"Innovation is the unrelenting drive to break the status quo and develop anew where few have dared to go."
Companies start playing safe once they reach a certain level of growth and success. However, in return, they start losing their ability to take smart risks and grow. It is, however, possible for companies to deal with such situations by engaging with the right set of startups as they are commonly known for their disruptive ideas or business models.
Corporates today have recognised that partnering with startups is important for innovation and it will contribute to their future growth. However, most corporates struggle to implement and fail to bring new ideas to the operational stage through collaboration due to fear of failure and the risk of losing investment.
Conducting a pilot project can act as a solution here. By undertaking small and controlled pilots with startups, corporates can mitigate such risks. Startups on other hand can demonstrate the effectiveness of their technology or ideas which can bring exciting opportunities and contribute to the growth of a corporate.
A pilot project not just increases collaboration between corporates and startups but can also possibly culminate in a long-term relationship in the form of acquisition, joint venture, or strategic investment. With such a collaboration, startups also gain access to industry expertise, connection to large customer bases and access to potential capital. A successful pilot not only increases the confidence and enthusiasm of startups to work toward more innovative ideas and solutions but also helps corporates to gain a competitive edge and growth in their business.
Let us look at the way in which both startups and corporates can collaborate through a pilot project.
Identification of areas for collaboration
A corporate should identify key business areas that are subject to disruption and set priorities around each such area. With an understanding of areas of improvement, customer preferences, competition strategies, how startups are capturing market share, and new technological developments, a corporate can determine the areas to be pursued for future growth.
Set a flexible growth plan
As a next step, a corporate should set a growth plan which will enthuse both management as well as the company as a whole. A bold but flexible growth plan will stimulate people within the organisation to work towards achieving the goal.
This would give better results than simply tweaking existing products/services without any stimulation / innovation. Corporate should then engage with a startup to do a pilot on the identified areas of growth, without limiting the objectives or deliverables. This would help a startup to look at the objectives differently and come out with a pathbreaking idea or solution.
Once the growth plan is set, the next step will be to get an insight into uncertainties that may emerge while achieving the goal. This will help both corporate and startup to avoid possible risks and make the business future-proof. For example, while evaluating or implementing a new technology, there is always a question around its success. Hence, the best way to navigate through such an uncertainty will be by deploying a minimum possible amount to evaluate its successful implementation. It can either be done through testing it in-house or with customers/ end users. This will help in not just evaluating the technology but also getting the initial feedback on the same and thereby avoiding any risk that may rise in future.
Establish benchmarks for success
Once the growth plan is set and uncertainties are identified, both corporate and startup should jointly set benchmarks which will define the success of a pilot project. Such benchmarks/ milestones may or may not be related to achieving profitability but may also relate to other aspects like operational efficiency, bridging supply chain gaps, etc.
A pilot may or may not be able to achieve all the objectives but till the time it is able to achieve some of the objectives, it still contributes to the overall benefit that a corporate may achieve. By engaging a startup to do a small-scale pilot, a corporate will save its resources, both in terms of time and money, which would have been deployed in building a complete solution.
Creating a prototype
As evidence of a successful pilot, a prototype of a product or service along with data on user experience and feedback should be created. This will work as a stepping stone for actual large-scale implementation. It will create confidence amongst the key stakeholders and a corporate would be in a better position to take the decision of partnering with / investing in a startup for business integration.
The above steps would help in conducting successful pilots and in turn creating long-term partnership between corporates and startups. This will go a long way since both corporates and startups will constantly evaluate potential growth opportunities and synergies to work together for achieving the same.
Corporations should keep looking out for startups that align with their goals and objectives and help in creating solutions which address the market requirements. It would set a foundation for a partnership. Even where such partnerships do not result in a long-term engagement, investment or acquisition, both corporates and startups will gain valuable insights and information by working together.
While startups will benefit from the strategic guidance and sophisticated infrastructure of corporates, they in turn will provide benefits such as a fresh approach, innovative thinking and cutting-edge technology to their corporate partner.
Rightly said, conducting pilots with startups would be part of the corporate innovation approach which will help corporates to take advantage of disruptive ideas and technologies. It would truly be a step towards creating a lasting partnership with startups and creating a growth journey together.
Corporate Venture Capital (CVC) can play a pivotal role in the innovation roadmap of a corporate. 100X CVC team is on a mission to drive innovation by connecting the brightest minds to corporations and providing broad range of startup portfolio.