Collaboration as the key to survival in the auto industry
On both sides, you need open lines of communication for expectation management and alignment. It’s easy to forget that B2B is still a people’s business.
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What I learned following the Autotech theme at 4YFN (Part IV)
Just 10 years ago, the idea of two direct competitors combining their efforts in a joint venture would’ve been unimaginable. Today, we have BMW & Daimler’s €1bn Jurbey.
We’re witnessing the transformation of an individualized industry to a collaborative ecosystem.
Dr. Nicolai Schättgen, Founder & CEO of Match-Maker Ventures, outlined five different formats of how startup/corporate collaboration can take shape:
- New business units
- M&A
- Joint venture or strategic partnerships
- New company setup
- Startup collaboration
While this topic has been examined in depth and ad nauseam, it’s extremely rare to find an example of successful startup/corporate partnerships scaling past the pilot project. On the surface, putting innovator + market leader seems like an easy win/win for everyone involved, the reality is quite complicated.
You can’t just say the magic word, throw together a dedicated team, and hope for the best. There’s a lot of work and a lot of research corporates need to do before even engaging a startup. First, you need to define a clear need and evaluate what type of cooperation works best for your organization. According to Luis Fonseca of Match-Maker Ventures, a startup/corporate partnership can take three forms: Buyer-Supplier relationship, Co-branding, Joint Product Development.
A partnership between a startup and a corporation is like an iceberg. 90% of the work has to be done internally on the corporate side beforehand. The cooperation itself is just the tip.
You have to set specific KPIs, technological framework, and value-adding outcomes for every startup collaboration or innovation project. These have to be agreed upon and signed off by every stakeholder, including the Board, IT Security, Procurement, Finance, etc. — basically anyone who can later oppose the project because it becomes too much of a hassle (which it will). This requires top management buy-in and a dedicated internal champion who is senior enough to convince stakeholders to be flexible with processes.
Then, you need to clearly define the project requirements and staff it with the right people. In order for the pilot project to scale beyond just that, you have to make sure to involve people from the mothership that will be inspired to bring some of the key learnings back into the organization. At Siemens Mobility, their focus is on having an ongoing cultural exchange, according to Karolina Korth.
“We integrate people from the core business into startup projects so there’s cross-pollination of the entrepreneurial mindset.”
For corporates who are just getting started with startup projects, it’s vital to lay out the selection criteria for a potential collaborator. Schättgen advised that corporates should only consider working with startups when they’re past Series A or B. Before then, they don’t have the time or manpower to dedicate to such a time-consuming endeavor. “They should already have paying customers and a yearly revenue of at least €1m.”
You’ll need flexibility in processes, and you’re guaranteed to get a lot of resistance from the CFO, CTO, Compliance, IT Security, etc. Their advice? The best way to get this wiggle room (and circumvent the naysayers) is to only go for projects that don’t affect the core infrastructure of the organization.
On the startup side, be sure to do a lot of research on the corporate. Ask around for feedback from people that have worked with them in the past. Consider every angle and ask every question:
Have they worked with startups before?
What’s become of those projects and where are those startups now?
Have they invested in companies before?
Would you have an internal champion with enough leverage to be your cheerleader?
Have they made the necessary process exceptions for your project to get any and all necessary approvals quickly?
What are the legal ramifications of the contracts?
Do they have a technological framework or criteria for the outcome?
Build rapport with multiple stakeholders in the organization and remember that you’re a speedboat sailing along with a cruise ship.
On both sides, you need open lines of communication for expectation management and alignment. It’s easy to forget that B2B is still a people’s business.
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This post is the fourth in a series on the collaborative future of mobility. If you haven’t yet, you should also read Part I (link), Part II (link), and Part III (link).
