The Startup Grind is Status Quo.

There are a lot of challenges facing startups and customers alike. Disruption waits for nobody. Technologies are advancing in capabilities at a record pace.

Why is it then that Canada is far behind the rest of the world in terms of startup successes and a much higher rate of technology adoption? We want to stay at the forefront of global competitiveness and grow our GDP while creating new jobs, facilitating knowledge and skill transfer and having self sustaining startups.

Startups face friction from a variety of areas in the traditional Lean Startup model, which was developed as a linear process of design, customer validation then a rigorous pitching of random investors to try  to create a new company. Startup founders are challenged with a number of tasks which are usually out of domain and experience, like a student engineer becoming a credible CEO or a business student assuming a product development role.

The process is very gated to access to the very people they need to reach and eventually pitch and the success ratios prove that the model is in need of correction. Funding is typically required just to get an idea into a viable prototype or proof of concept stage and startups can spend up to 18 months just getting this far.

The number of successful startups is very low outside of funded accelerators (within Universities) and even within, the ratio of startups that reach global commercialization potential is troublesome.

There are plenty of resources which can train anyone to be an entrepreneur and the trend is huge in terms of potential job creation for 3 generations. What we have to stop doing is making them work in a vacuum. Funding isn’t the problem. It’s the process that we believe that ideas and products have to be built, vetted then pitched to investors looking to hit pay dirt rather than applying the concept into an innovation ecosystem. There is a lot of risk for everyone in the process.

Open Innovation: The Problem is the Opportunity

In the past, companies have relied on IT departments and consultants to help drive strategy and develop a “willed future”. The 5 year blue print was usually a pretty safe bet. That was until highly disruptive startups began systematically taking apart static companies that relied on waterfall development, fixed channels and manufacturing processes.

With the rapid advancement of technologies and a wealth of companies in the “greenfield technology” space, the linear path of technology adoption from within the organization proved to be risky. Several technology companies like GE have been proponents of Open Innovation, where millions of dollars of IP from in-house R+D has gone dormant. Rather than let the patents time out, the opted to let anyone review the IP and move towards collaborating on new applications together.

This process immediately drove many new strategic partnerships and Joint Ventures. Startups began participating in these ventures and then customers began setting up in house innovation labs to bring in new products, services and business models to stay ahead of the curve.

The balance of momentum and calculated outputs (KPI’s of value creation and capture) create a model called “output driven innovation”. When applied to a corporate environment, it is the full cycle customer experience driving the business vs. product lead innovation.

The trifecta of startups, technology vendors and industry partners is a power application of open innovation. If we start with challenges and problems within the framework of collaboration we are apt to get the product solution fit and product market fit right for all stakeholders. Getting it right fast brings significant value to the ecosystem and there are several in kind ways to bring ventures together without third party investors.

Most technology vendors have now created venture groups to nurture and grow this model out. To attract problem solvers vs. startups with preconceived products seeking funding. Without that baggage and chasing rainbows to fund ideas, startups can take a number of paths to success.

The model requires an open lab platform and that is what IoT Foundry is setting up with a path and position for all stakeholders.