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How can startups and big corporations overcome their differences, innovate together and strike win-win deals? This article discusses the importance of innovation in a context of rapid technological, economic, societal, and political changes. It emphasizes that while startups may threaten large corporations, these two actors often have an interest in collaborating to innovate together. However, managing interdependence and sharing the created value can be real challenges, mainly due to cultural differences and distinct management processes. Mutual trust and relationship-building are essential to overcome these obstacles and create successful innovation collaborations.
E. Krieger
We are living in a historic period where rapid technological, economic, societal, and political changes are occurring. The reduction in costs and the speed of information processing and transmission facilitate the creation of hundreds of thousands of companies, eroding the established companies’ competitive positions, reminiscent of Schumpeter’s concept of creative destruction.
Many industrial groups are paralyzed by this situation, as they rightfully fear being disrupted by startups that defy traditional norms and impose a pace that’s hard to match, akin to a super tanker racing against a speedboat.
Large Corporations vs. Startups: The Regatta of Supertankers and Speedboats
The reality is more complex because startups often have an interest in partnering with large corporations to accelerate their growth, and vice versa. Innovation is not about sudden brilliance but a persistent process leading to the convergence of novelty and market demand, aligning with the OECD’s definition in its renowned Oslo Manual.
The OECD defines innovation as « the implementation of a new or significantly improved product (good or service), or process, a new marketing method, or a new organizational method in business practices, workplace organization, or external relations. » This underscores that innovation is tied to production, distinguishing it from invention or discovery. It involves a practical process leading to effective utilization, typically not falling under research or experimental development.
Too Much Process Kills Business
Forming an alliance with a large corporation can make sense, but many initiatives face the challenge of managing interdependence and addressing issues related to sharing the created value. The difficulty is not only fairly distributing margins and risks associated with operations but also the substantial differences between startups and large corporations, starting with culture and management processes.
A large corporation can be seen as an (aging) startup that has successfully grown, relying on competitive offerings and well-established processes for managing technical, commercial, financial, and legal risks. However, the formalism can often become stagnant as « too much process kills business. » Hence, finding cooperative spaces between startups and large corporations where each can contribute their strengths is both tempting and challenging.
Building Trust to Overcome the Usual Divides
This is where an essential aspect of innovation management comes into play: the trust that startup teams and their corporate counterparts must develop to move beyond the « David vs. Goliath » dynamic. This underscores the importance of innovation networks and catalyst organizations that facilitate the development of trust among members of the same cluster.
Beyond the exchange of ideas, these catalyst organizations, led by a few key facilitators, enable decision-makers to meet and make the joint development of innovative offerings an acceptable risk. Often, the desire to work together precedes a formal collaboration project.
Managing Interdependence and Sharing Value and Risks
In the realm of innovation, the key challenge is to create a sense of shared destiny, share the risks and the value created, and effectively manage the resulting interdependence.
All of this is only possible through a high level of mutual trust, as success depends on the ability to establish subtle connections, especially when the major actors in an innovation ecosystem often do not share the same cultural reference points.
In conclusion, genetic engineering holds promise for creating the unicorns of tomorrow, but to do so successfully, we must find ways to bridge the gap between seemingly disparate entities, much like mixing oil with vinegar.
