Technology activity levels have skyrocketed by most measures. That is driving companies into the arms of startups while doing away with the not invented here syndrome.
Corporate Accelerators have never been more visible and relevant to strike corporate-startup partnerships. Which models might work?
Executives have the habit of jumping onto the latest trends – all based on the fact that everybody else is doing it.
Consequently, over the past few years, an increasing number of corporates and large organizations in industries like energy, automotive, finance, software, CPG and healthcare have been starting to adopt the Corporate Accelerator idea to help them stay competitive.
The name of the game: Return on Collaboration
Corporate Accelerators have in common that they focus on Open Innovation by collaborating with tech startups involving information sharing up to co-research and co-development.
At the operational level, these models vary by the level of corporate involvement and ultimately, the Return on Collaboration (RoC).
RoC is a proxy for the cost, involvement, and effort of running a Corporate Accelerator versus the benefits one gets from it.
Little is known about how to structure the Corporate – Startup collaborative relationship for maximum output. Besides best intentions, the hurdles to effectively working together are real and have root in aspects like lack of common purpose, lack of trust among the collaborating people, and ambiguous work processes.
Failure to overcome them leads to an inevitable collapse of the Corporate Accelerator model on the whole. It probably underlies the demise of the first generation of Corporate Accelerators. Reportedly, up to 90% have been failing thus far.
Four anchor models that might work
Nonetheless, the sentiment seems to be changing.
To crystallize some new patterns, Scoutely performed a meta-analysis of industry publications and events, followed by dozens of (ongoing) talks with startup and scale-up founders, and C/D-suite innovation leaders from corporate companies and large organizations
Whereas the definition of what constitutes a Corporate Accelerator is blurred, we observed four anchor models that might work, with a slight bias to what we see happening in The Netherlands.
The models we found range from gaining access to startups all the way to deploying the accelerator model as a strategic instrument for business model innovation and new value chains.
1. Event-based, sourcing model
In the first model, an event-organizer such as Amsterdam-based The Next Web X drums up startups who may be relevant for companies in solving, for example, company-specific, operational challenges in functional areas like Marketing, HR, Manufacturing or Logistics.
The corporate company decides on the fit and gives instructions as to what they expect. The startup should then prove its value using corporate resources.
In this model, benefits may almost be instant. It’s advantageous for corporates achieving incremental innovation. For startups, it’s a practical model to validate their proposition and possibly, to sign up new clients.
This model can also be run in a more bespoke way and then precedes to what is called ‘venture clienting.’
2. Themed, open, acceleration model
Unlike the previous model, more diligence is spent on startup matching and structured experimentation.
An Accelerator company like Startupbootcamp recruits and hosts startups that match a particular theme or technology field, and enables them to validate their solutions with corporates, through learning and validation experiments.
3. Continuity-based, closed, acceleration model
In this model, a corporate company operates an Accelerator program on its own.
The goal is to position the Accelerator as a continuing part of the companies’ search for radical innovation. The program content is based on the unique value the corporate can provide, and it can be targeting select startups in various fields and of different maturity levels.
It implies substantial engagement on the part of the corporate company to gain maximum access and unfiltered learnings. The operational aspects of the accelerator can be outsourced to collaborative innovation specialists like Scoutely.
Philips Healthworks is an example of this model.
4. Cross-sector, semi-open, acceleration model
In this model, the corporate chooses to unite with other non-competing companies and startups that have an interest in innovating together.
The goal is not to find solutions that befit one company but to establish new value chains by creating, for example, new platforms that link the traditional and startup companies and aggregating thousands of customers across the new platform.
This collaborative model poses a challenge to maintain ongoing involvement and engagements with the startups next to managing stakeholder interests among all participating companies.
What model to choose?
In general, Corporate Accelerators are particularly valuable for longer-term bets farther from the core. Nonetheless, from our research, we learned that Return on Collaboration-conscious corporates are still trying to crack the code.
So, the Corporate Accelerator idea is at its infancy at best. It has pros and cons compared to other (partnership) models like centers of excellence, university partnerships, startup funds, corporate venture capital, and venture builders.
The choice of models depends on available investment budgets, competitive pressure and interestingly, the CEO’s vision to seek collaborative, unlike competitive advantage.
The choice for a particular acceleration model translates into requirements for the (quality of) startups. Every Jack has his Jill, but the matching accuracy in model 3 or 4 is generally more rigorous than for model 1 or 2.
A trend not to miss is cross-sector collaboration (model 4). The challenges and regulatory aspects of healthcare, food, energy, and transportation - to name a few require a lot of cross-company collaboration. Startups might play a pivotal role in it.
The below figure displays the relative position of the four models:
The biggest payoff from Corporate Accelerators will probably require multiple years to materialize as the collaborative effort and startup mojo that comes with it transform the corporate. Or even whole industries.