It's Official: Working With Startups Is Good For Business!

Working with startups is now a core corporate innovation strategy. Tech startups are the perfect collaboration partners for mature companies looking for fresh ideas.
A hot little startup coming up fast on the rails is no longer just a competitor – it’s a potential collaborator. Long gone are the days when the only way to get new ideas for a business was to buy a competitor, or come up with them yourself.
Working with smaller startup companies, especially from the tech sector, has become a key component for corporate innovation, concludes a new report from Nesta, the innovation charity. Aptly named “Winning Together”, the report found that corporations from all sectors and sizes can benefit from a collaborative approach to the companies they’d normally see as disrupters.
“For the vast majority of corporations, it’s far more valuable to figure out how to leverage the innovation that startups have accomplished through mutually beneficial partnerships,” Giuseppe Zocco, co–founder and partner at Index Ventures, writes in the report. One way to achieve this, says Zocco, is to establish a ‘channel partnership’ where the bigger company provides a joint solution to their customers. Alternatively, a large firm can build a long-term relationship with startups by becoming an investor.
The benefits of this collaborative approach go both ways: the smaller company gains recognition, exposure and a cash injection. The bigger company gets new ideas, but the benefits may also extend to rejuvenating the corporate culture and making people in the organisation more aware of current trends. It could innovate the brand and make it a contender in the digital age, as well as adding the option to expand into new markets.
But how to start? Consider these three things:
Talk to people.
Reach out to people who know about working with startups to see if this is something you actually want to do. Talk to someone in another corporation, a startup founder, or possibly one of the many organisations working to support startups as they grow.
Consider your motivations.
Why do you want to work with a startup? What are you trying to achieve? Knowing the answers to these questions will make it easier to determine which type of collaboration is the best fit.
Start small.
If you decide to go ahead, start with a pilot programme. An initial project could be a one-off event like a competition or sharing resources. If it goes well, you can scale it up to something bigger, like business support or a full on partnership.
For Dell, building a more entrepreneurial culture is a key reason for working with startups. The IT group has a scheme called ‘Dell For Entrepreneurs’ which provides mentoring, advice and financial support. Google has a similar scheme, exercised through its global ‘Campus’ network in cities including London, Madrid and Warsaw. This major scheme has ensured Google has roots in startup communities all around the world.
Establishing ongoing innovation within the company is a core benefit for telecoms giant Telefonica’s work with younger companies. “Working with startups is about finding technologies that keep Telefonica relevant in the 21st century, and make it into a digital company that does not end up like Kodak who got stuck in the analogue age”, said Gary Stewart in the Nesta report. Stewart is Director for Telefonica’s Wayra accelerator in the UK, which offers business development for startups.
Looking beyond technology businesses, Unilever is an example of a major company that works with startups to gain a new approach to problem-solving. “We are on a mission to collaborate with innovators to make sustainable living commonplace,” is their mission statement for this work. Unilever works by asking entrepreneurs to help with solutions to specific problems, before choosing partners for pilot projects ahead of a possible full partnership.
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