Break Out to Open Innovation

Working with an open corporate accelerator program allows Mercedes to more quickly incorporate new technologies from startups.

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Image courtesy of Daniel Garcia/theispot.com

Mercedes-Benz AG produces over 2 million passenger cars annually for a global market in the throes of transformation. Automakers are meeting new demands for electrification and connectivity, new competitors are arising, and customers have new expectations, such as the desire for sustainable mobility. All of these trends are driving the need to speed innovation in every facet of the automotive industry.

In 2016, R&D and digital business managers at Mercedes’s headquarters in Stuttgart, Germany, realized that their efforts to collaborate with startups — a valuable source of external innovation — were being hampered by the company’s existing innovation processes. Those processes were overly focused on internal development and ready-to-implement solutions provided by the company’s established base of suppliers and weren’t well suited to uncertainty-ridden collaborations with promising technology startups. The company needed an innovation pathway capable of more effectively integrating startups earlier in the R&D process and significantly reducing the time required to identify, develop, test, and implement their most promising technologies and solutions.

In response, a new team within R&D was formed to build a better bridge between the promising ideas of external startups and the innovation needs of Mercedes’s internal business units. The team joined forces with partners from academia and industry to cofound Startup Autobahn, what we call an open corporate accelerator (CA). Unlike a conventional corporate accelerator — typically established by a single company for its own benefit — an open CA welcomes multiple sponsor companies and can attract a broader array of more mature startups. This model, also known as a consortium accelerator, improves sponsor access to external innovation and enhances the overall competitiveness of regional ecosystems.1

Startup Autobahn is operated by the Plug and Play Tech Center on the ARENA2036 research campus of the University of Stuttgart. Since its founding, it has attracted 30 large corporate sponsors (clients for startup solutions), including automotive OEMs and suppliers, as well as companies from other industries, such as IT, logistics, and chemicals. It has enabled Mercedes, in its role as a sponsor, to screen thousands of startups, execute more than 150 pilot projects, and implement 17 innovative solutions.

For instance, Mercedes worked with a startup named What3Words to jointly develop a voice-activated navigation system that guides users to precise locations by dividing the world into 57 billion 3-meter squares.

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References

1. S. Moschner, A.A. Fink, S. Kurpjuweit, et al., “Toward a Better Understanding of Corporate Accelerator Models,” Business Horizons 62, no. 5 (September-October 2019): 637-647.

2. J.P. Eggers and K.F. Park, “Incumbent Adaptation to Technological Change: The Past, Present, and Future of Research on Heterogeneous Incumbent Response,” Academy of Management Annals 12, no. 1 (January 2018): 357-389.

3. R.K. Shankar and D.A. Shepherd, “Accelerating Strategic Fit or Venture Emergence: Different Paths Adopted by Corporate Accelerators,” Journal of Business Venturing 34, no. 5 (September 2019): 1-19.

4. S. Falk and F. Riemensperger, “Three Lessons From Germany’s Platform Economy,” MIT Sloan Management Review, Aug. 5, 2019, https://sloanreview.mit.edu.

5. K. Prexl, M. Hubert, S. Beck, et al., “Identifying and Analysing the Drivers of Heterogeneity Among Ecosystem Builder Accelerators,” R&D Management 49, no. 4 (September 2019): 624-638.

6. This is enabled but not dictated by the open CA model. Some sponsors in Startup Autobahn choose to make equity investments in startups.

7. K.J. Boudreau and K.R. Lakhani, “How to Manage Outside Innovation,” MIT Sloan Management Review 50, no. 4 (summer 2009): 69-76.

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