Vol.2 — Best Practice for Corporations Partnering with Startups
Hi everyone! In my previous article, I shared the challenges between corporate partners and startups. Let’s find out the set of best practice. By adhering to these practices and incorporating them into future partnerships, both startups and corporate partners will have a more fruitful relationship.
1. Establish a Clear Problem Statement
Each of our corporate partners enters with its own set of challenges and problems as it seeks to innovate. However, corporate innovation goals are often unclear and vague. By establishing a clear problem statement and telling startups what specific innovations they are looking for, corporations can have a more productive experience.
Even if a corporation is unsure of its specific goals, giving startups a statement such as: “We would like to learn about your product” can facilitate a more effective meeting: startups can make their pitch more informative and tailored to the corporation’s goals. Conversely, if a corporation has a specific need, startups can be more targeted in pitching how their products or solutions will address that problem. This will allow both sides to get into detailed discussions over whether the startup truly fits the corporation’s needs. Moreover, this gives the startup helpful feedback on the drawbacks and benefits of their solution within the corporation and industry.
This practice will also eliminate innovation theater and provide value by establishing clear goals for the meeting. Furthermore, the problem statement will allow both parties to gain a clear sense of whether they are a match for each other. If the startup’s solution addresses the corporate’s problem statement, both can move forward with an understanding of what is to be discussed and can have a more fruitful conversation. A problem statement eliminates uncertainty about either side’s goals and allows the startup and corporation to have a more productive meeting.
2. Ensure Startup Fit
Corporations often engage in POCs and discussions with startups for the sake of innovating and boosting their PR. One startup mentioned a large corporation that ran a POC with them, only to decide not to move forward with a full commercial deal. The corporation was pressured by internal forces to not move forward with a solution that would make an existing division redundant. Consequently, the startup questioned why the corporation agreed to a pilot that they had no intention of fully implementing. While this was described as a valuable learning experience, this mishap cost the startup valuable time and resources that could have been better allocated.
Companies have to look at their culture and determine if a startup will be a good fit before they agree to a partnership. Companies need feedback and input from relevant business units and decision makers before agreeing to a POC. In the aforementioned example, if the corporation’s innovation team wants to work with a startup but does not have consensus from the business unit who will be implementing the idea, neither party should collaborate. Startups need strong buy-in within the organization if they are to run an effective pilot that is productive for both parties.
3. Provide Startups with the Right Connections for Success
Innovation is difficult to foster in any company; navigating hierarchies and bureaucracies take time. However, corporations must help startups in this process by providing them with the right connections. Innovation team members, who are often the main point of contact with Plug and Play, must provide startups with the requisite connections to advance their ideas through the company. They must be able to put the startup in front of a decision maker who has the power to make a decision regarding its implementation and partnership.
Having an empowered, strong champion is a crucial feature of any successful corporate-startup collaboration. While organizations are naturally resistant to change, having a stakeholder who is motivated to see the startup help the company is important for both sides to succeed. This will help the startup get in front of the right people within the organization and navigate the requisite company hierarchies to reach an agreement.
4. Establish a Clear Post-Pilot Framework
The corporation and the startup need to establish a clear post-pilot framework so both parties are aware of the next steps following the pilot. First both need to clearly establish the KPIs and metrics for a successful pilot. Both parties should then outline the steps for how to proceed after this stage is complete. In order to avoid being stuck after the conclusion of the pilot, key elements such as the commercial budget and timeline of implementation must be determined. The corporation must decide, in the event of a successful pilot, how they will proceed with the startup’s solution so they don’t leave the startup in limbo as pertains to future revenues and deals.
Another important part of this stage is establishing a timeline for the various steps throughout the partnership. From the procurement process to a possible commercial agreement, both sides should outline various timeframes for completion and execution. This gives both parties a guide that they can look back on when reviewing the partnership and determining the extent of its success. While it may be difficult to follow a detailed plan for post-pilot implementation, laying out a basic framework for how to proceed after the pilot will generate a smoother innovation process for the startup and corporation.
5. Establish Strong Communication Channels
Plug and Play’s most successful partners have a strong culture of innovation built on communication and empowerment. Innovation teams are connected with various business units throughout the company and have strong buy-ins from the involved teams before agreeing to a partnership. This is achieved through strong communication within the company. Effective innovation teams are aware of the needs of various business units and know whether a specific startup can address these needs. This allows them to provide value to the different teams within the company and creates a solid foundation for change.
In addition to communicating effectively within the company, our most effective partners also communicate well with startups. They are able to make decisions quickly about whether or not they will work with various startups, streamlining the innovation process. This encourages startups to work with corporations and doesn’t mislead startups about the organization’s intentions.
Startups don’t have the requisite resources to spend time pursuing false leads. After both parties meet initially, the startup will benefit greatly if the corporation expresses its interest or lack thereof immediately. This will prevent the startup from wasting manpower and time chasing the corporation and its decision-makers to get a concrete answer. From a corporate point of view, after a startup has taken valuable time and effort to pitch their ideas to them, it is important to tell them promptly whether or not their solution adds value to the company. Not leading startups is a key best practice and will allow the startup and corporation to only pursue collaborations that add value.
6. Shorten Procurement Processes
Corporations should streamline the legal and security processes that startups must go through before agreeing to a POC. Instead of giving startups lengthy security documents consisting of hundreds of questions, corporations should provide startups with a specialized questionnaire that is unique to the startup. Moreover, redundant questions should be eliminated so that startups are able to review documents quickly and make revisions if necessary.
If the startup’s solution is relevant to different departments, both parties should establish a standard template so the startup does not have to go through the procurement process with different teams in the company. This will allow the corporation to test multiple use cases as well as provide the startup with a platform to scale their solution across the larger organization.
Additionally, both sides need to have a strong understanding of the timeline and scope of the procurement process before embarking on a partnership. This will help avoid the legal hurdles that threaten partnerships before they have even begun. Streamlining the procurement process by lessening the legal and security burden on startups will allow corporations to move on to the POC quicker.
7. Provide Startups with Testing Data
Many startups need corporate data in order to gain insights about customers and how the corporation can more effectively conduct their operations. Given the need for data and the lengthy security protocols that startups must go through in order to acquire it, collaborations would be streamlined if corporations created a model data set that potential startup partners could use to test their solutions. This would shorten security protocols and save both parties time and resources necessary in getting corporate data.
Thank you for reading! I hope the article helps to make a practical move to your fresh start to spring.