CHAPTER 4
KEYS TO SUCCESS
Barriers and challenges
Chapter 3
While Open Innovation offers huge potential, the rapid evolution of state-of-the-art-technologies adds new complexity. Cultural gaps, misaligned expectations, and technical challenges can hinder collaboration — making mutual understanding and adaptability crucial.
The rise of AI has intensified both the opportunities and challenges within Open Innovation. As corporates race to integrate AI across their operations, they increasingly turn to startups for cutting-edge expertise and agile solutions.
Open Innovation projects require flexibility, particularly key when adding the complexity of AI technologies. It requires the combination of differing organisational cultures, and can create friction — hindering the very innovation these partnerships seek to achieve.
Collaboration between corporates and startups demands more than just aligning on goals; it requires navigating the technical and strategic hurdles. Successful partnerships depend on corporates having the flexibility to adapt traditional processes and an openness to new ways of working. Specifically, corporates need flexibility in the areas of procurement, people, process and structure.
At the same time, startups must understand the scale, compliance demands, and risk management protocols that larger organisations face — especially when deploying AI in critical business functions. Without this balance, even the most promising collaborations risk falling short of their potential.
of corporates say they have the capabilities to collaborate with startups but startups cite cultural differences as their biggest barrier
84%
Liza Donskaya, Director, Plug and Play
Collaboration barriers for corporates
Previously, one of the biggest barriers to Open Innovation was corporates’ internal lack of capabilities to collaborate with startups. In 2025, corporates believe they have what it takes, with 84% now saying they have the capabilities they require:
0%
Previously 6 in 10 (60%) felt they had the necessary capabilities:
0%
This is interesting as the success rate remains just less than two-thirds (65%). This feels like a major step forward in corporates’ willingness and ability to adopt Open Innovation, even if this success rate would suggest self-belief outmatches actual performance.
Corporates might have a false sense of trust in their capabilities
Collaboration barriers for startups
But do startups experience that corporates are capable of collaborating with them? It seems not. They cite cultural differences between themselves and the corporate as the biggest barrier for collaboration. And this is becoming more of a challenge rather than less, having risen to the number one grievance in 2025 from sixth place in 2023. Conversely, corporates do not recognise cultural barriers as being a significant blocker, placing it second to last on their list of barriers, tenth out of eleven identified problems.
It seems that corporates might have a false sense of trust in their capabilities, since the reality is that they still do not fully understand startups and how fast they move and are far from overcoming the cultural barriers between them.
Nigel Watson, Chief Information Officer, Northumbrian Water
Top 3 collaboration barriers identified by corporates
1. Legal and regulatory constraints
2. Challenging to move from pilot
3. Lack of structure/process
Legal and regulatory constraints
0%
Challenging to move from pilot
0%
Lack of structure/process
0%
Top 3 barriers in 2023:
1. Legal and regulatory constraints
2. Low risk tolerance
3. Lack of strategic focus
Top 3 collaboration barriers identified by startups
1. Lack of strategic focus from top management at the corporate
2. Cultural differences
3. Misaligned collaboration objectives
Lack of strategic focus from top management at the corporate
0%
Cultural differences
0%
Misaligned collaboration objectives
0%
Top 3 barriers in 2023:
1. Lack of structure and/or processes for collaboration with the startup
2. Low risk tolerance from the corporates.
3. Intellectual property concerns.
Barriers by industry
Principle barriers for the Defence & Homeland Security (DHS) industry include going from pilot to implementation, and intellectual property concerns, while the Public Sector & Government industry finds legal and regulatory concerns more difficult than any other industry. This isn’t surprising, since both DHS and Public Sector & Government have a high number of regulations and constraints in their operations, procurement, collaborations and experimenting.
Tom Staley, Technology Advisory & Innovation Lead, Sopra Steria Next UK
Challenging phases
Regardless of how long the corporate has been operating Open Innovation projects, when asked about which phase of the process they find the most challenging, validating the startup comes out top for all corporates.
0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
40%
48%
36%
24%
46%
35%
27%
29%
45%
45%
33%
15%
33%
54%
44%
23%
41%
46%
34%
34%
Average
Less than 1 year
1–2 years
3–4 years
5 years or more
Finding the right startup
Validating the startup capabilities
Experimenting with startups
Scaling beyond experimenting
Interestingly collaboration doesn’t get easier with time. Instead it’s the opposite. The corporates who have been doing Open Innovation the longest doesn’t find collaborating any easier than those who are newer to the process. Meanwhile, the most successful corporates find all phases more challenging than those that are less successful. This suggests that experience has shown corporates that Open Innovation projects are more complex in practice than they expect.
What is the most challenges phase of a collaboration?
46%
35%
27%
29%
46%
45%
33%
15%
33%
54%
44%
23%
41%
46%
34%
34%
40%
48%
36%
24%
The need to be aware of barriers
As previously mentioned, corporates’ objectives for collaborating revolve around experimentation and improving their innovation culture, whereas startups aim to sell their solutions and gain access to capital. Bringing cultural differences into the mix, which startups find the biggest challenge, it’s obvious there is a clash between the two parties which they must be aware of before entering a partnership.