How startups and corporates can mutually benefit from innovation springing from accelerator programmes

While startups bring agility to the table, corporates have deep pockets and the ability to fund innovation that bright-eyed entrepreneurs are capable of. But each needs to have expectations set straight before signing on the dotted line.

The ‘Corporate Innovation’ space is hotting up across the globe and more so in India, with a significant increase in the number of corporates figuring out different channels to tap into in order to drive a strong innovation agenda. India’s tech talent has proved to be very lucrative and rewarding, and corporates are no longer just looking at the cost arbitrage through offshoring. Rather, they are building capabilities and harnessing the innovation potential in India by leveraging various factors.

I have been in the strategy and innovation team of Corporates for the last few years, trying to solve their problems through the innovation route and build a strong win-win proposition for all the stakeholders. Over the last 8-12 months, I have also been interacting with multiple industry leaders on tapping into this space in India through both proven and newer models. We see a lot of impetus given to different KRAs - creating better consumer experience, operational excellence, better products for customers, number of patents filed, employees experience, tech talent acquisition, talent development, etc., which impact both the top and bottom line of an organization.

Corporates are utilizing multiple models to drive innovation; one of the most successful models for the innovation agenda of an organisation has been to interact and partner with startups through an accelerator. Over the last 6-8 years, we have seen more than 50+ corporate accelerators set up and working with startups for motives such as:

• Doing a quick test to validate a particular strategy or product
• Figuring out what’s happening in the industry
• Drafting cost-effective strategies to get access to disruptive technologies and products
• Building a stronger suite of products for own clientele
• Testing and improving upon their own products

There are multiple such motives and combining them in different proportions with specific timelines is what allows corporates to better define their KRAs and thereby forge a stronger plan for achieving the larger innovation goal.

While the corporates in India have been running these accelerators for 5+ years now, we have seen accelerators across different stages of the growth curve - while some are nascent, others have had a lot of experience on their hands and have gone through multiple transformational cycles based on learning, both internal, as well as external and, have streamlined their strategy to maximise returns. Some of the key strategic interventions that I have seen in the accelerator way of operating include:

Paid pilots

As the ecosystem has evolved, the startup founders don’t find it completely fair to apply resources such as infrastructure, time, money and, most importantly, human capital for a corporate pilot for free. This is specifically applicable for startups that have a few clients already or the ones that have to bear heavy financial burden for the work. In order to maintain the intent of having strong startups meeting their KRAs, some corporate accelerators have now moved completely to a paid pilot model.

Virtual incubation

Another aspect that got the attention of corporates is the need for the founders and their teams to be at the corporate location. But based on the industry and other factors such as the stage of the startup, scope of work, etc., some corporates have realised that they could run their accelerator/ incubator programmes virtually, thereby eliminating the cost of infrastructure and the need for the founders to relocate to the corporate’s office.

Ongoing intake

Most corporate accelerators work on the batch or cohort model with a defined intake timeline and duration for the programme. This beats all intent for such a programme in two ways - sourcing for a startup or solution after the programme has started for a critical business need and refusing a strong solution-based startup after the programme has started even when you know the fitment of the startup is great. To avoid these situations, we are seeing a gradual shift from a batch model to an ongoing intake.

Co-development

When corporates are solving for issues, where not many strong or apt solutions exist in the ecosystem, it becomes important to develop these solutions. Co-development of these solutions with the startups having teams with the right capability sets and experience helps with agility and scale at the same time. Some corporates are now focusing on bringing this change in the way their accelerator operates.

Winning motivation

In some corporate accelerator programmes, where the intent is to create stronger wins for the scaling of startups and, specifically, if the stage at which the startups are at is more or less same, certain KRAs can be defined to ladder the startups’ progress over key milestones. The top startups are awarded by the corporate and this could be in the form of financial investments, grants, prize money, products licences, patent costs’ coverage, etc. This leads to the creation of a healthy competitive environment and also the motivation to perform better.

It is very important that the stakeholders participating in the various corporate accelerator programmes understand their goals and associated metrics and accordingly take decisions around fitment. The three key stakeholders include the startups, internal business teams from corporates and the innovation team from the corporates.

From the perspective of startups, it is imperative that they understand their win and way around the corporate innovation ecosystem to maximise their returns on the resources they allocate, be it time, effort, money, human capital, etc. It is this rationalisation that will help them choose the right programme to be a part of and save much heartburn later.

Some of the key areas for startups to think through while immersing themselves in this environment include:

The selection process of the accelerator and goal setting

Startups need to be very careful in identifying the intent to be a part of a corporate accelerator programme and thereby defining their KRAs and associated milestones. Once they have the clarity, they need to figure out the programmes that can enable them to achieve these KRAs. They should make sure that they clarify any questions pertaining to the offerings and with regards to the legalities before they sign any contract. Mapping of the requirements and the corporate accelerator’s offering is thus a must first step in taking up this journey.

Corporate navigation

Startups need to understand that corporates do not have the same agility as startups do because of the scale at which they Navigation within the corporate environment thus becomes a science that startup founders must understand and apply to achieve the maximum return while working with them. For example, there could be phases in the year where test-freeze happens in a corporate and this time could be forecasted and applied beforehand while creating the milestones. It is also imperative that the startup founders clearly understand the internal stakeholders and classify them as decision makers, influencers and internal champions to navigate through the corporate mesh easily.

Conversion and up/cross-selling

Startup founders tend to try and sell their products and capabilities as soon as they become a part of the corporate programme. Instead, they should be in a position to make the internal business stakeholders understand their capabilities for a larger goal and identify various problem statements and use Once the use cases are identified, they should ideally try and solve for some of the problems that they feel highly confident about in the limited time that they have. This strategy allows them to get their foot through the door and also establish their team’s credibility. Post the successful evaluation of these pilot(s), they can then be in a better position to up and cross-sell to the corporate.

Another set of key stakeholders are the internal business teams, and since they are closely associated with the business decisions, they need to invest their time, effort and financial resources wisely as well through the programme to obtain the most benefits. Some of the areas that they can focus on are:

• Top-level organisational strategy: The internal business leaders need to understand and tabulate their strategy clearly to maximise returns through the programme. This could be in the form of Short Term (1-2 years), Mid Term (2-4 years) and Long Term (5 years +) strategies. It further helps to create cross-functional teams to evaluate the overlaps and not work in silos to strengthen the resource pool for meeting the key objectives.
• Strategy on IP and go-to-market: Internal business stakeholders must be very clear on their strategy on the IP, specifically in cases of co-d These cases can seldom create issues and heartburn at a later stage and is thus a critical factor that needs to be addressed at the beginning.
• Clear investment of resources: As part of the project planning, it is necessary for the internal business stakeholders to clearly identify the needs of the project and account for the resources that can be allocated by them towards the same.
• Startup agility: It is advisable for the internal stakeholders in a corporate to factor in a startup’s agility while making commitments to them on tests, integrations and other key contractual obligations.

The third key cog in this stakeholder wheel is the Innovation/Accelerator team and they need to have a strong clarity to drive their metrics up and in the right direction. This would allow for their programme to remain desirable for both the startups as well as the internal business stakeholders for helping them scale the key problem-solving units respectively. Some key areas that they need to focus on include:

• Strong internal business partner buy-in: Very important for the team to get internal buy-in to identify the right organisational strategy and direct the programme better.
• Value proposition and creating a win-win: While creating the programme structure, it is necessary to define the value proposition for both the stakeholders. ‘What is their win?’ and ‘How do we get there?’ are two key questions that can help teams create the value proposition map better.
• Balancing it right: Innovation teams would face a lot of situations where they would need to balance the stakeholder expectations and it becomes key to manage the programme successfully.
• Understanding the market and evolve continuously: Innovation teams need to always monitor the market to remain abreast with their industry trends, disruptive technologies and their commercial applications, market needs, etc. This allows them to bring in not just the necessary strategic interventions to the programme but also proactively anticipate the innovation drifts.
• Measure, measure, measure: It is key for the innovation teams to monitor every parameter leading to the KRAs. This allows them to build credibility both within the organisation as well as in the external ecosystem as to why their programme has created a strong value-driven system for the stakeholders.

The above pointers should help corporates and startups have the right expectations from the Accelerator/ Incubator model.

Apart from the Accelerator model, corporates have now started focusing on tapping into other sources to harness the prowess of innovation. Open innovation has again been tried and tested by various organisations and that has done well too. Internal innovation is the next big thing in this space that’s picking up commercial viability. Is this something new? Not at all - we have seen several organisations running internal programmes for a long time now, focusing on empowering internal talent for bringing out the best. This is picking up in India as well.

More on these models in Part 2 of this article.

Disclaimer: All views and opinions are my own and do not represent the opinions of my employers, present or past.

(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)