For technology leaders, the real question is no longer whether to partner with AI startups, but where in the portfolio that external capability creates measurable advantage. The source points to faster execution and access to specialist expertise, but the management implication is sharper: open innovation should be treated as a sourcing and prioritisation mechanism, not an ad hoc experiment. CIOs and strategy leaders need to decide which AI use cases justify external collaboration, and which should remain internal because they are core to differentiation, sensitive data, or long-term platform control.
Dedicated operating structures matter because collaboration breaks under standard enterprise processes. The reported success gap between organisations with and without open innovation teams suggests that governance is a scaling issue, not a networking issue. Decision rights, procurement paths, legal review, security assessment and business sponsorship need to be pre-agreed if startups are to move from pilot to production. A practical next question is whether the organisation has a repeatable intake model for startup proposals, clear escalation for exceptions, and a named owner for conversion from proof of concept to industrialised deployment.
The trade-off is speed versus control. AI startups can reduce time to value, but they can also increase exposure to vendor dependency, data-handling risk, model opacity and integration debt if partnerships are not scoped tightly. Leaders should ask how each external solution fits into enterprise architecture, what exit options exist, and how IP, data rights and compliance obligations are managed before scale-up. In practice, open innovation only becomes strategic when it is linked to funding, risk appetite and benefits tracking rather than innovation theatre.
As AI reshapes business strategy, large corporations are racing to innovate alongside startups.
Twenty years after the term โopen innovationโ was coined by American professor Henry Chesbrough, collaborating with other firms to share ideas and innovation has become essential to corporate success. Critical, in fact, against the backdrop of proliferating artificial intelligence, as our latestย Open Innovation Reportย (OIR25) shows.ย
The survey of more than 1,000 innovation and strategy leaders at private and public organisations in Europe shows that the strategic importance of open innovation has dramatically increased since ourย last reportย in 2023, particularly when it comes to AI.
Specifically, OIR25 โ which focuses on corporate-startup collaboration โ indicates that 80% of corporates now deem startup collaboration as important or mission-critical to their business strategy, up from 67% in 2023. Itโs evident that, to accelerate their AI strategies, organisations are seeking to bypass bottlenecks including the lack of talent by partnering agile, tech-driven startups, which also often brings fresh thinking and specialised expertise.ย
Variations across industries
Indeed, corporate leaders we interviewed cite the importance of turbocharging AI execution and unlocking new value as the primary driver for collaborating with startups. Organisations in aerospace were the most enthusiastic: 92% of the industry players in our study have collaborated with startups. Within the sector,ย Airbus is seen as the open innovation leader, collaborating with startups in areas such as sustainable aviation fuels, digital flight operations and autonomous systems.
Generative AI, not surprisingly, is the focus of corporate attention: Six in 10 organisations said AI integration is highly important to their business, and 72% of corporates with over 5,000 employees have partnered with startups on AI projects.
However, not everyone is sold on open innovation. Organisations in the โdefenceโ and โhomeland securityโ sectors in our survey showed the lowest enthusiasm, with only 42% having collaborated with startups. Culture and competition probably underlie the divergence: The more competitive an industry is, the more its players tend to value external expertise to reduce time to market. One would expect the โdefenceโ and โpublic sector & governmentโ sectors to occupy spaces in the opposite end of the spectrum, where lower risk and stability are valued more than innovation.ย
The need for open innovation departments
Interestingly, our survey shows that organisations with extensive experience of collaboration with startups donโt find it easier to do so than those with less experience. Counterintuitive, yes, but not illogical. When organisations engage in more open innovation, they tend to experience real-world hurdles as they move from experimentation towards strategic integration. Our research shows that legal and regulatory constraints in areas such as procurement becomes serious barriers when existing corporate structures and processes are not tailored for agile startups.
Organisations that have been successful in open innovation tend to understand the need to dedicate resources to working with startups. Those with dedicated open innovation departments reported a 73% success rate โ defined in our survey as โreaching set objectivesโ such as exploring innovative technology โ in their projects, compared to just 51% for those without.
Prominent examples of open innovation departments include BMWโs Startup Garage, staffed by 25-30 employees, and Transport for Londonโs team of 20 employees, who work with external partners to co-develop mobility innovations.
Open innovation departments are crucial for aligning strategic priorities, engaging the right business functions and industrialising the collaboration process. They also serve as internal ambassadors for external expertise. Their main mission is to enable quick onboarding of new startups and experimentation with cutting-edge technologies, ensuring that open innovation is not just a side experiment but a core strategic capability.
Future trendsย
The OIR25 signals a major shift in how large firms leverage open innovation. Traditionally, these firms collaborated with startups to fill expertise gaps. Now, they are turning to AI startups to adopt new solutions and services faster even though they already have AI capabilities. This tells us that collaboration is not just about keeping pace with technological change โ it’s about staying competitive and resilient in a landscape where speed and innovation are critical.
Edited by:
Seok Hwai Lee
About the author(s)
is the Innovation Director & Group Head of Sopra Steria Scale up.
is a Professor of Strategy and the John H. Loudon Chair of International Management at INSEAD.
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https://knowledge.insead.edu/strategy/ai-supercharging-open-innovation
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