To transform themselves into ‘engines of innovation’, established corporates are adopting powerful new models for engaging with startups, writes Tobias Weiblen and Henry Chesbrough in their paper “Engaging with Startups to Enhance Corporate Innovation” 2015 California Management Review. They have identified four successful models of corporate incubation.

The authors note that instead of viewing startups as agents of disruption they are adopting successful collaborations, overturning the failures of previous attempts which have suffered from cultural misunderstandings and differences in organisational clock speed.

The researchers screened the startup support landscape for tech companies and identified four different models for engagement:-

• Corporate Venture Capital – the larger company provides valuable funds in return for equity, but this can be a ‘double-edged sword for young entrepreneurs’.
• Corporate Incubation (inside-out)  – this is when there is a ‘misfit’ between ideas generated internally and the corporate mission. Spinning out these promising ideas as new ventures has been successful. An example is the Bosch ‘Startup Platform’ which provides a support with light touch procedural guidelines.
• Outside-in Startup Programs – this has a focus on encouraging multiple startups to elaborate on their ideas, the result is that the the corporate backer has a head-start over competitors and access to ‘hot’ areas of technology. Examples include the AT&T Foundry.
• Inside-out platform – the goal here is to get the startup to use the corporate’s technology platform to expand the market. An example is the SAP Startup Focus.

The Weiblen and Chesbrough study showed that companies are evolving more lightweight models to engage with startups in attempt to accelerate their decision-making; a traditional obstacle to successful collaboration. These models are enabling the corporates to attract, support and retain startups in great quantities.

However, the starting point for a successful collaboration is for the corporate to decide on its objectives. The authors comment: “On their websites, many large corporations’ engagements with the startup world are presented as an almost altruistic activity. As our study shows, however, there are very specific motives and tangible benefits behind any of those moves. Four different models of engaging with startups allow large corporations to tap into the speed, innovativeness, and growth potential of entrepreneurial activity.”

To read the full paper: Weiblen, T., Chesbrough, H.W. (2015) Engaging with Startups to Enhance Corporate Innovation. California Management Review, 57, 66–90. https://doi.org/10.1525/cmr.2015.57.2.66