During times of uncertainty, corporates have traditionally prioritised short-term projects over long-term innovation plans that lack immediate financial gain. However, a growing number of leaders are beginning to leverage the power of Open Innovation to kickstart their research and development projects and collaborate with startups. This allows them to pioneer new solutions and gain a competitive edge without impacting their finances.

With 69% of European corporates wanting to collaborate with startups over the next 18 months, building on this momentum is vital. By establishing a clear strategy, having a dedicated team and creating a repository of key learnings, corporates can establish a clear Open Innovation strategy and reap the benefits for years to come.

Defining Open Innovation

Open Innovation, put simply, means sourcing input, ideas and expertise from external partners. This can be through challenge-based invitations, hackathons, or roundtables with expert groups, which are often managed with the assistance of third-party intermediaries experienced in working with small and large organisations.

While once a little-known phenomenon, it’s now becoming a key strategy for European corporates, with almost three-quarters (72%) already collaborating with startups. This has partially been driven by Covid-19 and the rise of remote working, with 50% of these partnerships having started either during or after the pandemic.

This, in part, has also been driven by greater awareness of Open Innovation models and the success they can bring. However, this varies by sector, with 100% of corporates in the aerospace industry collaborating with startups, while at the other end of the scale, public sector organisations report the fewest such projects.

The key benefits

Establishing an Open Innovation strategy can offer a range of benefits for corporates. Through collaborating with startups, they can become more exposed to new technologies and ideas. This can help identify gaps in the market and opportunities for expansion, while encouraging leaders to look beyond organisational boundaries for new ideas, knowledge and competence.

Tapping into this expertise also allows corporates to create and experiment with new solutions. Rather than starting from scratch, they can partner with a startup that has already developed the solution they need. This can significantly reduce time-to-market given the product or service may have already been in development for a number of years.

Adopting a collaborative approach can also help optimise internal processes by exposing corporates to new ways of working. Usually, without a rigid company structure, startups tend to be characterised by high levels of autonomy and agility. This can allow corporates to incorporate new and innovative ways of working into their own organisation.

Establishing a successful strategy

Despite offering many advantages, it can be difficult for leaders to know where to start when establishing an Open Innovation strategy. The first step is ensuring Open Innovation is a key part of the overall business plan. This means these initiatives are regarded as strategic priorities, both in the short and long term, ensuring the right levels of support and accountability to improve the chances of success.

Secondly, it’s important to establish a dedicated department or business unit led by middle or senior management – and an assigned C-level sponsor – with a clear mandate for achieving successful collaboration. This will ensure the business remains accountable and that core business objectives are aligned with the aims of the overall project.

Lastly, creating a repository of best practices, processes, and learnings can also be helpful. This is particularly important given corporates may lack first-hand experience in setting up collaboration models. By having a repository to summarise ways of working and tips for best practice, leaders can ensure their strategies are continually improving over time.

Final thoughts

Open Innovation is fast becoming one of the most dynamic trends in today's business landscape. Against a backdrop of economic downturn, corporate-startup collaboration allows corporations to become more innovative, drive growth and enhance revenue. By establishing Open Innovation as a core part of your business strategy, having a dedicated department, and establishing a repository of key learnings, corporates can reap the benefits of Open Innovation for years to come.