Corporate accelerators are the latest must-have accessory for enterprises looking to hop on the current startup hype wave.

Enterprises fear that they’ll miss out on some unicorn and become obsolete. Yet if you think the solution to all your innovation issues is to find tech talent and market yourselves as a corporate accelerator, you are wrong. Before you show your decision template to your boss stating all you need is fancy innovation vehicle, ask yourself this one simple question: is your organization even ready to work with startups?

My suggestion: dump those strategy management slides in the trash. And don’t invest in more innovation theatre.

In the last 6 years over 200 accelerators, labs, hubs or incubators have been ramped up in Germany only. A couple of them have already shut down and most failed accelerators didn’t even last for 2 years — many demonstrating with rapid accuracy their ineffectiveness. Of the remaining ones only a handful pay into the needs and desires of both sides: corporations and startups. Since both worlds are very different — and only a few people have an overview of what is needed on the one hand and offered on the other hand — satisfying these desires and meeting their unique needs can be difficult.

Most corporates look for new innovations, cultural change, and improved brand image by aligning both worlds. For startups, while these goals are shared, they are only the bare minimum to become interested in joining your accelerator. These goals don’t include the focus and desires of the startups themselves. In fact, the corporate approach is often one-sided and oriented only around the corporate’s needs.

The “corporate first” orientation is also the reason why most corporate accelerators suck. They don’t take into account the need of their customers: the startups themselves.

There are also problems on the startup side. The number of startups has sky-rocketed and it is not hard to find people claiming to be entrepreneurs or startups. Not everybody is cut out to be an entrepreneur or to start a scalable, highly digital, AI, or blockchain driven SaaS business… but that’s enough fodder for another article. What is becoming difficult is finding the RIGHT startups for us as corporates.

In an environment that is crazy about startups, startup conferences, startup habits, startup books, startup behavior and startup everything, I took over the position as Managing Director at Wayra Germany. I began my position in early 2017, after heading the operations at TechFounders, a white-label accelerator in the largest European entrepreneurship center. At TechFounders we scouted for startups for industry giants like BMW, Siemens, Adidas, Linde and MunichRE and gained traction on “accelerating” future best in class startups like KONUX, ProGlove and Tacterion.

Whereas the focus at TechFounders was more on entrepreneurial education, the transfer of the technology and learnings to the paying organization was lacking. The same challenge is back at Wayra: creating added value for the group and impact through startup technology. In this way, no CFO would shut down the vehicle after their reorganization and cost cutting challenge. Sooner or later, this task would affect all innovation hubs, labs, and companies, due to being misused as an instrument for cultural change and innovation marketing. The result is that these players will not play a key role on the corporate P&L nor in the startup ecosystem.

Wayra until then had invested in hundreds of teams across the globe, yet there were internal questions regarding what the hell they were doing and how they impact the core of the business. This was especially concerning when headcount and budget challenges became topics on the board’s agenda rather than Horizon 3 innovations to create new capabilities taking advantage of or responding to disruptive opportunities.

So how can corporate accelerators succeed in an ever-growing bubble, find the best teams, startups and deals to create a countable added value for the industry?

The answer can only be to rewrite the rules of the game by focusing on the basic principles of pragmatism, aside from all the hype and buzzwords. Let’s take another look at the basic scenario: Startups are inherently good at exploration — exploring new opportunities — but weak at execution because they lack the means to scale and gain traction in the market. Startups need corporations as customers to gain traction in the market and gradually scale. Since startups do not necessarily speak the language of the corporates and the processes are very complex there, they rarely achieve this by their own efforts.

By contrast, large companies are good at execution because they already have traction strengths including processes, customers, networks, resources, the brand awareness etc. On the other hand, their optimized core business with a lower risk profile makes them weak in the “exploration” of new opportunities. Established companies therefore need above all, innovations with added value, which fit in with the core business and contribute to the consolidated result. This can succeed with new solutions for internal efficiency gains or new offers for higher sales.

In a market where there is more money waiting to be invested — just as before the .com bubble burst — startups do not come to us for the cash. Instead, startups can get support from the best universities and government agencies to secure their first 100k to 200k. Universities near institutions provide early coaching and education on how to create a startup. We should not be competing directly with universities- the teams come to us to do business with our mother company, without logging countless meetings with company representatives.

Group employees will not work like in the startup. Startup founders should not adapt to corporate processes. Instead, the goal is a clear customer relationship between the startup and the industry, allowing the startup to grow and bring new relevant solutions to the enterprise.

So instead of wanting to forcibly marry both worlds together, it takes a translator so that both can stay as they are and play to their strengths.

Wayra Germany, as such a translator, is now working to uncover the needs of the group and its customers, and to find the right startups (exploration). These are then brought to Wayra with a concrete, paid project in the group, and possibly supported in the further scaling (execution). We only get active if we can secure top tier commitment from the board, manpower and budget from the management layers below, and high probability of winning the big corporate as a client in a lasting commercial relationship.

Our model consists in particular of the following factors:

Innovation projects with startups (and also without) are measured by clear KPIs. This is possible, although it is more difficult and therefore usually avoided. Only in this way can the activities be justified in the long term and be anchored in the process.

Innovation with (and without) startups will be part of the innovation strategy at decision-making level. Innovation is thus strategically anchored and contributes to the group’s success.

Startups and other open innovation partners are systematically sought by revealing the needs of relevant stakeholders in the group. Working with the start-ups or innovation projects is part of the goal definition. This anchors the topics organizationally.

With these principles, the accelerator model changes radically: instead of being as far as possible from the core business — more or less randomly sourcing as many start-ups as possible — 2/3 of the process takes place within the group, turning it around but keeping its autonomy, which is key to its speed.

Needs are identified within all business units and stakeholders are identified as sponsors and promoters for the startups. The quantity is thus smaller, the relevance however clearly higher. Since these startups can then directly deliver concrete added value, an investment tends to be secondary — it can be made if necessary but is not the goal per se. Because value is not increased through investments, but rather through the concrete solutions of the startups, a B2B technology that can be scaled over millions of customers or trillion of data points can impact rapidly all layers of the organization.

In this way, we also have a clear business case. We invest in our activities and achieve a positive return for the group by attaching the innovations of startups into our core business. How close or far away from the core business these solutions are, always depends on the needs of the business units — completely irrelevant topics and technologies are not addressed, even if they are full of hype. In this case we serve both sides as a shit umbrella to prevent loss of time, effort and resources.

This may not sound as sexy as an agile lab that is disrupting a massive transformative “on the edge” of the core business. But it brings lasting success for both the corporations and the startups. And isn’t that what counts when the innovation curtain falls?

I also promised to give hints on the DON’Ts of a corporate accelerator:

Demo Day — How many startups actually got funded or closed a deal at Demo Day? It comes with a lot of overhead on both, the founders and the accelerator staff in organizing the day, updating the decks, consolidating them and practicing the pitch. What for, that not decision makers in the audience are feeling entertained and important? This is not investor readiness, deals are closed on 121s and behind closed doors.
Overpromise pilots if you have not taken care of securing resources, budget and executive buy in after the pilot.

Processes — A startup is not the average vendor of an enterprise it comes from a partner relationship, streamline your procurement, legal framework processes to smoothly integrate the startups technology into the systems landscape.

Coaching — Honestly, what does an accelerator staff, on the payroll of the enterprise know about the nightmare of founding and funding a business? Don’t waste the founders time in checking on their business, burn rate and run rate but establish a tailor-made program where experienced entrepreneurs come in to share their experiences. Take care of the quality of the coaches, if you don’t find any in your local ecosystem, fly them in, it’s worth it.

And lastly, rather than having random “How to start a business” workshops in an developed startup ecosystem such as Europe, the US, and parts of Asia focus on how to enterprise sales. This is a deep dive in your B2B entrepreneurial journey and hard to understand. Who are the decision makers, what deals can they sign, navigating politics, dealing with corporate warriors, etc. This is truly valuable – for both corporate accelerator and startup. And value, that’s what should be our one and only goal for doing this in the first palce.

This is a guest post by Chrstian Lindener, CEO at Wayra Germany as previously published here.