Corporates are collaborating with startups more and more to avoid disruption but in order to create a successful partnership, you need to do your homework and have the right processes and people in place before you begin.
Startup innovation: it’s a two way street
Last week I was interviewed live on Sky Business News about corporate and startup collaboration in Australia. Increased awareness about the impact of disruption is driving corporates to widen their innovation efforts both internally and externally. Corporates are turning to startups in an effort to collaborate. That’s where Fusion Labs comes in; connecting the two to help foster innovation.
The idea of ‘disrupt or be disrupted’ shouldn’t be ignored. In fact, it should be deeply rooted into a corporations culture and environment. Avoid being disrupted; avoid being left behind. Collaborate with the ‘little guys’.
The startup ecosystem has been growing rapidly and there is much more awareness about their potential. As the saying goes, it’s not the strongest that survive, it’s the most adaptable.
Recent research by the Boston startup accelerator MassChallenge found that 82% of polled corporations believe interactions with startups are important. Of those surveyed, 23% stated that the interactions are ‘mission critical’.
Startups are attractive to corporates because they’re more agile, resourceful with their time and money, and are often at the forefront of new technologies. This gives corporates invaluable knowledge that they wouldn’t otherwise be exposed to. Working with a startup has also shown to validate a corporate’s business model and increase exposure.
And it’s not just corporates that can benefit from this partnership. While startups tend to produce innovative and often successful ideas, corporations have resources, generally a large client base and experts on tap that startups can leverage off.
In fact, some of the best innovation actually comes from initiatives combining the best of both worlds – corporate research and resources, and startup. Think of it as a hybrid model.
Don’t ignore the challenges
However, as with all things in life, we know that with these opportunities comes challenges. The main reason issues may arise is purely because a startup and a corporate are vastly different to one another. For corporates, there are also risks involved; while the outcome can be highly positive, there’s also the risk that the investment in the startup may not be recovered. If you’re a corporate or a startup reading this, what’s our advice to improve the chances of success? I’ve listed a few ideas to get you going:
- Understand each other: the key to success is remembering that a startup and a corporate work very differently. Not only are their ideals different, but the practices are as well. Ignoring this will put you on struggle street at the very least; and worst case scenario, will mean failure. So corporates, remember that startups are passionate, innovative, there’s no legacy they need to be loyal to. At the same time, they’re small and have very few resources.
- For corporates, make sure there are startup friendly processes in place: If you’re a corporate, having process and governance in place to work with a startup is really important. Being able to get to a go/no go decision quickly is crucial, as is ensuring you have a clear mandate for what you’re after. This will save time and lead to more mutually beneficial outcomes.
- Obtain senior management buy-in: You might think startups offer a great way to improve your innovation efforts but if senior management don’t agree, the project will be hard to advance, and you’re going to struggle from the get-go. Having senior management buy-in and an internal sponsor to drive momentum is imperative for success.
- For startups, do your homework: Actually, this one goes both ways. But if you’re a startup, find out what your target corporate is interested in. By understanding and speaking to their focus area and broader vision, you have a much better chance of getting yourself in the door. And for the corporates out there, do your due diligence about what exactly the startup does and how they’re making it work.
- Communicate regularly: For both parties, be transparent about your intentions and requirements of the partnership right from the beginning. Being up front from the get go can really pay off down the track. But if you’re not clear with your objectives, processes and available resources, there’s potential for confusion as you move down the working track.
When it comes to new technologies, collaboration can only be a good thing. And when it comes to corporates and startups, the relationship can be one of the most rewarding things that can happen to your business; both organisations have complementing knowledge and skill sets. When both organisations bring their best to the partnership, there is a much better chance of success.
To learn more as well as good examples of startup and corporate innovation, watch my 12-minute interview on Sky Business.
We hope some of this resonated with you. What do you think works/doesn’t work when setting product teams up for success? Keep the discussion going on Twitter @FusionLabsAU and linkedin.com/in/annabelmurphy