To be innovative, established corporations rely on startups to help them explore new business models and products. In turn, startups benefit immensely from the experience and expertise that big companies bring to the mix.
Sponsored by SAP and billed as a “startup crash course for corporates,” the NKF-Summit recently brought together 250 corporations and 220 startups.
In an Age of Exponential Growth, Agility Is Vital
Hotbeds of innovation are sprouting up all over the place right now, providing breeding grounds for corporations and public sector bodies to work with partners and startups on the next big ideas. These are known as hubs, labs, incubators, and accelerators, and companies like Daimler and Audi have them.
With a global workforce that has swelled to 87,000 since its founding in 1972, one-time tech startup SAP is not the only multinational company pondering the question of how to stay agile in a fast-changing environment. Speaking at the NKF-Summit, Martin Heinig, COO of SAP Labs Berlin, used this analogy: “SAP is like a tanker ship that holds its course even in heavy weather such as we experienced in the 2007-2008 financial crisis.”
More challenging by far are the potentially disruptive technologies and business models that large corporations like SAP, which can naturally err on the side of caution, are generally unable to adapt or develop as quickly as startups can.
Mistakes are part of trying new things, but when innovating can large corporations afford to get it wrong?
“The tanker’s hull is protective, but it can also be restrictive,” says Heinig. “If we have new ideas or want to try new technologies, there’s initially a strong tendency within the organization to resist them ‒ mainly due to a fear of failure.”
Mistakes are part and parcel of trying new things. But can large corporations afford to get it wrong? They may be good at scaling, but their mistakes scale as well. If 4,000 employees were to spend a year building up a division that had no future, that could spell the end of a company.
The Tanker Meets the Speedboat
With this situation in mind, SAP began searching for new ways to experiment with ideas. “Our plan was to pair the ‘SAP tanker’ with ‘speedboats’ that could change course faster than we can,” says Heinig. And that is how, through its various locations in the greater Berlin-Potsdam area, SAP began relying increasingly on collaboration with versatile startups to get the business models of tomorrow off the ground and launch innovative products.
Alongside the Internet of Things (IoT) and machine learning, which are already served by accelerators in Berlin, SAP is also focusing on other relevant sectors that many Berlin-based startups are engaged in, including blockchain, healthcare, and the future of work.
As Heinig points out, “We’re not looking just to benefit from the ecosystem here in Berlin; we want to be part of it and play an active role in shaping it.”
Startups Need Venture Capital and Expertise
Clearly, established companies are showing plenty of interest in startup endeavors right now, and that interest shows no signs of abating. At the NKF-Summit, there was even talk of a “war for startups,” meaning that corporations will have to fight hard to get promising startups on board for collaboration projects.
Unicorns — the name given to startup companies valued at US$1 billion or more — have the world at their feet. So promises of funding are not enough. Venture capital is still harder to obtain in Germany than in the U.S. and elsewhere. The funds are there, but startups want the complete package: market access, customers, technology, and capital.
Accelerator-style collaboration potentially creates a win-win situation for both parties, because, as well as giving of their expertise, corporations can also learn a great deal from startups.
“In my view, the learning process works both ways,” says Heinig. “We obviously get to see which technology trends startups are working on right now. But seeing how they do it can be an inspiration for us as well, because we’re always encountering problems that call for unconventional solutions.”
SAP in the Berlin Ecosystem
SAP offers various modes of collaboration for startups, ranging from sponsoring events like the NKF-Summit that get a dialogue going through various investment options all the way to M&A transactions aimed at securing emerging talents.
SAP operates several incubators and accelerators around the globe, including in San Francisco and Tel Aviv. In Berlin, the current focus topics are the Internet of Things and machine learning. The SAP IoT Accelerator at the SAP Data Space in Berlin brings SAP into connect with more mature IoT startups to investigate joint value propositions. As well as benefiting from the chance to use an SAP platform or technology to develop new products, these startups receive valuable support from SAP experts.
Also in Berlin, the SAP.iO Foundry, Powered By Techstars Accelerator, an accelerator for machine learning, was opened by SAP in partnership with Techstars in September. Ten startups were selected to take part in a 13-week program at the SAP.iO Foundry that gives them access to a co-working space in the heart of Berlin and help from SAP and Techstars mentors on honing their value propositions.
praktice.ai, one of the startups selected for the program, is committed to optimizing hospital workflows using interactive artificial intelligence and speech recognition. According to CEO Srinath Akula, “We’re particularly reliant on experienced mentors to help us with our go-to-market strategies. SAP has the expertise we need to convince customers, and we want to learn from it.”