In 2012, one of us — Gregor Gimmy, a California-based serial entrepreneur and former IDEO consultant — accepted a new role at BMW’s corporate R&D headquarters. Gimmy’s task was clear but highly demanding: to reimagine the way BMW innovates.
At the time, BMW had no dedicated, company-spanning unit to leverage the creative power of startups. This meant that the company was leaving out huge innovation potential — thousands of startups with billions of funding — that could help BMW innovate anything from core vehicle technology (batteries, sensors, artificial intelligence software) to manufacturing innovations (internet of things, cybersecurity, robotics). To fill the void and build such a new BMW startup unit, Gimmy partnered with an experienced innovation manager from BMW, Matthias Meyer.
The prevalent model of startup cooperation in recent years has been corporate venture capital and accelerators (CVC&A). From 2012 to 2015, the number of global corporate venture capital deals almost doubled, and their investments quadrupled, to $29.1 billion. Among the 30 top companies in seven of the largest industries, almost half had a VC-fueled accelerator in 2015, up from just 2% in 2010.
However, despite these massive resources and C-level attention, all this corporate venturing seems to be failing to accomplish strategic innovation goals. In recent years, many high-profile companies, including Volkswagen, Yahoo, Turner/Warner Bros, and Coca-Cola, have shuttered their VC arms or accelerators entirely. In fact, in 2011 BMW had also founded a corporate venture capital (CVC) unit, called BMW iVentures, but it exclusively invested in service startups. Gregor and BMW faced a crucial question: “How can the BMW Group, as a company, co-innovate with startups?”
Based on his own experience, a reading of the emerging research, and dozens of conversations, Gimmy was convinced that the innovation impact of corporate VCs had been disappointing not because…