The reverse pitch: Enlisting startups to hone innovation

Aflac, Bayer and Bosch are among a growing number of enterprises leveraging the ‘reverse pitch,’ in which companies pose business challenges they will pay winning startups to solve.

Pilgrimages to Silicon Valley have long been a rite of passage for IT leaders seeking game-changing innovation. During those jaunts, venture capital firms host "speed-dating" sessions, trying to match their tech startups with CIOs.

But as digital disruption regularly challenges enterprises' ability to stay current, companies are courting innovation with a more targeted practice: The reverse pitch.

What is a reverse pitch?

In a typical reverse pitch, companies host startups, explain business challenges they’d like to see addressed via technology and send them off to build a prototype solution. After a few months, the companies reconnect with the startups to assess results and decide whether to partner with the startup to bring its idea to life.

For years CIOs have pumped money into innovation labs and incubators, hosted hackathons, and met with startups at the behest of their VC overlords. While these approaches have sparked innovation, they've also resulted in a lot of misfires.

An ideal reverse pitch provides a more targeted approach because it allows companies to articulate a real-world business problem and enlist entrepreneurs to solve it.

Although hardly new, the reverse pitch is catching on at a time when CIOs are placing more strategic bets on startups. Ninety percent of enterprises that have an innovation program work directly with startups, according to a Gartner innovation study.

Startups typically require funding, visibility or access to customers, and they bring creativity, speed and an ability to execute, wrote Gartner analyst Erik Van Ommeren in a report on steps CIOs should take when working with startups. Enterprises tend to have discretionary budgets allocated for innovation, and are hungry to experiment in search of digital game-changers. This makes the pairing a match made in heaven, Van Ommeren says in his September research.

The insurance reverse pitch

Seeking an innovation boost from startups, supplemental insurance provider Aflac in March presided over a reverse pitch in Silicon Valley. Partnering with innovation accelerator Plug-and-Play, Aflac invited 30 startups to tackle a handful of business problems it wanted to solve.

By May, Aflac settled on five startups, which pitched solutions around areas such as how to pay claims faster; how to improve the experience for customers shopping for insurance; and how to work more closely with hospitals, says Keith Farley, who ran Aflac's innovation efforts before his promotion to vice president of Aflac Northern Ireland in October.

The startups then spent the next six weeks building solutions to the business challenges. Aflac is wrapping up the vetting process; should it sign off on the proof-of-concepts, its Hatch innovation lab will collaborate with the startups to build pilots before sending it to IT to develop a production version. Ultimately, Hatch makes the call as to whether the solution meets customers’ needs, Farley says.

Here, utility is critical. It's easy to get sucked into "bright and shiny" solutions that don't work as advertised, he says. “I’ve seen so many things that look great in a PowerPoint presentation, but they can’t be brought to life,” says Farley, who advises companies to make sure what they're getting in return actually solves their business problems and isn’t just cool tech for tech's sake.

Even so, Farley allows that innovation requires trying things that aren’t guaranteed to work. “A failure is just as acceptable as a win as long as we figure out whether it work or not,” Farley says.

The reverse pitch comes to Pittsburgh

In February, Bayer, Bosch, Phillips, Highmark Health and Rio Tinto participated in the first Pittsburgh Reverse Pitch & Innovation Challenge, hosted by Carnegie Mellon University's Corporate Startup Lab. For the kickoff event, sponsored by accelerator InnovationWorks, the companies pitched both broad and narrow business challenges to 200-plus local startups and entrepreneurs with expertise ranging from life sciences to machine learning and artificial intelligence.

InnovationWorks' goal is to stimulate the budding tech sector in Pittsburgh, where R&D activity is robust, says Bob Starzynksi, director of business development at InnovationWorks. The reverse-pitch companies and several other enterprises are keenly interested in cultivating “innovation outside their own four walls,” he says.

Bosch startup SAST is interested in analytics software that can help retail companies better understand customer behavior to improve product placement or redeploy staff, says Christopher Martin, who directs the Bosch Research and Technology Center (RTC) in Pittsburgh. Such software would, for example, help determine which shelves shoppers may be paying attention to, or detect when queues are filling up with people trying to check out.

While many retailers are experimenting with such technologies, SAST is trying to unify the market by creating an operating system on which third-party developers can build and run their apps.

Martin sees the approach as complementary to other innovation efforts. "It was a neat opportunity to pose a more focused challenge," Martin says, adding that he looks forward to seeing what solution proposals participants submit in the coming weeks.

The reverse pitch comes to health care

Reverse pitching is a regular part of the job for Priscilla Beal, who, as global head of the digital health ecosystem and engagement for Bayer G4A, says a natural part of her job is explaining the 157-year-old company’s business challenges. While Beal has worked with early-stage and late-stage startups in virtually every innovation format, the InnovationWorks event was a new experience for her.

"In order to reach these startups effectively and establish strategic partnerships, we need to do a lot of engagement," Beal says, adding that the reverse pitch can help with that effort.

Bayer's G4A then posted "challenge statements" geared toward improving the patient health experience in areas such as radiology, oncology, cardiovascular and women's health. Bayer reviewed startups’ submissions to assess solution quality and partnership fit. Those challenges remained open for two months, after which Bayer reviewed them internally to assess solution quality and partnership fit.

"Being able to show them what we go through [in the hunt for new solutions] is a great display of reciprocity,” Beal says.

Reverse pitching helps $18 billion Highmark Health partner and source technology from many different places to solve health-care problems, says Sarah Ahmad, senior vice president of innovation and transformation strategy for the integrated healthcare provider, which has 5 five million members and eight hospitals.

Highmark seeks point-of-care solutions that help patients and companions navigate a hospital visit, as well as tools that can harness data to better personalize care needs and make processes more efficient for clinicians, Ahmad says. "We have to be high tech and high touch," Ahmad says. "The ideal would be a bit of both."

Startups and entrepreneurs needn't hail from the health-care sector to work with Highmark. The company's challenge statements are intentionally broad to encourage a range of potential partners, Ahmad says. Ideally, solutions will be in line with the human-centered design practices Highmark has embedded in its organization. The early response from the InnovationWorks event was positive, as attendees offered up potential ideas to Highmark attendees, she says.

Where it goes from there is anyone’s guess. "Time will tell how successful these reverse pitches will be," says InnovationWorks’ Starzynski.

Copyright © 2019 IDG Communications, Inc.

Survey says! Share your insights in our 19th annual State of the CIO study