The reverse pitch: Enlisting startups to hone innovation

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? Flipping the innovation script

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

For years CIOs have pumped money into innovation labs and incubators, hosted hackathons, and met with the portfolio companies of VC overlords. While these approaches have certainly sparked innovation, they've also resulted in a lot of misfires and sunk costs.

A reverse pitch could provide a more targeted approach because it allows companies to articulate a business problem and enlist entrepreneurs to solve it. The reverse pitch also fits with a trend toward more surgical innovation these days in light of the fact that more than 50 percent of Big Bang digital transformations failed in 2018, according to Forrester Research.

The reverse pitch experience

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 seed investor and 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.

Bosch startup SAST (Security and Safety Things), for example, is looking for analytics software that can help retail companies better understand customer behavior, says Christopher Martin, who directs the Bosch Research and Technology Center (RTC) in Pittsburgh.

"What we pitched at this event was around retail analytics, which is important because brick and mortars have a desire to understand how customers are using their stores," says Adam Wynne, a software engineering manager for Bosch Security Systems. Such software would, for example, help understand what shelves shoppers may be paying attention to, or detecting when queues are filling up with people trying to check out. Such information could help retailers improve product placement or redeploy staffers during busy times.

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, Wynne says, adding that SAST's platform is based on the Android OS. Martin and Wynne say the InnovationWorks event was the first reverse pitch they'd participated in, though the company regularly engages in hackathons and other innovation events.

They see 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 daily practice 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 tells, adding that the reverse pitch can help with that effort.

By April 1, Bayer's G4A plans to post 8 to 12 "challenge statements" geared toward improving the patient health experience in areas such as radiology, oncology, cardiovascular and women's health. Those challenges will remain open for two months, after which Bayer will review them internally to assess solution quality and partnership fit. If all goes well, the startups/entrepreneurs could sign a letter of intent to work with Bayer by October, Beal says.

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

$18 billion Highmark Health also needs to 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 is looking for 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. She adds that it's incumbent upon health-care providers to provide patients personalized support at the right time. "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. "We want to source ideas from any place to solve a problem," Ahmad says. The early response from the InnovationWorks event was positive, as attendees offered up potential ideas to Highmark attendees, she says.

Start local, think national

Reverse pitches have a local flavor to them, largely because it's easier to meet in metropolitan areas where several corporations may be headquartered. Large enterprises with the gravity pull of big revenues can court tech talent. This was the case for Northwestern Mutual Life Insurance, which in 2017 hosted a reverse pitch at its headquarters in downtown Milwaukee, Wisconsin.

The insurer invited entrepreneurs to learn about specific business challenges that existing vendors weren't addressing, including methods for automating procurement and identifying prospects, says Karl Gouverneur, head of digital innovation at Northwestern Mutual.

The event was successful enough that Northwestern Mutual hosted a second reverse pitch in 2018, seeking solutions for securing payments and streamlining medical record review, according to Northwestern's reverse pitch website. Teams that accept the challenge earn a seed investment of up to $85,000, access to corporate mentors and networks, and working space. If all goes well, startups can parlay the experience into more funding.

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

Starzynski says he plans to post the formal challenges the companies issue to the event’s website in April, with local and national cross-promotions on tap. Startups will submit proposals over the ensuing 8 weeks, after which the companies will invite entrepreneurs to formally review plans and, ideally, begin working together to bring the solutions to life.

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

Copyright © 2019 IDG Communications, Inc.

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