One of the prime reasons global companies come to Communitech to set up innovation outposts is to interact with startups. Startups, after all, are cool, they are fun, they dress differently, and they are fast and nimble.

Big enterprises can learn a lot from startups . . . but they rarely do.

Large companies and the people who run them simply aren’t rewarded and incented to try new things. They’re not familiar with the concept of engaging with a startup, let alone an entire ecosystem of them. Doing so, then, comes with inherent risk and uncertainty.

Let’s look at some simple and productive ways we’ve found that a big company can engage with startups after setting up an innovation outpost. This won’t be business as usual – and it shouldn’t be.

Collision days

We at Communitech have run many collision days for our enterprise partners over the past few years. The approach is to focus on a problem that the enterprise partner is experiencing and share it with our large, national database of startup companies. When startups apply, we make a shortlist of the most suitable ones, then facilitate eight to 10 presentations they can make to decision makers from the large company. Typically, four or five follow-on conversations between the startups and the large company result from these encounters.

We have learned from these collisions that our enterprise partners often struggle to determine what problems they need to solve, and how to communicate them. On the other side of the table, our startups are learning how to position their products and services better to solve these enterprise problems, and create successful businesses. Communitech is facilitating improvements on both sides to create more productive conversations and actual business.

Contests

One of the most effective ways for large companies to get smart people outside of their organizations to work on their problems is to issue a challenge. For a relatively small amount of money, you can motivate an army of smart, young people to try to solve these challenges. At the larger end of the scale, the popular X-Prize model (created by Peter Diamandis) issues a big challenge with a $10-million prize attached. Space travel, medical mysteries and transportation are all global problems being addressed with a relatively small amount of money, by tapping into the brainpower of the crowd.

Large companies can create significant impact with as little investment as $5,000 or $10,000.  It’s not easy, and you can’t expect production-ready solutions out of these challenges, but you are exposing smart people to opportunities in your company, which can be leveraged in many ways.

Acquisitions

For large enterprises accustomed to bringing on technology and talent through acquisitions of smaller companies, exposure to startups is a great opportunity to drive R&D activities. Many non-tech organizations talk about doing this, but find it difficult to execute. They simply aren’t set up for small, private acquisitions.

The second challenge is how to integrate the startup’s team and technology into the larger company, whose technology stack might not be compatible with that of the startup.

Startup acquisitions can be a great way to build technology teams, R&D capabilities, and jumpstart innovation activities, but big companies need to understand the cultures of both parties to make it work, and find a way financially and logistically to make it happen quickly.

Partnerships

Partnerships are an interesting way for large companies to work with startups. In specific cases, enterprises have assets that a startup can find incredibly valuable. These might include sales channels, IP or distribution networks. Startups provide value through things like new technology, talented team members and a culture of experimentation and risk. Put these together and exponential growth opportunities can emerge.

It’s not easy for large companies to interact effectively with creative, small, and fast startups, but it’s also imperative that they do. The right startups can be a valuable resource to curious enterprise companies, but those big companies have to be strategic and have the right mechanisms in place to take full advantage of these relationships.

By building processes to make it easy to work together, and internal groups to support experimentation and pilots, large enterprises and startups can learn a lot from each other.

The Nimble Hippo looks at how large organizations can build innovative cultures and disruptive strategies by taking the best lessons from startup ecosystems and applying them in a big-company context.

Photo: Mum & Baby by Brad is licensed under CC BY-ND 2.0.

About The Author

Craig Haney
Director, Corporate Innovation, Communitech

Craig is leading the charge for corporate innovation in Canada. His work with Canadian Tire Innovations helped launch the LeanLab project at Communitech, helping large, non-tech companies become faster and more innovative by engaging with startups. As Director of Corporate Innovation at Communitech, his focus is to grow the ecosystem by exposing small companies to big problems they can solve for some of Canada’s largest players. Craig has an undergraduate degree from the University of Western Ontario and a Masters of Business, Entrepreneurship, and Technonogy (MBET) from the University of Waterloo.