involved in the startup ecosystem, I have been extremely interested by involving large corporations with startups. Initially, my view was that large corporations had a lot to learn from startups as much in terms of innovation as in terms of energy. On the other hand, startups had also a lot to learn from bigger corporations: being focused on customer and revenue among other things. That’s why my acceleration program, StartUp42, was and is still mainly funded by large corporations.
Since I launched StartUp42 two years ago, it seems that more and more large corporations have discovered (again?) that startups were sexy and that they needed to get closer to them. But, as in any relationships, there’s also a maturity curve for the corporate-startup partnership.
The figure above is the result of my direct experience involving large corporations with startups, hearing about other programs and a discussion I had last month with someone from Accenture Open Innovation group. I believe that large corporations go through 3 different phases in their attempt to partner with startups: “Amused”, “Worried” and “Welcoming”. Of course, this pattern does not apply to all corporates and not all of them go through the 3 phases in that order but most experiences I gathered tend to confirm it.
The first phase is the “amused” phase. High-level executives, usually HR director or Marketing directors, discover the growing interest for startups. And they’re right! What’s not to like in startups? They’re young companies, founded by equally young talented individuals with big dreams and lots of energy. In that phase, corporates usually tend to sponsor or organize events like startup weekends or hackathons. The main objectives are to increase their brand’s reach to a younger audience, potentially notice young talents to recruit and ideally get wowed by one of the teams’ product.
The second phase is the “worried” phase. Now it’s the C-suite’s turn to notice startups and usually it’s either because they realize that they have troubles coping with innovation cycles or, “worst”, they’re already being disrupted. In that phase, corporates tend to follow the saying “keep your friends close and your ennemies closer”. Instead of partnering with the startups, they prefer to watch them carefully by investing in them or by hosting them in their own acceleration/incubation program.
The third and last phase is the “welcoming” phase. Leaders in that phase understand that the size of their organizations slows down their capacity to innovate and they’re better off integrating startups’ innovations in their portfolio through partnership or M&A.
So far, I’ve seen very few organizations capable of being in the 3rd phase (think Google, Facebook, Cisco). The reason is not because they’re necessarily evil agains startups or because of incompetence but mainly because it demands a commitment of the organization at every level to be able to work with or integrate startups. Entrepreneurs react almost opposite to corporate executives and it demands a lot of work from both sides. But anyway, as in any relationships, they don’t really have a choice. In the end most startups will need to work with big corporations (or get acquired) and most big corporations will need to work with startups. We’ll need to make it work ☺