When worlds collide: why, how and where energy companies should work with startups. Following part one of this article series by Elena Bou, Innovation Director, EIT InnoEnergy, here is part two: The why – understanding innovation motivation.
The first step in an energy company collaborating with a startup is to ask itself a simple question: why?
In part one of this series, we answered that from a wide-angle perspective – because the industry needs to innovate to keep up with the pace of change, and collaboration with startups appears the quickest, surest way to do so. Because the old model of fiercely guarded, siloed research has reached its limit.
But that is not the ‘why’ I am talking about now. Here, I am talking about why a specific company might have chosen to collaborate with startups in the context of its own corporate goals and strategy. I am talking about motivation.
Everyone else is doing it
So what? One of the risks we are seeing is that companies fear they won’t be seen as cutting-edge if they don’t work with startups (which is testament to how effective and widespread open innovation has become). Perhaps they fear competitors will snatch up the best talent, or that shareholders will grumble.
The result of such bad-faith motivation is usually a cosmetic implementation made with an eye on the brand rather than expected technological development. There is nothing wrong with companies looking to market themselves, but don’t expect open innovation as a PR exercise to deliver anything more than PR coverage.
What does a good motivation look like then? Every company will be different, but here are three main goals we see in the energy sector.
One: To absorb the startup magic
The stereotype of corporate culture as staid and slow can be a little unfair, but few corporate behemoths can match the energy, drive and sheer excitement of a young startup. One reason to collaborate with startups is to expose teams from large companies to more flexible and disruptive environments, new ways of thinking, new businesses and new technologies.
The hope is that some of that startup magic will rub-off on teams through contact, fostering entrepreneurialism, creativity and innovation that individuals can bring to their day-to-day roles and helping rejuvenate the corporate culture.
Two: To solve a specific problem
Perhaps an energy company is looking to consolidate or maintain its market position and has identified specific problems that hinder that. For example, it may have identified that it is slow to launch new products to market, and is losing ground versus competitors as a result.
Working alongside a startup with a leaner development process can accelerate the co-creation of new solutions and slash time to market. This approach also shares the burden of risk, which is attractive for company and startup alike.
Three: To expand (or to reinvent)
Other companies may harbour ambitions to enter new markets and identify startup partners as the best way to do so. The right collaborator can offer access to disruptive technologies and new business models in exchange for financial and operational heft – see how Shell has sidestepped into e-mobility through its acquisition of EV charging infrastructure specialist, New Motion.
This can also be a way to gain exposure to and learn about a new market with limited risk.
Getting on the same page
Of course, these motivations will only lead to effective collaborations if they are shared with the startup – or at least complementary to their own. If an energy company wants to absorb some of the entrepreneurial magic, then a startup which prefers an arm’s length partner is a poor fit. Likewise, energy companies should be wary of leaning on startups to enter certain markets if the startup’s own aspirations (and therefore resources) ultimately lie elsewhere.
And remember the little things too: ‘short term’ means something very different to a large company than it does to a startup, for example. Getting – and staying – on the same page is vital, both in terms of motivations and expectations.
Next up: the ‘how’ of energy company/startup collaboration…how different motivations will imply different ways of implementation, strategic impact and organisational fit.