Virtual open innovation post Covid-19 (part 2)
Knowledge exchange. Open innovation is dependent on information sharing and collaboration. Out of necessity due to its small market size and its cultural mix Israel is focused on international business exchange and cooperation with foreign companies. The Israeli ecosystem exhibits an extreme willingness to cooperate through openness and transparency with each other, it proudly shares tech insights to explore global collaboration. Foreign corporates appreciate the straight talk both with Israeli and local international firms about their expertise in innovative products, processes and new business models. It gives overseas leaders first-hand insight into a peer group ecosystem which is typically closed in their home markets. It is common to have meetings with outsiders as well as peer groups to bounce off ideas and share lessons learned on digital transformation.
For example, real-life experiences are shared not just about what type of technology is relevant to resolve a specific industry challenge but also how to work with startups in a mutually successful way. This gives corporates more comfort on how to proceed and fine-tune their innovation agenda. Video conferences improve flexibility and permit for multiple meetings with innovation leaders and technical subject matter experts in a short time window. A time-zone difference of only one hour to most of Europe eases remote collaboration in comparison to the US or Asia.
Personalized scouting. To recognise efficiently relevant startups, corporates require personalized support at innovation hubs. Local scouting experts on the ground have ears and eyes open, continuously being faced with people and technology at meetings, meet-ups and conferences. Together corporates and tech scouts discuss and align search criteria and scouting mandates to respond to priority innovation gaps. Initial focus is given on high profile challenges within a preliminary scope to ensure resource allocation and timely execution. The proprietary know-how of a startup needs to resolve a major pain point, if it is a nice-to-have solution then success will not be sufficiently appreciated by key stakeholders. A smaller more manageable scope hedges some of the risks of failure. To be in sync with corporate requirements, local tech scouts team up with the project manager abroad at HQ. This helps supporting also adjacent activities to core scouting such as due diligence, proof of concept, pilot or contract negotiation locally both for an investment opportunity or partnership with the startup.
For example, the Israeli ecosystem has the unique advantage of being the tech hub with the most dense numbers of startups per capita and highest startup funding per capita in the world. Foreign executives confirm that scouting here allows for fast access to a large average number of high quality tech startups within a small and accessible physical space. The Tel Aviv ecosystem is very personal and dynamic, tech events and gatherings occur on a daily basis often doubling up. Virtual access to such personal meetings are challenging. Partnering with a local scout is crucial to benefit from personal approachability, to sense what is happening behind close curtains and not shared on the webpages and to quickly discuss ideas informally with relevant experts. This personal ecosystem network generates trusted deal-flow and acts as a friendly soundboard.
Startup demo. Remote digital communication will further increase in importance post Corona Covid-19. It boosts flexibility through virtual collaboration with startup live demos, topical expert roundtables or personalized roadshows. Virtual meetings do not restrict attendance due to cost or logistical reasons. A combined online audience of business and technical experts across seniority levels improves understanding, buy-in and decision-making. An empowered local tech scouting partner understands the client’s corporate requirements and is able to convey the message to the entrepreneur. In particular, inexperienced early stage startups need to be taken by the hand and require more guidance by the local scout; however their technology is often very innovative and disruptive, they can provide a clear competitive advantage for the corporate partner. Tech scouts leverage their previous project experience to support the engagement and communication between small startups and large corporates until go-live.
For example, frustration grows quickly when live demos and relevant use-cases have not been understood by the startup. Upfront alignment with the corporate and preparation of the local startup to meet their client’s specific requirements is decisive in running successful virtual meetings. We see that Israeli startups and German corporates complement each other very well. Contrary to Silicon Valley, both countries have working cultures which are very direct; and the innovative Israeli startups own deep tech know-how, whereas the traditional Germanic industries have strong business acumen – both parties naturally feed into each other.
Innovation buddy. Corporate open innovation generates further ongoing value from a continuous and sustainable scouting partnership. Local scouts constantly observe the tech ecosystem. They track how investments are shaping the market, which innovations are being pursued by which companies, and seek out innovations with additional potential for applications across verticals. Long-term corporate scouting partnerships enable scouts to better get to know client’s future strategic requirements, allowing them to foresee the business’ future needs. They plan ahead to introduce unmentioned innovations, identify startups in stealth mode and pull disruptive tech ideas as well as new business models from other industries. Since the 1980s the Israeli ecosystem has repeatedly been among the first to spot global venture trends. Local tech talents develop transferable know-how and frequently become serial entrepreneurs across different industries; likewise deep tech solutions are developed and sustained through scale in global markets.
For example, numerous corporates struggle to articulate their innovation search criteria. They may be unaware of new and disruptive technologies, especially when these innovations originate in a different industry. As a result, they do not focus on the optimal technology or it might be obsolete. Local scouts have an external interpretation and actively present rational solutions which would not otherwise appear on the corporate radar. They create additional impact by bringing an outside view to challenge the common corporate view point. Together a trusting partnership develops between corporates and scouts that delivers more value-add.
To continue succeeding on the innovation agenda post Corona Covid-19, virtual open innovation allows project teams to have increased flexibility, act quickly and cost-efficiently by leveraging interactive digital channels. A structured framework needs to be in place to support the corporate scouting partnership that allows to enjoy the benefits whilst managing the challenges.