CO-INNOVATION MYTHBREAKER

Myth #1: Despite the potential benefits, only a few corporates have already tried to collaborate with startups.
According to a recent report by Match-Maker Ventures and ADL, 98% of 340 surveyed corporates from over 70 countries have already collaborated with startups in one way or the other. After customers and suppliers, startups are the third preference when it comes to open innovation partners of corporates. Still, there are a lot of challenges and misconceptions involved. Reference: Match-Maker Ventures, & Arthur D. Little. (2019). Age of Collaboration II: Startups + Corporates = Pain or Gain?
Reference: Match-Maker Ventures, & Arthur D. Little. (2019). Age of Collaboration II: Startups + Corporates = Pain or Gain? 

Myth #2: Only the young can innovate.
Although venture capitalist Vinod Khosla stated that “people under 35 are the people who make change happen, and those over 45 basically die in terms of new ideas”, studies tell us a different story. In the US for example, the average age of people who founded the highest growth startups is 45 and even rising. Still, venture capitalists primarily bet on young entrepreneurs, believing that youth is the elixir of successful entrepreneurship, while in fact, it is rather a mix of experience and creative minds. Corporates and startups teaming up can be a powerful way to combine these two success factors in terms of experience and fresh perspectives.
Sources: Azoulay, P., Jones, B. F., Kim, J. D., & Miranda, J. (2018). Research: The Average Age of a Successful Startup Founder Is 45. Harvard Business Review. ; Wadhwa, V. (2011). The case for old entrepreneurs. Washington Post. ; Wadhwa, V., Holly, K., Aggarwal, R., & Salkever, A. (2009). Anatomy of an Entrepreneur: Family Background and Motivation. ; Wadhwa, V. (2018). Revisiting The Myths About Entrepreneurship And Innovation. 

Myth #3: The majority of entrepreneurs have never been working as employees within an organisation before. 
That’s actually true. The Harvard Business Review showed that approximately 70% of founders started out by incubating their business ideas while working in a traditional job. The data revealed that many entrepreneurs started their own business in order to get away from bad leadership, but most often took the time to thoroughly plan out and create a business plan to gain funding before quitting their day job. This also shows that managers and entrepreneurs are actually more similar than we often think they are. It’s more a question of perspective. So why not use their potential to realize ideas within the organisations as intrapreneurs or bringing those corporate entrepreneurs together with entrepreneurs in institutional startup collaboration vehicles?
Source: Chamorro-Premuzic, T. (2012). How Bad Leadership Spurs Entrepreneurship. Harvard Business Review.

Myth #4: A startup needs big funding, ideally from one huge investor to start-off.
Still a widespread misconception among entrepreneurs. In fact, studies show that angel investors and venture capitalists fund only 1 % of all the startups (at least in the US). Most startups are rather financed by personal savings/credits or by investments from the founder’s family or friends. The real trouble starts in later stages when startups are ready to scale and need larger investments. Especially in those challenging stages, there is huge potential for corporations with corporates.
In addition, one single key partner should never prevail or influence the direction of a startup. As a startup, be careful to not become dependent on one single investor – try to balance your portfolio.
Sources: Entis, L. (2013). Where Startup Funding Really Comes From (Infographic). Ries, E. (2011). The lean startup: How today’s entrepreneurs use continuous innovation to create radically successful businesses.

Myth #5: Higher R&D expenditures result in the better financial performance of a company.
Actually a myth again. PwC Global Innovation 1000 study has found no statistical relationship between dollars spent on research and development (R&D) and financial performance, suggesting that the way you spend your innovation dollars is more important than how many of those dollars you spend. Many established corporates often fail due to a lack of clear processes for innovation management or using the same processes/KPIs as for their core products. Here, corporates could learn from startups and adapt their learning management styles – another argument for cross-collaborations between the two.
Sources: Viki, T., Toma, D., & Gons, E. (2017). The corporate startup: How established companies can develop successful innovation ecosystems ; Staack, V., & Cole, B. (2017). Reinventing innovation: Five findings to guide strategy through execution.

Myth #6: Entrepreneurs are born leaders and CEOs of their ventures.
Studies have shown that bad leadership and management are among the top reasons for business failure. Also, while many founders start their business with the idea of retaining their role as CEO, many quite simply do not have the skills to do so. As a result, some 52% of startup CEOs were removed from their role by the third round of company funding.
Sources:  Baldassarre, G. (2018). Lack of leadership and planning the key reasons behind business failure: CEO study; Ismail, N. (2019). Poor leadership is the number one cause of failure for tech startups; Horowitz, B. (2010). Why We Prefer Founding CEOs.

Myth #7: We are either entrepreneur, manager or technician.
Each of us inhibits three types of personalities: the entrepreneur, the manager & the technician. True, at least according to Michael E. Gerber who argues that as entrepreneurs we solve problems and live in visions of the future. The manager in us tries to manage and order the existing. The technician concentrates fully on completing tasks. All three personalities do not get along with each other well, but they are in each of us and therefore constantly fight against each other. At the same time, however, all three are necessary for the successful foundation of a company. So, managers in established companies and entrepreneurs are not so different after all – or as Eric Ries once stated “Entrepreneurship is not just for entrepreneurs”.
Sources: Gerber, M. E. (1995). The E-myth revisited: Why most small businesses don’t work and what to do about it; Ries, E. (2011). The lean startup: How today’s entrepreneurs use continuous innovation to create radically successful businesses.

Myth #8: The challenge in most startup-corporate collaboration is to find a partner.
Not really: The challenge in most startup-corporate collaboration only starts when you find the perfect match. “Aligning two completely different worlds, getting into co-creation mode versus a buyer-supplier relationship, and exploring how 1+1 can equal 3 are big challenges”, said Jošt Faganel, based on his experience working with more than 100 corporate innovation teams at HighTechXL. Clearly communicating and agreeing on the expected goals, outcomes, and format before entering into a collaboration is crucial here, something you will learn during this course by using dedicated tools like the “Co-Innovation Builder”. Source: Faganel, J. (2019). Misconceptions in startup-corporate collaboration.

Myth #9: An entrepreneur has unlimited freedom. Corporates have unlimited resources.
Obviously, not. Unfortunately. Those are common perceptions from both sides, but the numbers tell a different story. For entrepreneurs, especially time (and budget) are highly limited – so where is their freedom? For corporates, innovation departments are under strict financial control (while traditional accounting systems are widely not in favor of innovation and operate with different KPIs > see Tendayi´s Viki newest book on Innovation Accounting) they are often hit first by budget cuts. Especially if top management is prioritizing (short-term) efficiency and profits over (long-term) innovation investments and efforts.  Sources: Carman, Z. (2017). 6 Misconceptions About Entrepreneurship; Ries, E. (2011). The lean startup: How today’s entrepreneurs use continuous innovation to create radically successful businesses; Viki, T., Toma, D., & Gons, E. (2017). The corporate startup: How established companies can develop successful innovation ecosystems.

Myth #10: Keep your startup secrets hidden when partnering with corporates. Startups often tend to believe that if they unveil their ideas, numbers, plans, etc., the corporate might steal their idea and go to market themselves. That is not always true. Being transparent allows building long-term and powerful partnerships based on trust. Moreover, while setting up a collaboration with a corporate, it is better to avoid becoming paranoid: most corporates do not want to steal ideas, and the idea itself is more often than not a very small part of the final product.
Sources: Dixon, C. (2009). Why you shouldn’t keep your startup idea secret.