Sustainability has caught up with corporations. What were once merely exercises in reporting are now plans to invest eye-watering sums into new products and services. Established capital goods and industrial corporations are having to pivot quickly and internal R&D is not cutting it.
Corporations are turning en masse to “open innovation”, hunting for startups to spark innovations that will hopefully grow into meaningful business outcomes at scale—ones that can truly move the needle on sustainability. But much about the actual process of open innovation is unique to each company and contingent on the quirks of their internal cultures. Unlike venture capital, no dominant systematic process yet exists for corporations to engage with entrepreneur-led startups, causing frustration for both parties.
This is a problem not only for the companies and startups seeking to collaborate, but also for the VC firms, like us, that work with corporations to provide relevant deal flow. That’s because exposing conglomerates to startups in their sector is only the beginning of the open innovation journey. For our corporate partners, deal flow is where the hard work really starts.
At Emerald, we’ve had to think about how to extend our own corporate engagement model. Last year, we devised and tested a new program that we now intend to roll out in 2022: the “Emerald Sprints” initiative.
These are specific, topic-centric and time-concentrated meetings between a group of like-minded companies, working with cohorts of invited start-ups and meant to accelerate pilot concept design. Value drivers that were important to the open innovation teams from the seven launch corporations we worked with last year included:
- Topics that resonate with their business units and would lead to internal engagement that otherwise would be more difficult to achieve. The topic-centric and time-limited nature of Sprints created the impetus that open innovation teams were looking for.
- The power of the corporate group to attract top-tier startups relevant to the topic in a way that individual corporations may not be able to.
- The fact that the invited startups were focused and ready to engage in the pilot process. This saved the corporations a lot of time and effort.
- Each company’s specific “challenge statement” for its topics of interest—essentially, a manifesto that permits the startups to respond with fit-for-purpose, creative and bespoke solutions.
We know from our own conversations just how challenging it is for industrial corporations to engage a sufficient number of startups with the potential to pilot and ultimately help solve critical business problems, particularly in sustainability, net-zero and related areas.
That’s why—armed with these new insights and in conjunction with our partners at Pilot44 Labs—we’re planning to organise a series of Sprints this year across the five industrial domains of downstream oil and gas, offroad mobility, marine, batteries (advanced materials) and advanced manufacturing. These are all sectors that need help in their sustainability transformation as the pressure to go green intensifies by the day.
As Michael Schrage of MIT puts it, “For innovation-hungry legacy firms, partnering with a startup can be appealing. Relatively small sums of time and money can quickly yield generous returns.”
Our sincere thanks to the launch corporations for their support, to the two cohorts of start-ups, Pilot44 and our own Emerald team. To find out more, please get in touch with Charles Vaslet.