Successful, established companies are generally good at innovating around their current businesses and optimising their existing operations. But breakthrough innovation is harder for them, because they typically focus on continuously improving existing products and services. Meanwhile, research shows that the very highest-performing companies have a greater focus on disruptive innovation.
Opposites attract. Large companies and startups each have what the other one doesn’t. What if we got them together?
Startups, on the other hand, excel at radical innovation. So engaging with startups is an opportunity for big companies to diversify and challenge their thinking beyond what they would normally think is possible. And that collaboration can keep big companies innovative and competitive.
Discover, innovate, execute and scale
Scaling an existing business and discovering/proving innovative concepts are complementary skills. Large companies are usually better at the former, which is how they got big. Startups are usually better at the latter. This suggests that collaboration between startups and corporations can benefit both.
The collaboration between established players and startups in the pharmaceutical industry in recent decades clearly demonstrates the real-world potential of this approach. Biotech startups are much faster than large pharmaceutical firms, when it comes to research and product development.
For example, an HBM Partners report shows that 63% of all new prescription drugs approved during the last five years stem from research by biotech start-ups. Established pharmaceutical companies have then used their sales and marketing organisations to drive sales. We think it’s obvious that established and startup companies in other industries could benefit from this type of collaboration. And even in the case of biotech firms, increased R&D collaboration could take place at an earlier stage than it generally does.
Accelerators bridge the gap
Despite the clear benefits, the substantial differences between startups and large corporations have traditionally been a major stumbling block for collaboration. So how can established corporations and startups interact more efficiently going forward?
Business accelerators are a key component in bridging this gap. They support entrepreneurs with a variety of resources, including education, mentorship, and financing. These fixed-term programmes focus on compressing years’ worth of applied entrepreneurship know-how into a programme that lasts a few months.
Business accelerators also serve as listening posts to help established companies understand where the industry is heading. This gives them increased awareness about what disruptive technologies are coming and helps them choose which ones they want to engage with.
In addition, the accelerator functions as a test laboratory for incubating new business ideas. For instance, accelerators can give established corporations the opportunity to create innovation around a specific business problem or platform. Working with startups can also help to rejuvenate corporate culture and attract and retain talent.