The Steinbeis Innovation Hub Brings Together SMEs and Startups

Small and Medium-sized Enterprises (SMEs) are the backbone of the German economy.[1] it is therefore crucial that SMEs continue to develop, establish strength, and exploit the potential of emerging technology to sustain. Partnerships with startups play an important role in shaping SMEs’ necessary transformation processes and securing their and the economy’s sustainability. This goal was the main aim of the Bosch Startup Harbour, now continued through the Steinbeis Innovation Hub (SIH).

The Bosch Startup Harbour is an initiative funded by the European Union (European Social Fund) and the Berlin Senate. This program was active for several years and conducted with the School of Management and Technology (SMT), a leading institute of Steinbeis University. SMT’s CEO, Dr.-Ing. Peter Schupp, together with Fritjof Karnani, Efrat Pan, and Dr. Julian Kahl, have coached the Bosch Startup Harbour program to train and share experiences with the incubation of early-stage startups. The focus of the project lies in forging networks between startups and a variety of business units belonging to the Bosch Group, to validate new technologies and business models and promote the interests of new ventures within the Group.[2] The idea of SIH is to keep up the momentum of this approach and offer SMEs access to innovative startups. “We want to support SMEs’ needs by connecting them with novel technologies and helping them implement application-oriented projects in research, development, consulting, and staff training,” said Dr. Peter Schupp.

The transformation of SMEs

Collaboration between SMEs and innovative startups offers numerous benefits to both stakeholders. Merging incremental innovation in the incumbent business with disruptive innovations helps SMEs overcome their transformation challenges. One of the key innovation barriers faced by SMEs is succinctly summed up by the so-called innovator’s dilemma,[3] whereby the success of past innovations means there is little incentive for established companies to leave the trodden path of current markets and turn to new (discontinuous) technologies. Current customer relationships, market reputation, and sunk costs mean that companies feel tempted to focus solely on key strengths, which lie in moving forward incrementally with technology. Transformation demands such as the decarbonization of industrial processes, transition to e-vehicles, and new mobility, as well as rapid developments stemming from digital transformation (in general) and artificial intelligence (in particular) – make it necessary to invest even more energy in innovation.[4,5,6]

Win-win for everyone

Partnerships between SMEs and startups offer tremendous potential by providing access to emerging technology and new business models.[7] They also make it possible to pinpoint and gauge potential beyond the technology pathways for successful and established companies. Such partnerships also provide SMEs with insights into the agile working methods and rapid pace of innovative processes, typical of startups, by injecting new impetus into companies and coaching them on the mindset of innovation.

There are also numerous benefits to startups. One of the biggest challenges faced in the early stages of startups is acquiring the first paying customer. Often, startups have not yet completed all processes of technological development and business models have yet to be put through their paces. Successful pilot projects with a solid partner can make a substantial difference in validating technologies and business models. Such pilots act as door openers when subsequently acquiring additional customers and attempting to approach investors.

Despite the significant benefits that arise when SMEs work alongside startups, not enough is being done to exploit the potential offered by such cooperations. Often, there is a lack of the required transparency regarding suitable partners and technology providers.[8] Moreover, only a few SMEs have the resources to run an in-house accelerator or co-innovation program, which would allow them to systematically engage in collaborative projects. Finally, startups lack maturity as an organization when it comes to exploiting the full potential of such potential collaborations and require accompaniment.

The outlook of SIH

SIH works to link SMEs in all parts of Germany to innovative startups both in Germany and abroad. Additionally to networking, SMT offers training in “entrepreneurship” and “intrapreneurship” as part of a project competence degree (in German: PKS®) at Steinbeis University. SIH training helps organize and support SMEs’ collaboration with startups by including learning journeys and innovation projects. Learning journeys allow SMEs and startups to network with each other within an informal setup and exchange knowledge in pre-defined fields. Innovation projects establish a framework for SMEs and startups to work together on tailor-made projects according to SMEs’ needs. Such projects typically deal with the development of industry solutions, the development of a proof of concept, product developments, or the joint development of intellectual property in areas of innovation gaps.

Added Value for Steinbeis University

The aforementioned approaches to collaboration raise trust and facilitate collaboration structure. This allows SMEs to access new know-how and technologies and master an innovative mindset. Integrating technological expertise from the Steinbeis Network along flexible lines makes it possible to bring additional know-how on board. “The key outcomes for startups will include an early validation of the market and technology, as well as the acquisition of initial partners to take part in pilot projects,” Dr. Schupp explains.

From scouting and matchmaking to the initial stages of information exchange and support while working on actual innovation projects, the plan is for the SIH to act as a co-innovation partner to SMEs and a companion during their transformation process. SIH offers an opportunity for Steinbeis Enterprises to input with their technology and offer customers in the industry a chance to actively work together to successfully implement their transformation goals.