How corporate-startup collaboration is the key to thriving amid economic turbulence
Corporate-startup collaboration is surging as companies leverage the power of smaller, agile businesses to outsource their R&D projects to innovate as the global economic slowdown squeezes already tight budgets, according to Sopra Steria’s new research.
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Open Innovation, where corporates collaborate with dynamic startups to seek out new solutions to their business challenges, has gone mainstream, as new post-Covid 19 working habits and the global economic slowdown change our business reality.
Once a relatively niche phenomenon, open innovation has rapidly become the norm, with almost 3 in 4 (72%) European corporates now running collaboration projects with startups, and two-thirds (67%) rating startup collaboration as Important or Mission Critical
for their organisation’s strategy, according to the findings of our new study produced in collaboration with Ipsos and INSEAD.
The data shines a fascinating spotlight on the state of open innovation in Europe and is based on our survey of 1,648 startups and corporates from 10 European countries (UK, France, Italy, Spain, Germany, Sweden, Norway, Belgium, the Netherlands, and
Luxembourg, with the three latter countries grouped as Benelux).
72 % of Corporates are operating in Open Innovation projects
The insight reveals the major factors driving corporates to collaborate, which countries and industries are advancing most rapidly with open innovation revolution - and which are behind the curve.
The Open Innovation Report 2023 key findings
- 50% of corporate-startup collaborations launched during or after the pandemic
- Italy and Benelux show most enthusiasm for open innovation (80%) while Germany shows least (57%), despite Berlin’s position as a leading European startup capital
- 89% of corporates who managed collaborations using a dedicated business unit always achieved their objectives
- 55% of corporates used third-party intermediaries to manage open innovation projects.
Why Open Innovation?
The rapidly growing interest in open innovation is likely from a combination of factors, including a higher awareness of open innovation models, a general surge in demand for innovation combined with a new familiarity with collaboration tools since the
covid pandemic normalised remote working.
As successive economic data confirms, Europe is unnervingly close to tipping into recession and pressure on company finances throughout the value chain has never been greater.
Companies traditionally become more risk averse in such a climate, and R&D projects with their unpredictable and long-term ROIs become frequent casualties, losing out to traditional, core business activities in the battle for budget allocation.
69% of Corporates are planning to collaborate with startups in the next 18 months
However Open Innovation is emerging as a key mechanism to enable corporates to keep innovation goals on track.
A total of 69% of corporates say they want to collaborate with startups within the next 18 months, while 84% believe in the value of leveraging external knowledge. For them, open innovation presents a way to uncover unknown business opportunities, create
new solutions and also rethink and improve their internal business practices.
The corporate view:
“Startup collaboration is becoming more and more important for us. We can’t build everything ourselves. Working with startups is key to achieving our targets.”Maria Archontoulis, Lead Startup Partnerships and Accelerator, DNBNorway
Meanwhile, for startups, collaboration offers the potential to dramatically drive forward their business, providing a fast track to scale, with a larger, higher-profile partner with resources.
Corporate-startup collaboration trends
- Collaboration is most popular in the aerospace industry with 100% of corporates having already collaborated with startups
- The desire to discover unknown business opportunities is the most popular objective driving corporates to work with startups (46%)
- The biggest blockers to collaboration were perceived incompatibilities between corporates and startups due to legal and regulatory issues (14%) and low risk tolerance (13.7%)
- Sustainability, Artificial Intelligence and Cybersecurity are the top three topics corporates aim to explore in collaboration with startups
The startup view:
“The cycles of decision-making take up to a year within the big corporations. When you know that a startup should gather funds every 18 months, it becomes complex to match these two, very different, timelines.”
The report includes case studies and insights from the corporate and startup worlds, a breakdown of pitfalls to avoid when launching a collaboration for the first time and a checklist of the keys to managing a successful open innovation collaboration
Carrot and stick
Open innovation is no longer simply a marketing exercise, it has become mainstream, already reshaping the products, services and business practices of some of the world’s largest conglomerates.
Corporates which fail to recognise and take advantage of the open innovation phenomenon, risk finding their most promising potential startup partner, now working with their most fierce rival.