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The Startup Revolution: Why it Matters for Corporations

up.co @upglobalhq /upglobal

Table of Contents

3 Introduction

5 Corporate Case Studies

26 Brad Feld: Community Case Study

27 Steve Blank: Corporations and Startup Methodologies

31 Conclusion

32 Contributing Corporations

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IntroductionFranck Nouyrigat, Vice President of UP Global

The purpose of this paper is to bring awareness around two major shifts happening in our

society and how large firms and startups should join efforts and collaborate.

The first shift is the rise of entrepreneurship as a movement. Until a few years ago,

entrepreneurship only existed post-incorporation in the eyes of economists, politicians, and of

course, large corporations. We are now witnessing the rise of what we call a grassroots

entrepreneurial community: people armed with a passion, a vision, and an amazing capacity to

execute. They are, by nature, searching for new ways to do things; according to Joseph

Schumpeter, they are the source of what he called Creative Destruction. These entrepreneurs

and startups are seeking sustainable and scalable business models -- and sometimes they are

seeing great success in bringing these models into markets where no one has been before.

The second shift is more recent. As Professor Michael Porter (HBS) noted, "The capitalist

system is under siege … Companies are widely perceived to be prospering at the expense of

the broader community.” This negative perception of the ‘system‘ is underscored with the

dramatic shrinking in the lifespan of top companies (according to an insight study of the S&P

500 by Pr. Richard N. Foster Yale). At the current churn rate, 75% of the S&P 500 will be

replaced by 2027. 1 This poses a fundamental challenge for large corporations: How can

corporations search for new business models and new markets despite lacking the structural

design to do so? 

Both shifts are converging toward a collaborative solution -- toward the goal of creating shared

value. This collaboration between startups and larger firms is already existing as we have

illustrated in testimony from our contributors in this paper. A lot is at stake; if large or new firms

fail more, we will observe not only a rise in unemployment but also a drop in our GDP. 

We recommend that large firms take action, support their local entrepreneurial ecosystem, and

embrace collaboration at the startup level. These new nascent collaborations are already

helping larger firms to scout for new markets and new promising business models. This is, we

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1 Creative Destruction Whips Through Corporate America

believe, an imperative for larger corporations to be able to survive in a world constantly

changing. 

With their capacity to scale and access to capital, large corporations are critical in fostering the

next generation of high growth companies from promising smaller firms. Understanding the

nature of this mutual interest will allow large firms to regain their key role in a capitalistic

society. 

We would like to thank all participating corporations for not only having answered our survey

and case study request, but also for supporting the greater entrepreneurial community,

recognizing the necessity of entrepreneurship, and for helping to ensure a stronger economic

future.

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CITRIX

Citrix Startup Accelerator

We make early-stage investments in enterprise startups and help them get their first customers.

The Citrix Startup Accelerator invests in enterprise startups creating the next generation of

cloud infrastructure services, mobile enterprise solutions, and collaboration technologies. We

invest in companies bringing new thinking, new technologies, and a fresh approach to today’s

problems. Our charter is to foster the next generation of enterprise solutions by helping our

portfolio companies develop strong market validation and achieve independent success.

Our Accelerator is unique; a seed-stage program with continuous enrollment that includes

funding, a deep advisory panel, office space in Silicon Valley, close collaboration, and a focus

on enterprise market validation.

Outcomes: 20 investments so far, 7 outside the US, 3 exits (Nukona, Drumbi, Gridcentric).

More Information

• Startup Accelerator

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COCA COLA COMPANY

5by20: Empowering 5 Million Women Entrepreneurs by 2020

5by20 is The Coca-Cola Company’s global commitment to enable the economic empowerment

of 5 million women entrepreneurs across the company’s value chain by 2020. Specifically, that

means the small businesses the company works with in over 200 countries around the world.

From fruit farmers to artisans, this initiative aims to help women overcome the barriers they

face to business success. 5by20 and The Coca-Cola Company are proud to be giving millions

of women opportunities to build their businesses, support their families and build their

communities, while inspiring more to do the same.

Since the initiative’s launch in 2010, The Coca-Cola Company has developed and implemented

programs that address the barriers that prevent women entrepreneurs from succeeding in the

marketplace. 5by20 is doing this by increasing access to 1) business skills training courses, 2)

financial services and assets and 3) networks of peers or mentors.

The reach of 5by20 has recently expanded beyond its pilot programs in four countries to

launch and scale programs across a total of 12 countries: Brazil, China, Costa Rica, Egypt, Haiti,

India, Kenya, Mexico, Nigeria, the Philippines, South Africa and Thailand. At the end of 2012,

approximately 300,000 women were impacted in total through the initiative.

Venturing and Emerging Brands

Coke’s Venturing & Emerging Brands (VEB) team was created in 2007 with an ambitious

mission: to identify and build the company’s next generation of billion-dollar brands in North

America. Part venture capitalists, part brand incubators and part industry forecasters, the team

invests in and builds groundbreaking beverages that satisfy unmet consumer needs – fromNOS

energy and FUZE enhanced juice drinks, to Honest Tea and ZICO coconut water, to Core Power

milk-based protein drinks and illy issimo ready-to-drink coffee beverages.

The sheer scale and intensity of entrepreneurial innovation taking place in our industry has

opened our eyes. Based on past experiences, we estimate that as much asone-third of our

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industry’s growth in North America over the next five to 10 years could come from disruptive

brands in categories that do not exist today. At a global company like Coca-Cola, we rightly

tend to focus on building our core brands in our core channels. However, we can’t ignore the

small,entrepreneurial brands popping up in unconventional outlets – such as health and beauty

spas, natural food stores, gyms, yoga studios and other places our red trucks don’t visit.

When looking for an investment brand, VEB likes to see brands that have reached “proof of

concept.”  This could be a revenue number, a beverage in a proven category, etc., but more

importantly, a strategic fit for The Company.   We typically make an initial investment, and

when the time is right, we introduce more expertise and capabilities - distribution,

procurement, R&D, marketing insights and more – while preserving the brand’s entrepreneurial

instinct and flair.

The emerging brand space is very relationship-oriented. Getting to know the entrepreneurs,

small distributors, specialty retailers, venture capitalists, consultants and more is incredibly

important. The trust and credibility we’ve built within this ecosystem has been critical to our

success. We share learnings and engage in conversations about innovation and

entrepreneurship through our dedicated LinkedIn Group, Twitter handle, Facebook page

andYouTube channel. We believe in helping these companies succeed. Because if they

succeed, then we have more reasons to partner with them. Five or six years ago, when we

walked up to a booth at a natural products trade show and said, “We’re from Coke,” we

attracted a few confused looks. Now we get high-fives.

Our greatest successes to date, from a purely financial standpoint, are the acquisition of FUZE

and NOS. We expect our FUZE business to be a very significant contributor to our business in

North America going forward. And NOS was just a little nugget of a business when we

acquired it and has become a successful energy brand with a lot of growth still ahead.

Honest Tea, on the other hand, put us on the map with the entrepreneurial community.

Because by investing in Honest Tea, we got Seth Goldman. Seth is such a credible, high-

integrity entrepreneur. When other entrepreneurs are considering a strategic partnership with

Coca-Cola, they call Seth to find out what it’s really like to work with us. And he can talk not just

about our three-year “courtship,” but also about the two years of “marriage” since we

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completed the acquisition. The fact that he wanted to stay at Coke speaks volumes, because

all entrepreneurs fear losing their identity the minute they hitch their small wagon to a big

company. They worry about their decisions getting overruled and their culture and ethos

morphing into a larger enterprise. We’ve demonstrated that the mouse and the elephant can

coexist.

PlantBottle™ Packaging

The Coca-Cola Company touches the world’s consumers like almost no other business.

Underlying its 2011 worldwide revenues of $46.5 billion was an average of more than 1.7

billion servings every day in more than 200 countries. Fundamental to Coca-Cola’s success in

the United States and around the world has been innovation that achieves both environmental

benefits and financial goals. In 1969, it commissioned the first-ever environmental life-cycle

assessment of packaging. In 1991, it introduced the first plastic beverage bottle with recycled

material. and in 2009, it introduced PlantBottle™ packaging: the world’s first recyclable

beverage bottle made partially from plants. Coca-Cola’s PlantBottle packaging initiative

demonstrates how research and innovation in global companies often foster innovation and

support jobs in younger small businesses that are part of Coca-Cola’s international supply

chain.

In December 2011, Coca-Cola’s R&D team announced multimillion-dollar partnership

agreements with three leading biotechnology companies to accelerate development of a

bottle made entirely from plant material. Virent, located in Madison, WI, was founded in 2002

and employs about 120 colleagues; Gevo, located near Denver, CO, was founded in2005 and

also employs 120 people; and Europe-based avantium was founded in 2000. Each company is

pursuing different technologies, but the research efforts of all three have been boosted by

Coca-Cola’s investments.

These breakthroughs demonstrate the symbiotic collaboration between large and small

businesses. Coca-Cola is relying upon the ingenuity and breakthrough technical skill of these

entrepreneurial businesses, and these businesses are enabled through the resources of their

larger partner. Said Gevo CEO Patrick Gruber, “new technologies need champions. The Coca-

Cola Company is in a unique position to drive and influence change in the global packaging

supply chain with this development. You cannot ask for a better champion.”

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More Information

• 5by20 Program

• Venturing and Emerging Brands

• PlantBottle

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GOOGLE

Google is a strong supporter of entrepreneurship around the world. We ourselves began as

two entrepreneurs working out of a garage in Menlo Park, CA. We believe entrepreneurship

fuels economic growth, benefits consumers, and leads to freer, more open societies.  It's one of

Google's core values and as a company we try to foster this spirit internally and externally. 

The Google for Entrepreneurs team is dedicated entirely to supporting entrepreneurs and

ecosystems that help them thrive. We're a global team that empowers entrepreneurs through

our own programming, through partnerships with global organizations and local incubators,

and through the Google products we have available to business owners. With over 50

programs in 110 countries, the Google for Entrepreneurs team focuses primarily on two

strategies: growing entrepreneur communities, and equipping people with the skills needed to

scale their big ideas.  

To help grow and encourage these communities of innovators, Google for Entrepreneurs

operates two physical spaces for startups (Campus London and Campus Tel Aviv) and partners

with dozens of tech hubs, accelerators, and incubators around the world. Through these efforts,

we've reached tens of thousands of entrepreneurs with events, mentoring, and education, and

have provided millions of dollars in sponsorships to help the highest impact partners scale their

reach. And it's working. Startup Weekend has reached more than 100,000 people through its

54-hour events where budding entrepreneurs meet, form teams, build products, and launch

startups by the end of the weekend. NewME Accelerator, an accelerator for minority-led

businesses, has now helped dozens of entrepreneurs grow their companies and get funding.

And Code for America, in partnership with Google for Entrepreneurs, launched a first of its kind

"civic" accelerator and incubator to turbo-charge startups working on sustainable solutions for

governments.  

Finally, Google Ventures, the venture capital arm of Google, invests up to $300 million per year

in startups across the United States. To date, Google Ventures has approximately $1.2 billion

under management and more than 160 companies in its portfolio. On average, the firm makes

one to two new investments every week.  Founded in 2009, Google Ventures has extensive

entrepreneurial experience, deep technical knowledge, and expertise in building scalable, high

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growth products and companies. Among its investments are Nest, DocuSign, and Foundation

Medicine. Google Ventures is headquartered in Mountain View, California, with offices in

Boston, New York, and Seattle.  

More Information

• Google for Entrepreneurs

• Google Ventures

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IBM

IBM has a deep commitment to the entrepreneurial community and our work with startup

companies is a key factor in our ability to build and strengthen new markets. Since launching

the IBM Global Entrepreneur Program in 2010, IBM has helped launch more than 500 new

businesses in key areas such as green energy, health care and transportation. Innovation from

the startup community is critical to building a smarter planet. This isn’t something IBM can do

on our own.  When you combine innovation from the startup community with the technology,

scale and resources of IBM, everyone wins.  

These new markets are defined in several ways.  Our work with MoDe and Sproxil in Africa is an

effort in a specific geographic market.  We are working with others in more topic related

markets such as Cloud, Mobile, Big Data/Analytics: Streetline (data, transportation), Localytics

(Mobile, big data), Profitero (Commerce, big data).

Additionally, the IBM Venture Capital Group (VCG) works with nearly 300 VC firms and have

broadened beyond the Silicon Valley area to more than 30 countries with a focus on key

initiatives such as cloud computing and analytics. Over the past six years, with the combined

efforts of IBM VCG and the IBM Global Entrepreneur Program, IBM has engaged with more

than 1,500 startups to bring new technologies to market. In that time, IBM has accepted more

than 1,400 startups into the Global Entrepreneur Program.

The centerpiece of IBM’s Global Entrepreneur Program is an initiative called IBM SmartCamps.  

They offer a variety of ways for entrepreneurs and their small businesses to grow their business,

get access to leading experts and technology, and ultimately get their products to market

faster.  IBM SmartCamps judge the best start-up company in different cities around the globe,

rewarding the winners with mentoring, services, access to industry experts and deeper

partnership opportunities from IBM, venture capital firms and industry partners.  They are

designed to spark innovation and help startup companies bring technologies to market that

tackle some of the world’s most pressing issues – such as healthcare, water management and

efficient energy resources.  Past SmartCamp participants have gone on to generate more than

$90 million in VC/Angel funding following their work with IBM.

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More Information

• Global Entrepreneur Program

• Venture Capital Group (VCG)

• SmartCamps

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INTEL

Intel’s entrepreneurship initiative drives innovation and accelerates economic growth.

Around the world, governments are looking for opportunities to promote growth and

competitiveness. Entrepreneurship and innovation are fundamental drivers of sustainable

growth.  A thriving entrepreneurial culture is supported by education, investment, and

infrastructure.  Intel, building on our heritage of innovation, collaborates with governments,

educators, NGOs and industry to help build capacity in each of these areas.  So individuals

have the opportunity to obtain the skills, technology and resources they need to build

successful businesses that drive innovation, create employment, accelerate economic growth

and have a positive impact on society.

Since 2005, Intel has invested in a number of initiatives aimed at inspiring and providing

education and critical skills for young entrepreneurs. Intel has invested in programs designed to

give entrepreneurs the skills and resources they need to address community issues and create

sustainable enterprises. These programs include business plan competitions, ideation

workshops, technology tools, entrepreneurship curricula and university seminars designed to

help young people, engineering students and business faculty build entrepreneurship

programs.

The programs under Intel’s entrepreneurship initiatives and their goals are:

Goal 1: Increase entrepreneurship awareness and build entrepreneurial mindset

Intel’s Ideation workshop targeted at high school and university students helps in building of

capabilities, skills, and mindsets about or for the purpose of entrepreneurship. The goal of this

program is to expand the pool of potential future entrepreneurs.

Intel Ideation Workshops is a practical and intensive 2 days program which trains the

participants on a process for developing and scaling ideas. The program consists of an ideas

framework that helps participants, first get an idea, second validate them, third develop them

and the last stage, test them in a real world environment. This program focuses on developing

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cognitive, social and emotional abilities required to lead others, recognize opportunities, and

think creatively.

Launched in 2012, this program has already been successfully deployed in over 15 countries.

Goal 2: Building entrepreneurial capacities and employability

Entrepreneurial skills are best developed through hands on education and experiences.  Intel’s

Entrepreneurship Basics ( E-Basics) provide opportunities for individuals to gain the experience

and skills needed to turn ideas into thriving businesses.  The program helps the participants in

building of knowledge and skills in preparation for starting or operating a business. Thus, the

goal of E- Basics is to expand the pool of aspiring or practicing entrepreneurs who wish to

improve their skills in entrepreneurship and management.

Entrepreneurship Basics (E-Basics) is a self paced e-learning course on the fundamentals of

entrepreneurship and education on basic technology tools that can be used to empower

businesses. The program, available in English and Mandarin has 40 hours of content  to

commercialize and scale businesses

Goal 3: Building business ownership and enhancing entrepreneurial performance

Intel Global Challenge aims at preparing aspiring student entrepreneurs for opening a new

business and enhance performances of their ventures. It refers to the quality of the business in

measurable terms and is captured through indicators of venture performance (e.g. higher

profits, sales, employment of others, higher survival rates, higher income).

Intel Global Challenge is held annually at UC Berkeley where young entrepreneurs from across

the world come together to share their plans for turning their technology ideas into business

opportunities, and to showcase those plans to potential investors in the silicon valley.

Competitors benefit from the education that the contest provides, along with introductions to

potential investors, publicity, and feedback from industry experts. Employees from Intel Capital

volunteer as mentors and judges for the competition. The competition engages over 150,000

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students and receives over18,000 entries from 60 countries. In the past 3 years, 10% of the

participating student ventures have received funding.

More Information

• Ideation Workshop

• Youth Enterprise Program

• Entrepreneurship Basics

• Global Challenge

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MICROSOFT

Microsoft BizSpark is a three-year global program that helps startups succeed by giving them

access to software, cloud computing and support.  It also connects them with individuals and

organizations that support entrepreneurship and provides market visibility.  At the end of three

years, graduates keep fully-licensed copies of software they’ve been using, free of charge, and

receive several years of discounts on future purchases and upgrades.

Today there are 50,000 active companies in the program (companies renew each year) and

nearly 25,000 graduates in more than 100 countries.  

Microsoft believes that by helping startups succeed we’re helping to build a valued long-term

partnership and together we can build a more vibrant global software economy.  These young

companies are the foundation of Microsoft’s future business.  In addition, their success can

have far-reaching implications for skills and economic development in their respective regions.

Facts

• More than 50,000 startups from over 100 countries have joined the program since its

founding in November 2008.

• The three-year offer provides startups with access to a global community of advisors,

investors and partners as well as Microsoft software and services.

• More than 2,400 BizSpark Network Partners assist startups through financial and legal

assistance, mentoring, networking and business advice.

• Thirty-five percent of these members are in the U.S., with the remainder based

internationally.

• During the first half of 2012, BizSpark companies raised a total of $1.91 billion in 256

deals.

How to Participate

• To qualify, startups must be less than five years old, be privately held, have less than $1

million (U.S.) in revenue and be developing software.

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• Startups can apply for program membership on the BizSpark website or be nominated

by one of 2,000 BizSpark Network Partners around the world, including academic and

government institutions, investors, incubators and mentors.

• At the end of three years, companies “graduate,” retaining perpetual licenses to all the

software used while in the program and significant discounts on support and new

software.

Program Benefits

• Software. Members receive immediate access to current, full-featured Microsoft

development tools, platform technologies and production licenses of server products

for use in developing and bringing solutions to market, including but not limited to

ASP.NET, Kinect for Windows Software Development Kit, Microsoft Expression Studio,

Microsoft SQL Server, Microsoft Visual Studio, Windows, Windows Azure, Windows

Phone and Windows Server.

• Connections. Startups have the opportunity to work with world-class mentors and

achieve visibility to an audience of potential investors, clients and partners.

• Microsoft BizSpark Partner Network. To help early-stage technology startups with

Microsoft software, BizSpark enables access to a community of more than 2,000

partners around the world — all involved in supporting entrepreneurship by providing

mentoring, advice, investment, training, marketing and services. Some partners include

Startup America Partnership LLC, Startup Weekend, Founder Institute Inc., DEMO,

TechStars, SVForum, Seedcamp, RocketSpace Inc., 500 Startups and many more.

• Microsoft BizSpark One. This is the premium tier of the BizSpark program. Microsoft

offers a significant portfolio of customized benefits to companies that have achieved

BizSpark One status, including marketing, technical and business resources to

accelerate their growth.  .

• BizSpark alumni. Graduates also will continue to have access to many of the benefits of

the BizSpark program, from newsletters to opportunities to connect with other startups

and partners in the BizSpark network.

Additional Microsoft Programs for Entrepreneurs

• Microsoft Accelerator. In addition to working with BizSpark Partners and leading

accelerator and incubator programs, Microsoft also hosts the Microsoft Accelerator

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program. This opportunity allows startups to work side by side with some of the top

minds at Microsoft.

• Bing Fund. The Bing Fund is an angel fund with an incubator program, founded by

entrepreneurs, sponsored by Bing, and backed by the experience, expertise and

resources of Microsoft.

• Microsoft Innovation Centers (MICs). Microsoft has created a network of state-of-the-art

technology facilities for collaboration on innovative research, technology and software

solutions, involving a combination of government, academic and industry participants.

There are now more than 100 Microsoft Innovation Centers worldwide.

• WebsiteSpark. This program gives small Web development and design companies a

jump-start by providing free tools, technologies and resources to build great websites.

• Microsoft DreamSpark. This program provides verified students around the world with

no-cost access to Microsoft designer and development tools to support and advance

their learning and skills in science, technology, engineering and math. This program

equips tomorrow’s developers with the professional tools they need to advance their

creative and technical abilities.

• Imagine Cup World Festival. This event is the world’s premier student technology

competition. It provides an opportunity for students to use their creativity, passion and

knowledge of technology to help solve global challenges and make a difference in the

world. More than 375,000 students from over 100 countries and regions participate

annually, demonstrating how technology can be a change agent.

More Information

• Microsoft Ventures

• BizSpark

• Microsoft Accelerator

• Bing Fund

• Innovation Center

• DreamSpark

• Imagine Cup World Festival

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PROCTER & GAMBLE

Procter & Gamble has been actively supporting entrepreneurial ventures through its

FutureWorks division, which is responsible for advancing the Company’s innovation efforts as it

relates to new business models, cutting-edge technologies, and brand building approaches.

Over the past 10 years, P&G FutureWorks has supported entrepreneurs in various capacities,

including financial investment, intellectual resources, and business partnerships to jointly

accelerate the companies’ mutual learning and market success.

P&G FutureWorks has collaborated with dozens of young ventures across diverse sectors,

including franchising, health & wellness, devices, CPG, platform services, and digital/online.

Some have resulted in formal learning partnerships, such as with Shopkick and eHP; and others

have led to joint ventures or acquisitions, such as with Carnett’s and MD VIP.

These external relationships with entrepreneurial firms and individuals had been critical to

accelerating the Company’s move into new spaces, and enhancing the organizational culture of

agility, resourcefulness, and innovation.

In some cases, P&G’s Connect & Develop program is used to match the right entrepreneurs

with the right resources within P&G. Other initiatives include collaborative working programs,

such as the embedding of P&G FutureWorks employees within Silicon Valley, or P&G Start-up

Pitch Days that invite entrepreneurs to collaborate with brand leaders in experimental pilots.

Critical to the success of any engagement has been the dedicated resources that can facilitate

the interaction, understanding both the intricacies of large organizations, as well as the realities

of young start-ups (budgets, capacity, and timing).  

More Information

• FutureWorks

• Connect & Develop

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SAP

Today, SAP (NYSE: SAP) is the global market leader delivering enterprise software applications

and services to over 232,000 customers in 180 countries worldwide.  Out of its 65,000

employees, SAP currently has more than 13,500 employees in the US alone.  Founded in 1972,

SAP is still fueled by the pioneering spirit inspired by its founders to continually transform the

IT industry.  

In celebrating its 40th anniversary, SAP launched the Startup Focus program in 2012 to inspire

startups to develop new applications on its high-performance in-memory database

management platform, SAP HANA.  The first SAP Startup Forum was held in Palo Alto in March

2012, where 26 startup companies gathered for a full day of collaboration and learning around

big-data and real-time analytics trends.  13 big-data startups pitched business cases, engaged

with technical experts and explored customer and funding opportunities.  "Being part of two

startups before my career here at SAP, entrepreneurship is very close to my heart. This event

offers a great opportunity for Silicon Valley startups, who bring their imagination and passion to

the bear on the great challenges facing us," said Dr. Vishal Sikka, member of the SAP Executive

Board, Technology & Innovation, when addressing the audience of Silicon Valley entrepreneurs

at the inaugural SAP Startup Forum.  “The biggest thing we have learned in our 40 years as an

enterprise applications company is that there are not enough applications in the world and that

the problem is looking for imagination far beyond the walls of SAP to the collective imagination

of all of us.”  

Based on the response from participating startups Dr. Sikka officially launched the Startup

Focus program in June 2012.  Designed as an accelerator program, SAP Startup Focus

identifies promising startups, assists them through the development process with training,

technology and easy access to expertise and then supports the startups in their go-to-market

efforts.  The program provides  training and technical support to the startups, market

enablement support through press releases, events, and access to SAP customers.  In addition,

SAP provides SAP HANA technology to these startups and to developers at no cost through

the Developer program.  Local SAP teams have since organized startup forums around the

world and invited innovative young companies to build on this powerful new technology as

well as events to connect with developers.  Less than a year later, more than 400 startups and

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thousands of developers are engaged with the SAP Startup Focus and Developer programs

respectively around the globe.

25 startups have completed development of their solutions and are already selling millions of

dollars of solutions in the market.  Even as a global program, with its origins in the heart of

Silicon Valley, the program has found compelling startups across the United States.  Among the

most promising startups are Florida-based Liquid Analytics, building mobile sales tools;

Pennsylvania-based Thingworx offering deep insights into sensor data, Massachusetts-based

Easy Ask, offering natural language searches on enterprise data, and two California startups,

FanAppz and Next Principles, which are both in the social media analytics space.  All of these

highly innovative companies presented their business cases to over 12,000 SAP customers at

SAP’s premier customer event, SAPPHIRE NOW in Orlando, Florida in May 2013.  The

companies that the Startup Focus program has been best able to support have come in with

deep domain expertise, huge technology talent and the business savvy to leverage SAP’s

global reach.

By fostering entrepreneurial organizations, SAP has the opportunity to give back to the

technology startup community.  Among these companies will be the technology giants of the

future.  By supporting them, we at SAP feel privileged in having contributed to their success.  

More Information

• Startup Focus Program

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SPRINT

Sprint is a mobile technology innovation leader with a long history of “firsts.” For years Sprint

has been active in Silicon Valley, partnering with Silicon Valley “giants,” exploring opportunities

with venture capital firms and engaging in the startup / entrepreneur community to bring new

services to market. In the past eighteen months Sprint has embraced the startup /entrepreneur

community that is quickly growing in its own hometown, Kansas City. Sprint also has begun

supporting programs with a national scope, including UP Global. Our UP Global relationship

enables Sprint to bring new resources to Kansas City and also extend support on a national

scale. In addition, it allows Sprint visibility to high-growth technology startups across the

country that we may not be able to identify through our more traditional VC and business

development efforts.

As a large corporation participating in the startup space in Kansas City, one of Sprint's core

objectives is to help cultivate the entrepreneurial community in our own home town. We are

rolling up our sleeves and getting engaged in events like Kauffman Foundation's 1 Million

Cups, Global Entrepreneurship Week and Startup Weekend. Sprint played a strong role in

helping secure the i6 Grant that is funding the newly launched Digital Sandbox KC.

Sprint is exploring ways to promote innovation outside the walls of our company. Providing the

tools and business support to enable others to invent is an important element in that process.

We believe the end results will not only drive greater utility and personalization of the mobile

experience, but also help spur significant growth in the region. Sprint is a sponsor of Silicon

Prairie News, a digital media company and emerging model for grassroots entrepreneurial

ecosystem development, and Pipeline, an elite organization of the Midwest’s most successful,

high-performance entrepreneurs.

Last fall (2012) Sprint hosted a Reverse Pitch event during Global Entrepreneurship Week.

Sprint and five other Kansas City area corporations came together to share how we can help

startups and entrepreneurs. Instead of startups pitching to big corporations, the local KC

companies presented to startups, developers and entrepreneurs and fielded questions about

the insights, resources and tools the companies have to offer. Some key feedback from the

Reverse Pitch event spells out how corporations can most effectively help the startup and

entrepreneurial community:

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• Be curious - Learn about startups, entrepreneurs and their products and services.

Actually try their products. We can keep a fresh eye on our own business problems by

continuously listening to how startups are dealing with their issues.

• Spread the word - Trying a startup product is only the beginning. Tell your circle about

the product. Use social media to get the word out about the startup and the product.

• Provide feedback back to the startup - Good or bad, feedback is critical to the startup

to make changes to the product. I think we take for granted how much business

knowledge and experience we have and our mentorship can often help someone

struggling to solve issues outside of their core competency.

• Make introductions - Provide startups and entrepreneurs with a connection and

accessibility to regional and national partners.

Startups and entrepreneurs feed the corporate ecosystem with new ideas and talent. They are

often able to solve business problems by applying a focus a large corporation cannot match.

Many of Sprint's innovation product solutions have come from business collaboration with

smaller startups and their inventions and applications. In order for corporations like Sprint to

remain relevant, we must grow and attract talent and encourage the cultivation of ideas.

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Community Case Study: Boulder, ColoradoBrad Feld

Large companies can play an important role in any startup community. However, there is often

much confusion, from both entrepreneurs and the employees of the large companies, about

what an effective set of activities is.

The two most powerful things large companies can do for the startup community are (1) provide a convening space and resources for local startups, and (2) create programs to

encourage startups to build companies that enhance the large company’s ecosystem.

In Boulder, Google does an awesome job of providing its space for startups. It has a fun office

in an old Circuit City building and has created an event space that comfortably holds 250

people. This space is free to any local gathering of entrepreneurs as long as they arrange it in

advance with the folks at Google. It’s a generous offer, and it allows Boulder Google

employees to easily engage with startup activity in Boulder that they are interested in, while

creating goodwill for Google within the Boulder startup community.

On an international basis, Microsoft has created a program called Bizspark, which began five

years ago by providing free Microsoft software to startups. It has expanded greatly since then,

now including an accelerator program (run by TechStars), international publicity for “Bizspark

start- ups,” free hosting infrastructure via Azure, and deep access to key Microsoft product

groups for startups that are building technologies that enhance the Microsoft ecosystem.

Many large companies are standoffish to the startup community. They worry that if they

engage, the startups they interact with will recruit their employees. Although this can happen,

having the opportunity to interact with startups enhances the quality of the employee’s job.

This often increases job satisfaction and long-term employee retention. 2

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2 Excerpt from Brad Feld’s book, Startup Communities

Strategy and Structure in the 21st CenturySteve Blank

While companies have existed for the last 400 years, their modern form is less than 150 years

old. In the U.S. the growth of railroads, telegraph, meat packers, steel and industrial equipment

forced companies to deal with the strategies of how to organize a complex organization. In

turn, these new strategies drove the need for companies to be structured around functions

(manufacturing, purchasing, sales, etc.)

90 years ago companies faced new strategic pressures as physical distances in the United

States limited the reach of day-to-day hands-on management. In addition, firms found

themselves now managing diverse product lines. In response, another structural shift in

corporate organization occurred. In the 1920’s companies restructured from monolithic

functional organizations (sales, marketing, manufacturing, purchasing, etc.) and reorganized

into operating divisions (by product, territory, brand, etc.) each with its own profit and loss

responsibility. This strategy-to-structure shift from functional organizations to operating

divisions was led by DuPont and popularized by General Motors and quickly followed by

Standard Oil and Sears.

General Motors Organization Chart ~1925

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In each case, whether it was organizing by functions or organizing by operating divisions, the

diagram we drew for management was an organization chart. Invented in 1854 by Daniel

McCallum, superintendent of the New York and Erie railroad, the org chart became the

organizing tool for how to think about strategy and structure.   It allowed companies to visually

show command and control hierarchies – who’s responsible, what they are responsible for and

who they manage underneath them, and report to above them.  (The irony is that while the org

chart may have been new for companies, the hierarchies it described paralleled military

organization and had been around since the Roman Legion.)

While org charts provided the “who” of a business, companies were missing a way to visualize

the “how” of a business. In the 1990’s Strategy Maps provided the “How.” Evolved from

Balanced Scorecards by Kaplan and Norton, Strategy Maps are a visual representation of an

organization’s strategy. Strategy Maps are a tool to translate the strategy into specific actions

and objectives to measure the progress of how the strategy gets implemented (but offer no

help on how to create new strategies.).

Strategy Maps from Robert Kaplan

By the 21st century, organizations still lacked a tool to create and formulate new strategies. 

Enter the Business Model Canvas. The canvas describes the rationale of how an organization

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creates, delivers, and captures value (economic, social, or other forms of value). The canvas ties

together the “who and how” and provides the “why.” External to the canvas are the

environmental influences (industry forces, market forces, key trends and macro-economic

forces.)  With the business model canvas in hand, we can now approach rethinking corporate

innovation strategy and structure.

Management Innovation in the 21st Century

Existing companies and their operating divisions implement known business models. Using the

business model canvas, they can draw how their organization is creating, delivering, and

capturing value. A business model for an existing company or division is not filled with

hypotheses, it is filled with a series of facts. Operating divisions execute the known business

model. Plans and processes are in place, and rules, job specifications, revenue, profit and

margin goals have been set. Forecasts can be based on a series of known conditions.

Inside existing companies and divisions, the business model canvas is used as a tool to

implement and continuously improve existing business models incrementally. This might

include new products, markets or acquisitions.

A New Strategy for Entrepreneurship in the 21st Century

Yet, simply focusing on improving existing business models is not enough anymore. To assure

their survival and produce satisfying growth, corporations need to invent new business models.

This challenge requires entirely new organizational structures and skills.

This is not unlike the challenges corporations were facing in the 1920′s. Companies then found

that their existing strategy and structures (organizations) were inadequate to respond to a

changing world. We believe that the solution for companies today is to realize that what they

are facing is a strategy and structure problem, common to all companies.

We propose that corporations equipped for the challenges of the 21st century think of

innovation as a sliding scale between execution and search.

1. For companies to survive in the 21st century they need to continually create a new

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set of businesses, by inventing new business models.

2. Most of these new businesses need to be created outside of the existing business

units.

3. The exact form of the new business models is not known at the beginning. It only

emerges after an intense business model design and search activity based on the

customer development process.

4. Companies will have to maintain a portfolio of new business model initiatives, not

unlike a venture capital firm, and they will have to accept that maybe only 1 out 10

initiatives might succeed.

5. To develop this new portfolio, companies need to provide a stable innovation

funding mechanism for new business creation, one that is simply thought of as a cost of

doing business

6. Many of the operating divisions can and should provide resources to the new

businesses inside the company

7. We need a new organizational structure to manage the creation of new businesses

and to coordinate the sharing of business model resources.

8. Some of these new businesses might become new resources to the existing

operating units in the company or they could grow into becoming the new profit

generating business units of the company’s future.

Lessons Learned

• Continuous disruption will be the norm for corporations in the 21st century

• Continuous innovation – in the form of new businesses- will be the path for long term

corporate survival

• Current corporate organizational models are inadequate for the task

• We will propose some alternatives

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Conclusion

Today, more than ever, we understand just how vital entrepreneurship is to our society and our

economy. As we focus our efforts on supporting startups, the role of every key stakeholder,

especially corporations, is too often overlooked.

Every corporation has its roots in entrepreneurship and was once a startup, but more

importantly, corporations today cannot continue to out-innovate and out-perform their

competitors without looking outside the walls of their offices.

Perhaps the most powerful phenomenon about this observation is that it is being driven from

within organizations - those team members who have entrepreneurial tendencies.

As corporations seek outside, new ways of thinking and approaching problems, it is only

natural that startups and corporations begin to develop a more intentional relationship with

one another.

The case studies in this paper highlight corporations that are actively encouraging

entrepreneurship and new firms both in their local communities and on a national scale. We

encourage readers, whether they be entrepreneurs, corporate professionals, or simply active

members of their communities, to look to these case studies as examples of what works, but

also to consider what other actions may work even better in the future.

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