For AI startups providing AI solutions to businesses, the road to success runs through incumbent industries. Established companies have the resources, data, and problems in need of solving that can catapult a startup toward growth and financial stability. But many incumbents are reluctant to team up with AI players, especially upstarts. How can AI players overcome this skepticism?

Our survey of 600 incumbent business leaders and 600 AI startups and scaleups found that many AI players are struggling to adapt their value proposition to incumbents’ needs—or to articulate their value proposition effectively. (See Exhibit 1 and methodology.) Incumbent leaders point to a lack of trust and understanding of AI players and their offerings.

AI players have two priorities as they set out to find partners: ensure they can stand out from the crowd of other technology providers by focusing on what incumbents need most and proactively address incumbents’ reservations about forming partnerships. Those that achieve both can become transformers—companies (typically startups and scaleups) that go well beyond developing the best AI tech, providing customized technology solutions to a specific industry or functional problem, helping incumbents build the right talent base, and driving organizational change.

Transformers are consistently granted greater access to incumbent data and industrial knowledge, allowing them to build more competitive AI solutions that can improve how an entire industry operates. Transformers have much to gain—and to lose if their competitors act first—making it imperative for AI players to play this role.