Collaboration between startups and corporates – two realities with very different cultures and goals – is anything but simple: establishing a model of interaction that is effective for both sides, feasible on a large scale and sustainable over time is a complex task.
McKinsey & Company, together with B Heroes, an ecosystem of initiatives supporting the growth of Italian innovative startups, conducted a research study (“Quando Davide si allea con Golia”, in English “When David allies himself with Goliath”) that identifies the main characteristics of the Italian context and the state of the relationship between startups and corporates in Italy.
The research was carried out in April 2021, based on the analysis of data collected from two primary sources of information: a survey that involved more than 80 Italian startups active in various industries, and a series of interviews given by executives and managers who are experts in the field of innovation and operating in large national and international companies.
The 80 startups represent three business models: 36% of them offer products or services directly to end customers (B2C); 33% offer services dedicated to small and medium-sized enterprises in the B2B market; while the remaining 31% target large national and international companies, also in the B2B market.
Italian startups see corporates as partners able to facilitate access to funding (75% of respondents), accelerate the entry into the end-user markets (88%) and guarantee a positive return on their image in the industry and with investors (90%). But they feel that corporates need greater flexibility and organisational agility.
On the other side, corporates see collaborations with startups as an opportunity to access talents, ideas and energy and to foster cultural change in the organisation through contamination with new ways of working. But they feel that startups need to improve their ability to rapidly replicate cutting-edge solutions on a large scale.
70% of the analysed startups are proactively engaged in the search for new corporate partners; only in 30% of cases, they revealed to have adopted a reactive approach after being approached by venture capital firms, corporates or innovation centres interested in their idea or business model.
However, despite the importance given to the relationship with corporates and the fact that more than 80% of startups and corporates are satisfied with their partnership experiences in Italy, only 41% of the analysed startups currently collaborate with more than two corporates; 35% of the startups have not established any type of partnership yet, while 24% have initiated their first collaborations with one or two corporates. The length of the decision-making process, the complexity of the corporate governance and the cultural gap seem to be the main challenges to be addressed.
For corporates, focusing on a specific area, focusing on mature startups, and using the right mix of channels (direct, accelerators and incubators, innovation brokers, and venture capital funds) is key for finding the right startup/partner.
The partnership relationship that a corporate can establish with a startup can take different forms depending on its needs and approach to innovation. The supplier-customer relationship or direct investment are the types of partnerships most used by Italian corporates.
Many companies are also adapting organisationally to encourage the establishment and development of partnerships with startups through innovative programs that follow mainly two models: the centralised management and the diffuse management of innovation. Whether innovation management is centralised or diffuse, the important thing for corporates is to be ready for the change.
To facilitate the creation of a shared path, McKinsey and B Heroes have identified some decisive factors that companies should take into consideration.
First of all, the role of the leadership is essential to ensure successful collaboration, starting with top management, which must act as a driver of innovation to attract startups and, at the same time, convey the value of transformation and digitisation to all levels within the organisation. It is important that innovation becomes transversal to all business functions and integrated into the working approach and corporate culture.
However, not all innovations are meant for success, which is why it is necessary to adopt an approach that consents to experimentation, testing and change as the work progresses.
In addition, partnerships need to be developed quickly, with pathways for scouting and selecting the most promising ideas for specific business objectives. Finally, it is crucial to respect the identity of the startup, and managing innovation so that the startup meets the needs of the company, but does not lose its value proposition.
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The McKinsey & Company and B Heroes research study “Quando Davide si allea con Golia” (in Italian) is available at this LINK.