Corporates and startups must collaborate for climate change

As COP26 continues in Glasgow, alumnus Shameen Prashantham discusses how businesses could help with regards to climate change and how innovation and start ups could be the key.

The run-up to COP26 in Glasgow has drawn growing attention to the climate change challenge facing the world – and the important role for businesses of all sizes in addressing it.

One way in which business can help is as a catalyst of innovation. Alok Sharma, President-Designate of COP26, has noted that “to tackle the climate crisis, and reach net zero, we need the innovation, the influence and the energy of the private sector on our side”.

This is easier said than done because for innovation to be effective, two factors are important – the agility to produce creative solutions and the scale to execute for widespread impact. In reality, most companies are strong in one of these attributes, not both.

Typically, smaller startups have the agility and large corporations the scale. This means corporate-startup partnering – which I refer to as “dancing with gorillas” – like the collaboration between Pfizer and BioNTech, is key for innovation. My research on this topic began in Scotland, which offered a wonderful laboratory to study these disparate sets of organisations coming together. Large multinationals were studied by my PhD advisor, Professor Stephen Young – after whom a new institute at the University of Strathclyde is to be named – and his long-time collaborator, Professor Neil Hood, who was closely involved with Scottish Development International (SDI). Under Professor Young’s guidance, I and others studied how smaller entrepreneurial firms internationalised.

After gaining my PhD from Strathclyde, I studied how these companies might work together. As I observed large multinationals with presence in Scotland, such as IBM, talking to innovative local startups, I noticed that the very differences making it attractive for these companies to collaborate also made it difficult to do so. Corporations can help create the conditions for startups to engage with them effectively in three ways.

First, mutual benefits should be clearly specified (clarifying the synergy). While this may seem obvious, startups are often not clear about the exact nature of the “win-win” a large corporation offers. It is important to clarify whether the corporation is offering a startup opportunities to build new offerings using its building blocks - say, its underlying platform technology - or solving pain points for which the startup has insufficient expertise, like digital marketing solutions.

Second, a clearly identifiable first port of call should be provided (creating an interface). Entities like BMW Startup Garage, Microsoft for Startups and Unilever Foundry provide visible mechanisms that bring startups together for a joint program - for instance, within a corporate accelerator - or innovation challenges to select startup partners. In some contexts, honest brokers like Scottish Enterprise or SDI could play important roles as a third party interface connecting these firms, as I’ve found in my research.

Third, it helps greatly to have observable partnering success stories (cultivating exemplars). When managers within large companies and startup entrepreneurs see examples of partnerships that work, they are better able to judge how to prioritise their attention on which partners and joint opportunities to pursue. In a recent discussion with Impact Hub Shanghai, a non-profit which links corporations with social enterprises, I heard of the collaboration between Budweiser China and a climate change-oriented startup, Mi Terro, focused on turning beer waste into eco-plastic. Making proactive efforts to ensure successful partnerships do emerge is important and useful.

Corporate-startup partnering offers a promising way to innovate for climate change and other Sustainable Development Goals, as evident from examples such as Glasgow-based software startup arbnco partnering with Centrica to develop a Digital Energy Efficiency Platform for SMEs. Scottish green hydrogen startups are likely well-placed to collaborate with big emitters such as large metal companies. Markets committed to decarbonisation like China offer the opportunity to deploy and refine these technologies, potentially collaborating with local companies.

COP26 provides a valuable wake-up call to businesses, big and small, to get their act together and join forces to their mutual benefit, and that of our planet.

About Shameen Prashantham

Shameen Prashantham is Professor of International Business & Strategy, and Associate Dean (MBA) at China Europe International Business School and author of "Gorillas can Dance: Lessons from Microsoft and Other Corporations on Partnering with Startups".