Work with startups to push innovation within your own organisation

How do you inject fresh thinking into a mature incumbent business? That is one of the key questions for CEOs, CTOs, CMOs and CIOs to wrestle with right now.

Many companies now float the idea of digital transformation within their boardrooms to change the way they operate and innovate, but doing this in isolation isn’t the answer.

This is because disruptive startups with new ways of doing things faster, and often better, are changing the business landscape beyond recognition.

In every industry, digital tools are enabling fresh ideas and quick execution, creating a new culture that for many beats even decades of experience.

However, for an established business, this represents an opportunity — not the threat that many seem to believe. Partnering with agile and digitally-savvy upstarts has now become a core strategy for forward-thinking organisations.

Brent Hoberman, co-founder of lastminute.com, says in ‘Winning Together’, a new report from innovation charity Nesta: “The most forward-thinking corporates know that the best ideas don’t always come from within their own business. Instead they are setting powerful examples of how working with and investing in startups can help defend and grow market position.”

Reaching out to startups, rather than ignoring their presence, often means existing products and services can be tweaked and improved — instead of allowing the competition to invent their own and take away existing market share. It can also rejuvenate an entire company culture, oozing in new ways of thinking, acting and implementing.

One way to do this is to share resources, offer business support and mentoring (that should go both ways). You may also want to host events or competitions, develop incubator programmes or form partnerships to co-develop products or services.

And there has never been more young companies out there to tap into. Last year, the number of businesses launched by people under 35 rose by 70%, compared to pre-recession 2006. That comes from research by DueDil and Enterprise Nation.

This follows other studies suggesting young people are less keen to take a traditional approach to working life, increasingly preferring to make their own way. Only 15% of 2015 graduates see working for a major corporation as their preference, says an Accenture study.

One company already showing the way is Unilever. It has launched more than 60 pilot projects alongside smaller companies over the past year. It all takes place at the Foundry, Unilever’s dedicated digital platform for facilitating collaborations. So when one of Unilever’s 400 brands wants to solve a particular challenge, they reach out to the Foundry, which in turn activates the entrepreneur community. A successful startup partnership benefits Unilever with unexpected solutions to problems. The startup benefits too, gaining access to the incumbent’s large development and marketing resources.

Diageo is another good example flagged up within the Nesta report. It worked with Thinfilm to solve the problem of counterfeiting. Diageo placed Thinfilm’s super-thin electronic sensor within its bottles, enabling it to track products and even tell if they’d been opened.

For a startup, securing a collaboration can be vital for getting off the ground. This was the case for Monitise’s online payments technology, a novel concept at launch in 2003. Visa stepped in to buy a 15% stake in 2009 and this became a long-standing partnership which offered help with funding, access to quality mentors, and an association to attract top talent and new customers to Monitise.

But not every collaboration has to be so formal. UBS recently launched the Innovate for Finance challenge; a competition aimed at finding startups to become potential partners as the banks develops its next-generation FinTech. Startups from all over the world are encouraged to enter the competition, with the winners offered funding and mentoring.

Dell and Google are two other big beasts of technology working with startups and entrepreneurs. But any business of any size can do it. Yours included.

Staying competitive has never been harder for all businesses and organisations. But thanks to the transformation digital can bring, nobody has to do it alone.