In a new report of the World Intellectual Property Organization (WIPO), Germany is ranked in the 9th place. (Read More) A great result! However, Germany is criticised for the comparatively bad conditions faced by founders and the lack of new business models. This means that there is still lots of potential for politics and companies to make improvements. While we have observed an increasing engagement with topics such as innovation and startups in the past few years with satisfaction, it is important to understand that dealing with these topics is much more difficult in practice, than in theory. This is only one of the many challenges: How do I find the 5-10 startups that are interesting for my company from a pool of 23,000 startups (in Silicon Valley alone).
In order for your interaction with the world of innovation to be successful, there are three very important pieces of advice that we have derived from the many challenges we have faced in our line of work since 2012. In our view, it is essential to follow these three steps in the beginning of your search for new innovations.
- What is my strategic goal and how will external innovations help me in reaching this goal?
The questions “What?”, “How?” and “Why?” are oft left unanswered and not seen as something that has to be adjusted and revised continuously. This leads to very general formulations, such as “We are looking for startups that will help us become more innovative”. Even though this might sound like a valid question, it is not precise enough.
Try to clearly and concisely define your strategy. How is a startup supposed to help you? What are you looking for? A technology? A certain software? A business model? Are you looking for skillsets or a combination of several factors and if yes, why? Is the input of a startup required for a specific use case or a company-wide? Why this topic? How do I plan to work together with the startup?
As you can see, under the surface there are many questions whose answers have to be clear to you.
- How do I deal with the given opportunities? How do I generate obligations for my benefit?
In the collaboration of established companies and young startups, we often observe the same effect that Roy Amara found in relation to technology. (Read More) The opportunities of collaboration are underestimated in the short run and overestimated in the long run. In many cases, a positive first experience causes euphoria in both parties. But after a short period of time, this euphoria is followed by disillusion. Process conformity, other urgent projects, unexpected regulations or a startup that is not yet ready to work together with a large company are all factors that might cause disruption of an initially good situation. It is therefore essential for established companies to set up a clear direction and to ensure patience and a constructive work relationship. Only through consistent and well structured actions with transparent expectations, the collaboration will be a success. Electrolux, a Swedish producer for household appliances is a good example for this. (Read More)
- What can my company offer a potential partner, what makes it interesting?
This is probably the most overlooked question an established company has to ask itself. In many conversations with visitors of the Bay Area we have found, that for many of them, this question is not prioritised. Many expect that the label of “German Mittelstand” or “hidden champion” is enough to convince a young company to work together with you, since they are dependent on new customers.
It is clear that young companies are searching for and need partners and customer. At the same time, many German companies are internationally successful and highly innovative, which would all be good arguments in favor of a collaboration. However, it is also necessary to sell your company and arguments in favor of choosing you as a partner. This is something that American companies tend to be very good at. Also, German companies are not the only ones that have caught on. There are many successful emerging startups from China, Italian engineering companies, Japanese software companies etc. which are all competitors. In the best case for the potential partner, the likes of Google, Amazon and Apple invest billions of dollars, that surpass the capabilities of DAX companies.
We can conclude, that it is important to engage with innovative ideas, even if some risk is involved. Acting is better than staying inactive as long as you have a clear strategy. Cooperation on an equal footing with a certain readiness to assume risk are good prerequisites for a successful cooperation.
If you have any more questions or need more support, we are happy to help you with our expertise. Learn more on www.germaninnovators.com .
