Philip Staehelin: Corporates Need Startups Too

Former StartupYard Executive in Residence, and current managing partner at Roland Berger, Philip Staehelin, wrote us this week with something to say.

Philip represented Roland Berger, along with StartupYard, at Startup Summit last week in Prague. He noticed a conspicuous absence, and wanted to share his views about the corporate relationship to startups.

Here’s Philip:

Don’t companies realize they need the startups as much as startups need them?

Last week I spoke before a full house at Prague’s Startup Summit. Over 500 participants listened eagerly to a full day of speakers, including the CEO of O2 CZ, the CEO of SAP BSCE, and the Strategy Director of MSD IT Global Innovation Center, to highlight but a few. There were panel discussions (one with the top regional PE/VC firms, and one with successful startup founders), and a few cool startup pitches to keep things interesting.

However, this was not your standard Startup event. Instead, it targeted the corporate sector, to help it address the startup community in order to strengthen, supplement, or jump start corporate innovation efforts.

Unfortunately, many of the larger corporates that I was expecting to see didn’t get the memo apparently, even though this was one of the biggest and best CEE events of the year. Not to mention the fact that it was completely sold out. It seems everyone else did get the memo.

Having worked in a few large, international corporations, I can see from where this disconnect arises. Most companies well understand the need to be more innovative – or to risk obsolescence. They’ve seen the destruction that companies like Amazon, Airbnb and Uber can quickly wreak on an entire industry. CEOs of all stripes are keenly aware of the plausibility of John Chambers’ (former CEO of Cisco Systems) assertion that “40% of today’s businesses will not exist in a meaningful way in 10 years”.

And this sense of fear and foreboding has companies banging the innovation drum more and more fervently.

But it’s not much more than noise for the most part. Does creating an internal “innovation department” cut it in today’s world? Does hiring more digital savvy millennials make a company innovative? Does throwing money at the problem make it go away? Quite simply – no.

Innovation is not a simplistic corporate function. Perhaps it once was, when innovation meant finding ways to be more efficient and to reduce the defect rate to as close to zero as possible. But that’s so last century.

In today’s age of disruption and compressed business cycles, companies have no other choice than to leverage the rapid innovation happening outside company walls. They need to think about creating a multi-pillar innovation strategy inside the company that: a) facilitates idea generation through many different channels (internal and external), b) nourishes and leverages fresh ideas that young startups bring to the table, and c) funds innovation efforts within the startup ecosystem. They need to put real skin in the game in order to increase their odds to survive and thrive.

But, why didn’t more corporates show up to last week’s game to show that they “get it”? I’m sure there are many reasons, but there are certainly two things that companies can do to make sure it doesn’t happen again. 

Ensure that there are people in the company that are tasked with “engaging” with the startup ecosystem. Get them out there. Empower them to be gateways into the company for startups, partners, academia, etc. Typically in a company, there is simply no one that feels responsible to participate in these types of events. And those that might be interested are afraid to ask the boss to “take the day off” to attend a conference – regardless of the fact that this (if done properly) can impact a company much more than a standard workday. And when done right (i.e. networking like hell, getting stimulated with new ideas, seeing new contexts), it should be far more exhausting than a normal day in the office!

Don’t believe that your HQ is “doing all the innovation”. Innovation should happen everywhere, in each branch and in each subsidiary. If you’re lucky enough to have a global presence, leverage it to find that “diamond in the rough” that may be a small local startup in one of your backwater geographies. That can only happen if you take full responsibility, and create a culture that is “looking” and “enabled” – something you can certainly do at a local level. Excusing your lack of initiative on a global policy (or lack thereof) is simply that – an excuse.

That’s a very long-winded way of saying: next time there’s a cool startup conference in your neighborhood – sign up and engage!