Corporations and disrupting tech companies: Combining the best of both worlds
We got the inspiration for this topic at this year’s SCV Summit, the annual event for South Central Ventures, where all portfolio members, investors and SCV team meet once a year and discuss important trends and topics and how it can benefit their businesses.
The main theme of the Summit was cooperation between companies that make innovative tech solutions and industry giants. For this purpose, we had an insightful talk among Simon Franko, Managing Director of BASF Adria, Miroslav Dimitrov, Program Manager of SAP.iO Foundry Berlin, Aleksandar Bijelic, Chief Digital Officer at MK Group and our portfolio companies. Since interest in this field was extensive, we’ve decided to post some highlights from the expert discussion.
Why it matters?
Big corporations are always trying to avoid their Kodak moment. For all of you that may not know, Kodak was the biggest camera and film seller in the past. They were also the first to develop digital camera — but at that point decided not to go forward with the production, since they made most of their revenue from selling film for analogue cameras and did not see the opportunity of this invention making it into the market. Once digital cameras made it on the market by their competitors, analogue film slowly became a thing of the past leading to the downfall of Kodak as market leader in the film and camera industry.
So how do corporations deal with avoiding falling behind the innovation?
The reasons why corporations can be slower with innovation can lie in multilevel decision and budgeting processes that tend to be slow. Sometimes it can also be a connection between the empowerment of technical personnel and the knowledge of management about the technology field. To manage keeping the innovation mindset flow in their businesses, some companies organise internal hackathons and incubators or internal VC funds to help catalyse new solutions with the existing product schemes. As Simon Franko from BASF put it:
“Digitalisation is not an option, it’s a must!”
Tips & Tricks for companies developing innovative technology that want to cooperate with big corporations
1. Pitching tech vs. pitching the solution
When the opportunity to pitch arises, there is often a question whether to present the inner workings of the technology and how it works better than other technologies on the market or to present how it solves a specific pain point. Our experts say it depends on the time you have with the person pitching the idea to. If you have only a minute, present the solution and if interested the tech talk will follow. If you have an hour or more, you have to able to answer both questions. If the company person you are pitching to doesn’t have the in-depth technical knowledge needed to understand your technology, be sure he will find a person in the company that does.
2. Building vs. buying
For corporations, the decision whether or not to build their own solution in-house with their R&D department comes down to cost of production versus buying existing technology from another source. In this respect, startup technology has to be better than the existing one. If they are on the same level, the internal solution simply makes more sense. On the other hand, when buying the solution from the company that constantly innovates you also buy the knowledge and experience of the team, that is always ready to not only the product. One of the most important things to emphasize is the question of compliance and safety. For corporations there is no compromise regarding this two fields, so you have to make sure you have those bases covered.
3. Are budgeting processes killing startups that sell to enterprises?
Knowing when the corporation budgeting period is, can be a huge advantage when approaching a corporation. Nevertheless, it can depend on how big of a problem your solution is solving. If it’s solving a big problem that needs a solution ASAP, the budgeting can be rearranged. If not, the decision is moved to the budgeting period.
4. It can happen that the corporation’s salespeople are not pushing the solution forward. How to convince the sales team to go for your product?
Pushing the solution and forcing the salespeople doesn’t help. The important thing to realise when you are an innovation-driven company that is in league with corporation, the goal is not to be put on the pricelist, the goal is that you can be the hero of the story. It’s crucial to quantify the value that this brings to the corporation’s top and bottom lines. If it happens that you have to present your solution tomorrow to corporation’s customer, you must be able to close the deal. If not, you don’t help the company and, in the end, neither yourself. So, think of the all the ways you can help corporate customers and when you get the chance — be the hero!
5. How to approach a corporation with proposition of cooperation?
You have to be prepared. If you took only 10 minutes applying, why should the corporate spend 15 minutes reviewing and evaluating your business proposal. And, as it is popular to say in the Silicon Valley, you always have to have your elevator pitch ready. Having the upper tips in your mind when preparing to pitch to enterprises that could potentially buy your tech solution will also help.
What are your experiences with connecting with corporations? Let us know if you agree or have any additional insights to add.
We would like to thank to our guest for enlightening and open debate on the third SCV Summit. It was a special honour having you with us sharing expert knowledge with our portfolio members. One of South Central Ventures core values is sharing key learnings throughout the portfolio community making the learning curve smaller and road to success easier for each of our portfolio member.
About the speakers:
Simon Franko, Managing Director of BASF Adria
With 20+ years of experience working at the largest chemical producer in the world BASF, Simon has successfully managed three subsidiaries in the region and can share first-hand insight on how to run a successful business combining the knowledge of startups and a tech giant.
Miroslav Dimitrov, Program Manager at SAP.iO Foundry Berlin
Miroslav is helping startups inside and outside of SAP build products, find customers and change industries. Having worked in consulting and presales in the SAP ecosystem he is used to living on the intersection of sales, strategy and enterprise technologies.
Aleksandar Bijelic, Chief Digital Officer at MK Group
With 15+ years of experience in Organization Project Management, he has handled large scale projects with more than 100 participants from 13 different countries. In regard to the evermoving digital environment, Aleksandar believes digital transformation is evolution, not revolution.