I have spent my career helping entrepreneurs and businesses innovate, create and build their brands across Europe and Southeast Asia, and what strikes me is that there are many good quality startups that are not discovered, and many large corporations that are not tapping into their expertise because they cannot break the ‘old’ ways of doing things.
Corporate organisations should look into attracting good quality startups as part of their corporate innovation strategy, be it through Merger and Acquisitions (M&A), piloting or testing of new products/business models or gaining access to validated innovations to internal, and even external business challenges. Startups can provide corporates an entire suite of innovative solutions and corporate start-up models, promoting dynamism within the rigid processes of a corporation.
With any meeting of minds, the union of a startup and corporation is complex and the foundation must be solid to encourage longevity. When corporates and startups collaborate, they become a hybrid model that is both innovative and effective – presenting new solutions. Here are some ways that this could be put in motion.
Collaboration is Necessary
Startups thrive on customer validation focusing on understanding customer’s pain points and building solutions around them – the inconvenience of hailing taxis and their high fares gave Grab an opportunity to introduce private-hire car services using GPS technology in 2012. Now we conveniently can make a booking ourselves using our mobiles for a fixed fare. Startups are customer centric – the speed and depth in which they understand their customer needs and build quick prototypes as Grab did can help corporates with de-risking innovation projects.
On the other hand, corporates incubate ideas for a long time and seek validation from stakeholders who often curtail great ideas when they cannot reach a consensus making ideas irrelevant in due course. They often focus on their KPIs and products which may not necessarily cater to their customer’s needs.
Arriving at the Partnership
We see many corporates loose the opportunity to work with quality startups because of unbalanced partnerships where there is no equal share for both sides. I frequently look at the relationship between a corporate and startup as a marriage where there must be compromise and alignment with each other’s opinions and value systems.
Corporates and startups often do not partake in a “marriage of equality“. Many corporates tend to adopt a “mentorship” role when working with startups. Startups are not ‘smaller versions’ of bigger organizations it is therefore impractical to have a corporate approach to the needs of a startup.
While the partnership is established with a contract, corporates fail to see that the contract conditions are unrealistic when working with startups. When corporates engage startups in the same breadth as they do with large organisations, the needs of startups are simply not recognised nor addressed.
I have been in an intercultural marriage for 16 years now and blessed with two children out of it. My husband is Singaporean and I am European. Despite helming from pretty different cultures and backgrounds, our marriage works because we’re aligned on values, morals and visions and focus on those instead of our differences – where there are differences in opinions we seek to find a common ground between each other’s beliefs. It also helps that our “shareholders” (in laws and extended family) do not involve themselves in our marriage (essential!).
This leads to realise that collaborations are effective if corporates and startups overcome their barriers to success. Most predominantly, a clash of culture (e.g. speed, processes, language, metrics, appetite for risks and experimentation). They need to work together to bridge the innovation and entrepreneurship gap which they all share – the future is unpredictable! Key message is, corporates really must respect the learning curve that startups face and allow the innovation journey to occur organically.
To customise their experiences, multinational corporations need to include all the various departments when engaging startups to ensure that all the bases of a partnership are covered. By nurturing a positive work relationship, the collaboration becomes a synergy, should disputes arise the strong foundation allows reasoning to take place without forsaking the collaboration.
Engage a Startup That Works for You
Lastly, what makes a good startup is one that understands the risks to innovation, prepares to fail and continuously innovates. The startup should have existing market validation, proof of concept, a driven founder (team) and an existing customer base at the point of partnership. It would be ideal if the team, or at least one member, also has past corporate experience so the startup can navigate its way around corporate practices and forms of communicating (presentation decks galore) too.
Innovation is translating an idea to the customer and requires speed and agility to be relevant in the market. This can happen if corporations and startups work together bearing in mind each other’s interests, casting aside egos and thinking about the big picture – soon the business model transforms producing a win-win collaboration that fosters economic growth and technological progress for both.
These are some thoughts and it’s really all a learning journey which can only prosper if we all work together to collaborate and share what works and what hasn’t. I’d love to hear from you!