Many of today's corporations are involved in several types of Corporate Startup Engagement.
How many types?
There are at least 10 and in fact, we covered all of them them just recently...
But the real question is: What are the core benefits?
Some benefit from these engagements by getting equity from the startup they are engaging with -- but generally, that isn't the case.
These corporations invest money, technical know-how, and human resources into the startups for equity.
This means that if the startup succeeds, the big corporation has a lot to gain.
The big corporation will then be ready to invest so much, especially when the startup has a very innovative idea or prototype that can change the way things are done in that field.
BUT, there are some startup programs, where the corporation does not benefit from the startup's equity.
In fact, it's becoming the new normal.
In this case, it is generally a collaboration that leads to innovation.
Microsoft is one of the many.
They do not take equity from those startups in their CSE programs.
So how do big corporations like Microsoft benefit?
PROXIMITY
When the CSE programs started lightly rolling out years back, it was to be seen as a form of investment tool, but that has changed, as many corporations now finance a pilot program for many reasons.
Many big corporations now get involved in financing a CSE program as a way to stay relevant in the industry and economy.
WHY?
Because the most important piece of all is ACCESS.
Access to new. New ideas. New methods. New technologies. New perspectives.
Because new information is the most important commodity in the world, access is then the ultimate growth device.
When corporations can easily access startups and engage with them, they remain close to the innovative trends in the industry and economy when it matters most.
A killer CSE program can take down an entire flock of birds with one stone.
DEFENSIBILITY
After years of being involved in CSE programs, and interacting with other corporations involved in accelerator programs, these are the main reasons behind the programs, and what corporations stand to gain through access.
To properly understand the reasons behind hosting a Corporate Startup Engagement program, let's look at a large corporation, Kodak, whose relevance has dropped for refusing to be innovative.
Every company on the planet wants to try and avoid the Kodak situation. In fact, most of them believe they're doing so right now.
But Kodak certainly didn't think they would ever be in this situation.
Many corporations involved in CSE programs do it to try and stay ahead of the industry by getting close to innovations and working with them.
Was Kodak slow in innovating? Maybe.
Or maybe they just weren't part of the right conversations.
Maybe they didn't have ACCESS to the right people having the right conversations.
Without access, they failed to catch up and suffered for it.
Fighting innovation is impossible. Innovation will always set in from outsiders.
What a rational corporation does is to be out there, spotting innovations and working with them.
It's a fairly simple concept: Many startups have innovative technology and ideas at their fingertips.
What they don't have are finances and other structures.
GROWTH
Big corporations that engage these innovative startups to get consistent access to the innovative ideas and technologies.
This will ensure they have a place in the growth and future of the field.
There are a lot of Corporate Startup Engagement models many corporations use to build relationships with startups, though a lot of corporations opt for core-aligned programs because of the proximity to the main aspects of the business.
Others, using defensibility or protection from disruption as a primary driver, use CSE to diversify their offerings with things like reseller models, bolt-ons and product adjacencies.
Launching CSE programs allow the big corporation to easily find innovative startups and gain insight into trendsetting technologies and ideas.
Marketing and Increasing Sales
Apart from gaining new, groundbreaking innovations, a lot of corporations are involved in CSE programs to establish new footholds in the market and increase their sales.
Clients always are in need of the best, and most innovative products or services that can satisfy their needs.
No corporation has the ability to satisfy all the needs and make their products or services the best around. That's where CSE programs come in.
Working with numerous startups offer big corporations the opportunity to know what they offer, have knowledge of the most innovative and new technologies around.
The information gathered can help the corporation craft out new products and services for their clients, change the way the corporation perceives things, as well as make them current in the field.
This will then increase the trust the clients have for the corporation and maintain an expectation of greatness.
Promoting Entrepreneurship Culture
Hosting entrepreneurs, in any variety of CSE has a way of promoting a corporation's entrepreneurship culture.
When the executives attend the classes with the startups or interact with them, they get to find some innovative cultures or elements that can be incorporated into their corporations to grow.
No corporation can no everything -- no matter how large they are, their success or the technology they have.
Their executives can learn from the startups and small-time entrepreneurs. Things like how to relate with clients better, how to build a more viable product, what the future holds and so on.
They can start using these insights as additional tools in their corporations' affairs.
Being exposed to the startup culture in many organizations allow employees of big corporations have an insight into the innovative culture of startups, which they can then infuse into their daily work activities.
Hosting a CSE program will always ensure a corporation stays rapid, relevant and resistant to disruption.
About the Author: Simon Hitchens is a startup enthusiast, columnist, researcher and educator living in Chicago, IL. He dreams of someday living somewhere warm and writing a novel -- in ink.
About Gearbox: Gearbox Enterprise Academy provides the leading corporate-startup engagement solutions designed to help innovation leaders, corporate development professionals, and strategic partnership executives master the art and science identifying and aligning with what's next. Through a unique combination of a membership community, AI-driven software, and cutting-edge expertise, Gearbox is focused helping corporations keep pace in an ever-changing digital world and providing startups with new avenues for growth. The result for modern innovators is unprecedented agility, risk management, and superior results. Headquartered in St. Louis, MO with offices in Denver, Chicago, and Los Angeles, Gearbox serves as a pivotal partner to large corporations and a champion to innovative startups.
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