Embracing innovation for the Sustainability Revolution
The sustainability revolution is here, and it’s time for corporates to find ways to support impact-driven startups that could help revolutionize their business model.
The key will be to see sustainability as a business opportunity and find a way to embed it in the business strategy.
Let’s look at strategies used by corporates in the business world in general, not limited to the sustainability space. Corporates have pursued any of these three approaches to foster innovation in their ranks.
Fostering innovation through Innovation Labs or Incubators
Innovations labs can be part of their own R&D departments .
Incubators of external startups would stimulate their ecosystem: the investment in this type of initiative is not necessarily aimed at developing a specific technology or solution for acquisition purposes.
In Tokyo, Japan, the Sega Sammy group operates Tunnel Tokyo, a co-working space that promotes the direct contact between the employees of the Sega Sammy group, startups and freelancers to stimulate innovation.
Investing in Innovative Startups
Corporates can develop a venture capital arm to pursue strategic investments. These investments can be made on balance sheet or off balance sheet if channeled through a separate venture fund.
With this strategy, corporate would take equity in startups that would develop new technologies relevant for their industry or for their ecosystem.
Atlassian Ventures invests in collaboration apps for their marketplace that will create value to their own customers. Indeed, the apps in the Atlassian marketplace create opportunities for better integration with the Atlassian app, enhancing Atlassian’s customers’experience.
Developing Partnerships with startups
Corporates can develop structured programs to partner with startups with the potential of creating value within their value chain. These types of partnerships may or may end-up the corporate acquiring a minority economic interest in the startup.
For instance, a partnership could fund pilot programs that could evolve into full-fledged longer term agreements depending on milestones achieved by the startup. This is the example that was discussed during the Greenbiz Circularity 2024 panel with HP Tech Ventures and Molg, a robotic manufacturing platform for circular manufacturing.
Microsoft and Open Ai developed in 2019 a partnership to develop a new Azure Platform. This partnership covered three elements: jointly building a new Azure AI supercomputing technologies, having OpenAI porting its services to run on Microsoft Azure to create new AI technologies and ensuring that Microsoft would become OpenAI’s preferred partner for commercializing new AI technologies. Later in 2021 and 2023, that partnership was expanded to scale AI supercomputing capabilities. See this FT article.
Which strategy will you pursue to foster innovation and embrace the sustainability revolution?
