How established companies can accelerate growth by working with startups

Established companies and brands are increasingly working with startups to enhance their own capabilities and create new competitive advantages. This trend is growing, and will continue to grow, as more and more organizations are recognizing the benefits, and seeing the results of collaborating with startups. Here are ten key reasons for established businesses to be working with startups:

1. Trend Spotting and Future Insights

Startups exist at the cutting edge. By nature, they are working to create the ‘next big thing’, looking to spot new trends and maximize insights on future customer demands so that they can gain elusive first mover and competitive advantage. They excel at sniffing out new ideas and opportunities and, as such, can act as lead indicators for more established players. As Unilever’s Shopping Marketing Director Lou Paik highlights, “We are always keeping our eye out for the next big thing. Startups are the best partners for this. They are our eyes and ears on the ground.”[i] Startups’ advantage is being able to get closer to the customer through their nimbleness and focus, thereby acting as a bellwether for where the customer is looking and going.

2. Accelerated Innovation

Internal innovation agendas for established corporates can be slow, expensive, and distracting from core business priorities. Working with startups allows access to new ideas, ways of thinking and approaches enabling companies to better leverage their own resources, assets and technology.

3. Accelerated Go-To-Market

Startups rely on speed of execution through acting lean and adopting agile practices. They are therefore able to put things to market quickly, gain feedback and insights, and then adapt and optimize accordingly. As they can’t compete with the sales and marketing power of established organizations, they have to find new ways of connecting with people in order to create awareness, engagement and advocacy; applying innovative strategies and tactics that can also be applicable to other brands.

4. More Tailored Customer Solutions

The ability to move and adapt quickly enables startups to react to and accommodate changing customer needs; as well as offer more attuned and tailored solutions. Working with startups therefore allows established businesses to increase the proximity of their teams to the customer through applying new processes and technologies to gain more immediate insights into customer needs and behavior; and to adapt accordingly.

5. Insights Into New Business Practices

Access to startups offers established organizations the ability to observe and learn new business practices and techniques that they can subsequently adopt to create more effective, productive, and impactful ways-of-working. Startups are the early adopters and leading proponents of new philosophies and methodologies such as lean and agile, design thinking, and growth hacking. Working on projects with startups enables teams to become familiar and immersed in these new behaviors, which can then be internalize with the rest of the organization.

6. Optimizing Resources and Mitigating Risks

Outsourcing research and development to startups can be a key strategy in optimizing resources and mitigating risks. Startups work fast and lean, enabling established businesses to make more manageable and controlled investments around new initiatives. By using external resources, the organization isn’t encumbered by having to build and live with its own infrastructure, choosing if and when to bring things in house at its own pace.

7. Cultural Crossover

When internal teams interface with startups there’s invariably an assimilation of experiences that can lead to a cross-over of culture. Facets such as high energy and intensity, change-orientation versus change-fear, and being inclined towards seeking collaboration and sharing, are all aspects of a startups’ approach that can consequently inform and augment the cultural norms of more established businesses.

8. Talent Development

Engaging with startups can provide established businesses with the ability to develop their talent. Through direct observation and interaction with startup teams, internal operators can broaden their perspectives to gain new aptitudes and skills. Working with external entrepreneurs can in-turn foster intrapreneurship within the organization; although leadership must identify and support this behavior, otherwise those intrapreneurs are likely to want to take their efforts and initiatives outside.

9. ‘Try-Before-You-Buy’ Corporate Acquisition

For established corporations looking to enter new markets, develop new capabilities, or extend their technology, acquiring startups can represent an enticing solution to fast-track their progress, and do so more viable than through internal investment. Before deciding on a full acquisition though, working with startups in the first place can minimize risk and provide valuable insights into potential strategic and cultural fit.

10. Corporate Social Responsibility and PR

Supporting the startup ecosystem is deemed a worthy cause by commentators and the public alike by encouraging job creation, talent development, and, generally, promoting entrepreneurial endeavors to stimulate growth in the wider economy. Also, there are a multitude of social startups that are looking to drive change in society or the environment that established companies can work with and invest in to augment or accelerate their own Corporate Social Responsibility (CSR) agendas.


[i] Source: Big Brands Are Counting On Startups To Guide Them Through What’s Cool At CES, John Boitnott, FastCoLabs