When worlds collide: why, how and where energy companies should work with start-ups - Part II

Elena Bou, Innovation Director, EIT InnoEnergy.

This article series by Elena Bou, Innovation Director, EIT InnoEnergy explores the philosophy of open-innovation that underpins good collaboration, as well as the why, how and where of how to make a success of energy company/start-up collaborations, drawing on best-practice from EIT InnoEnergy's experience along the way.

PART TWO: The why – understanding innovation motivation

April 6 (Renewables Now) - The first step in an energy company collaborating with a start-up 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 start-ups 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 start-ups 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 start-ups (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 start-up 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 start-up. One reason to collaborate with start-ups 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 start-up 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 start-up 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 start-up alike.

Three: To expand (or to reinvent)

Other companies may harbour ambitions to enter new markets and identify start-up 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 start-up – or at least complementary to their own. If an energy company wants to absorb some of the entrepreneurial magic, then a start-up which prefers an arm’s length partner is a poor fit. Likewise, energy companies should be wary of leaning on start-ups to enter certain markets if the start-up’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 start-up, 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/start-up collaboration…how different motivations will imply different ways of implementation, strategic impact and organisational fit.

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About the author

Elena Bou is Innovation Director of EIT InnoEnergy, the European sustainable energy accelerator.

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