Innovation is unpredictable. Identifying the next big thing and where it will come from is a challenging task. As a result, the market has become much more crowded—everyone is looking to innovate, and start-ups are looking for new sources of funding. According to a 2023 Boston Consulting Group study, 79% of companies ranked innovation among their top three priorities, and 42% expected to increase spending by more than 10%.

In reality, though, the framework of innovation has evolved. The responsibility for innovation should not sit solely on the shoulders of individual companies. Great ideas can originate from anywhere—whether from within a large company, from individuals, or through collaboration across an ecosystem. This includes startups on the verge of going public as well as early-stage startups comprised of a small team with just an idea and a prototype.

For these reasons, there is a new model for innovation in today’s business world. Collaborative ecosystems are being developed in key industries—from health care to cleantech and others—to drive market transformation, solve problems, and create better customer experiences.

PICKING THE RIGHT BEAN

Building a business is like making a cup of coffee. You start with a small bean, like a product or idea, and have to push and grind until you turn it into that perfect cup of coffee—or an idea for a successful business venture.

No matter where it comes from, pursuing an entirely new idea or business venture is a difficult proposition. And it’s always most challenging to be first. Some people believe in a first-mover advantage, but there can also be a first-mover disadvantage because you don’t have a playbook to follow.

A partner-driven approach can be very valuable in overcoming some of these challenges. There are several ways to partner, and many different types of organizations can have a role in partnerships. In these collaborations, both sides will have a thesis, but the collaboration must be a partnership of equals. And when meeting with investors and customers, everything happens together—hand-in-hand between startup and corporation.

PARTNERING FOR SUCCESS

When corporations and startups join forces, both sides have an interest in seeing the project succeed. This type of outside-in, collaboration-driven model can lead to business opportunities for big companies in new market sectors.

There are several reasons why startups and corporations should seek collaboration to drive innovation. For startups, there is excellent credibility in being associated with a global brand that is helping to incubate and grow your company.

Big companies have the infrastructure, channels, and talent to help develop and grow products quickly. This includes technical and support functions as well as the ability to drive global scale. In addition, corporate innovation centers often employ talent from a variety of fields and industries who can offer different skill sets and talents based on their experiences. This gives startups access to talent beyond their initial area of expertise.

Next is the startup’s ability to tap into the corporate partner’s customer and market information. A corporate partner is also a potential source of financing and a positive sign for attracting additional investors.

Meanwhile, start-ups help corporations gain early insights into experimental technologies and new verticals. Start-ups are often ahead of larger companies in their markets, and the larger company may want to bring them in-house. For example, many top innovations in industries like health care, energy, and cleantech are being born out of the startup community.

Investors and corporations are looking for partners who can bring these types of ideas to the table—ideas that can be tested through proofs-of-concept and pilots and then ultimately collaboratively built into new businesses.

Of course, corporations have a financial incentive to build and then spin out these types of businesses. Ultimately, the goal is to create a product or business that helps improve people’s lives and the world at large.

INVOLVING THE WHOLE ECOSYSTEM

While partnerships between startups and corporations are crucial for driving innovation, ensuring the success of these innovations requires involving stakeholders from the entire ecosystem. This helps vet the idea from multiple perspectives, promote and support it, and can include representatives from organizations like community groups, academia, government agencies, and investor groups.

The more voices that contribute to the discussion and the more ideas brought to the table, the greater the chance that something impactful and successful will result. For example, investor funding signals the viability of an idea, and consequently, by funding the idea, the investor provides a platform and foundation for the idea to grow—not just with monetary support. At the end of the day, it is in the best interest of the investor to see the idea become successful so they will likely do all they can to help ensure its success.

Once ideas are identified and developed, having ecosystem partners, like state entities or other corporations, can offer a forum for testing and validating the ideas and products in real-world settings. If they are willing to open doors and be a test bed for potential solutions they will use in the future, there is not only a place for PoC but also a support system for turning ideas into viable product solutions.

INNOVATING FOR IMPACT

We have reached a new era in innovation, driven by a collaborative ecosystem focused on key market sectors. By integrating startups, corporations, academia, and venture capitalists, this interconnected approach has the potential to produce transformative solutions.

It’s important to remember that innovation for the sake of innovation doesn’t accomplish anything—we must innovate for impact. Generally, there are a lot of good ideas within an ecosystem. It’s critical for corporations to go outside their walls and talk to startups to see what kind of ideas are out there, how partners might want to work together, and how quality of life can be improved by bringing new ventures and products to market through collaboration.

https://www.fastcompany.com/91178651/driving-a-new-era-of-innovation-through-collaboration