What is better? Running your own startup or driving innovation within a large company? Steve Jobs was very clear that it is better to be a pirate than to join the navy. There are freedoms that come with running your own company. Startup founders do not have to answer to line managers they disagree with or worry about getting a promotion. They can just get on with pursuing their vision. What they do have to worry about is the chance that their idea might fail! 

We have become a culture that celebrates entrepreneurial pursuits. This is a good thing because successful entrepreneurs can contribute to wealth creation and advancement of society. However, we should not celebrate entrepreneurship so much that we start to think that it is the only true path to innovation success.  It is not true that startups have all the advantages when it comes to entrepreneurship. There are also significant benefits of pursuing entrepreneurship within the context of a large company.

If we really stop and think about it, most of the advantages that startups have are at the beginning of a venture. Startup teams can start working on any idea they want without needing leadership approvals or facing the same level of resistance that corporate startups face. It is later in the process, when they want to launch and scale their ideas, that startups start to face significant challenges. It can be hard to find customers and develop scalable products, especially if manufacturing capabilities are needed.   

The opposite is true when working in a large company. Getting started can be difficult if you don’t have leadership support. Even if you get started, getting support through the early stages of a corporate startup is hard because you do not yet have revenue growth to show leaders. However, if a corporate startup survives this early stage, they will have access to really good resources when it comes to scaling their ideas. This is where the benefits of being a corporate startup start to show.  

The Corporate Benefits 

When working inside large corporations,  innovation teams can leverage benefits that most early stage startups can only dream off. Below are nine examples of such benefits: :

  1. Company Brand: Most established companies have a recognizable brand that can be leveraged by a corporate startup to get customer attention. If the brand is very well regarded, customers will give the new product the benefit of the doubt and at least try it. 
  2. Marketing Power:  Beyond the brand, most large companies have highly skilled marketing departments. When it is time to launch a new product they can leverage those skills and any connections they have in the market to drive a successful campaign. 
  3.  Access To Customers: Connected to marketing, large companies also have an established customer base. This can help corporate startups with testing their ideas and also in finding early adopters that will help when it’s time to launch the product. 
  4. Intellectual Property: At the beginning, a lot of early stage startups will have limited access to protected intellectual property. In contrast, most large companies have a treasure trove of intellectual property that can be leveraged as part of new product development. 
  5. Product Development: The product development advantages of large companies are not just based on patents. When it comes to creating physical products, large companies have manufacturing capabilities that most startups  can only dream off.
  6. People Skills: Hiring can be a challenge for early stage startups. In contrast, if the idea a corporate startup is working on is within the same field that the large company operates in, then a corporate startup can quickly scale up with people with the right skills. This is because large companies often have access to a global network of expertise.
  7. Access To Partners: Connected to the global network of expertise, corporate startups can leverage their company to get better introductions to potential partners within the value chain that can help with scaling. 
  8. Support Infrastructure: Corporate startups have access to support from key functions such as finance and legal. This overhead can be a huge headache for a small early stage startup.
  9. Political Influence: A corporate startup that is working on an idea that needs some sort of legislative change, permissions or approvals from government officials has an advantage over an early stage startup facing similar challenges. Large companies tend to have more political influence than startups do. 

The Price You Pay

It is clear that corporate startups have some advantages over early stage startups. However, these advantages don’t come for free. There is a price to pay and that price is called politics. In order to access these advantages, corporate startup teams need to be able to build collaborative relationships with leadership and their colleagues in key functions. Without such collaboration, innovation teams are like ‘startups in chains’ because they do not have any of the freedoms of early stage startups, but they are also not benefiting from the resources of the company. This is why it’s imperative that, beyond working on their product or service, corporate startup teams need to build a bridge to the core business.