Rom Coms Explain Why Deeptech Startups & Consulting Firms are Perfect Together
We’ve made it our mission to help them find their [startup/corporate] soulmates and realize they’re meant to be [strategic partners] — (PART II)
We see it all the time. As the startup engagement unit of MHP, a Porsche-owned consultancy that brings digitalization, IT innovation, and process optimization to over 300 corporate clients in mobility & manufacturing, the dynamics team acts as the bridge that connects the worlds of startup and corporate. Engaging with these two polar opposite groups every day gives us unique insights into what makes these specific innovators — deeptech startups — such a great fit as strategic partners for companies like MHP.
If deeptech startups and IT consultants are the leads in a romcom, we’re the sassy BFF who’s always there to give great advice and wants nothing more than to see them happy & successful.
To help them (and you, dear reader) see why we stan & share our vision, we’ve compiled a list of reasons in support of this match through the lens of typical romantic tropes:
#1 They’re misunderstood but lovable nerds
As is often the case with deeptech, the more ‘frontier’ the technology, the harder it is to explain its innovation potential in layman’s terms. The more complicated the technology is, the more creative you have to be in finding the right use cases to illustrate the benefits to potential customers. For deeptech companies, this means doing a lot of consulting work for free before getting a client to buy your product, which is not the core business and not the most productive use of their time. Simply put, not everyone will get it.
At the same time, it takes an expert to properly appreciate the value of a ‘deep’ technology. This sort of expertise is hard to find, but if you’re a consulting company whose day to day business is advising clients on any and all matters of digital transformation, you need not look further than the vast portfolio of specialists in your talent pool. They get it.
Deeptech companies are what happens when academics want to make a profitable venture out of their contributions to the advancement of human knowledge. The founders are typically brainy Ravenclaws with a passionate, in-depth understanding of their specific niche in frontier technologies. But what they bring in technical expertise, they sometimes* lack on the business front.
*For those ready to rage on Twitter, do not accuse me of generalizing all Ravenclaws as bad businesspeople, just saying that being a great scientist doesn’t always go hand in hand with business savvy.
It’s often the case that researchers are so laser-focused on scientific discovery that they neglect its functionality in the real world. Inventing a sound-morphing device that makes users perceive a regular speaking voice like the screech of a thousand banshees is arguably pretty cool technologically, but nobody really needs it, and nobody asked for it.
If you don’t understand the market and the needs of your customer, your contribution to society will, at best, be recognized in the form of a scholarly article on the third page of Google Search results. Outside of the deeptech context, unnecessary inventions provide bountiful fodder for internet mockery, gracing the click-baiting titles of countless listicles and even becoming the subject of its own eponymous Instagram page, which I admittedly spend way too much time on.
#2: Opposites attract — and sometimes they need a little nudge to see it
Snark aside, understanding the challenges of your customer is key. And educating the customer on your product and why it’s the best solution to their specific needs turns the lock that gets you in the door.
This is, fundamentally, the core business of consulting. Firms maintain years-long relationships with their clients built on a foundation of in-depth understanding of the organization, its assets, its strategic goals, its pain points, and its inefficiencies. Like an impressionist painting, consultants discern the bigger picture from the individual brush strokes. They use these outsider-insights to advise their client on the changes they need to make within their business in order to solve a problem or reach a specific goal — and put their recommendations into terms the client will understand.
Many corporations are still struggling with the hurdles of becoming digital enterprises. Digitalization is fertile ground for IT consultancies specifically because there’s so many tools and processes in need of a serious makeover. Clients want and actively request new solutions to be implemented by companies like MHP, but they’re not always aware of the potential of what’s outside of their existing toolbox.
While deeptech startups focus on their unique technology and solutions, consulting firms help to identify the use cases and potential customers. Each focusing on their strength, they can bring the best-suited solution to the client.
They just need to find each other.
#3: You have to kiss a lot of frogs before you find ‘the one’
Sometimes it’s the opposite. Companies flirting with corporate innovation will hear others in their sector buzzing with the latest #hype and want it too. Take blockchain for example*. Two or three years ago, everyone was shelling out €€€ trying to crypto-fy everything without giving much consideration to their use case; if blockchain was indeed the most appropriate technology for their application. Now its hype cycle plateaued and many of these vanity projects have been abandoned.
*I’m not denying the merits of distributed ledger technology, and I do strongly believe in the potential it has in increasing trust, transparency, and traceability across many industries. I’m just saying my aunt always buys herself the latest iPhone with all the upgrades available and still signs her name at the end of every text.
It takes someone with a lot of patience and a firmer grasp of the technology to show my aunt (and many corporate clients like her) how to work with the latest tech.
When it comes to corporates wanting to innovate, it’s often the case that they first discover a new technology they want to pilot, and then find a potential use case where to apply it. In our experience, you’ll have to test several applications before you find the right use case to successfully scale the solution. Identifying multiple use cases takes a lot of creativity, and you’ll spend a lot of time getting the buy-in from every stakeholder involved.
This is even more so applicable to deeptech startups. Educating the customer and preparing them to integrate a new technology is not repeatable or scalable business. It eats up a big chunk of resources, which by definition, startups have limited amounts of and constantly have to evaluate how to allocate them most efficiently. In the case of corporate clients, it can take years to get everyone on board, target use cases approved, the contracts signed, and a supplier number allocated. It’s a huge amount of work which you typically don’t get paid for (unless you’re a consultant) and have to start from scratch with every new customer. For some young tech companies, it’s not worth the hassle. For others, it can be the kiss of death.
#4: Find someone who loves the real you, flaws and all
We won’t name names, but here’s an example: we once met with a startup that developed a really cool B2B SaaS product with tons of industry applications that can save their customers a huge percentage of their recurring operation costs. They got a ton of funding and became a media darling because of the enormous potential of their solution. But instead of allocating their resources toward securing more funding & optimizing their product with all of the claims they made on their investor deck, they focused on consulting their customers on digital transformation. They even spent over a year building a hardware prototype to show their solution in action. They spread themselves too thin and tried to do everything on their own, which meant they didn’t prioritize building their core product highly enough to differentiate their USP in the market. Long story short, this left them vulnerable to the competition.
In the end, if this startup doesn’t achieve the results it set out to, their clients won’t really care. For them, the real impact was in the optics. Being ‘seen’ with the ‘It girl’ of the startup ecosystem makes them cool by association. In committing to low-risk, low-cost pilot projects, they hitched their innovation wagon to the PR juggernaut of the startup, making the rounds through all the key media outlets.
It doesn’t matter if the startup can’t fulfil their promises and ultimately folds, their clients got what they wanted. The free digitalization consulting was the icing on the cake.
For young companies looking to work with large organizations — and vice-versa — all that glitters ain’t gold.
#5: Know your strengths and dive in head-first
By trying to do everything, this promising young startup achieved nothing (or very little). Integrating a very technical product in a very non-technical enterprise is a huge time sink, and if you’re not billing those hours, it’s probably not the best use of your time. But the same is true on the flipside.
Like many of my colleagues, consultants involved in big digital transformation projects will often be tasked with developing new solutions for their clients from scratch. Each software tool needed is often part of a much larger organizational overhaul but building an entire software product from zero takes a lot of time and energy, and doing it well even more so. Nevertheless, what the client wants, the client gets. However long it takes, those hours are billed, and in turn the client receives the tools they needed and get to keep the underlying IP to boot. But a lot of the time, these individual components already exist in the market. You don’t actually need to reinvent the wheel if what you need is a new car.
Teamwork makes the dream work. In the B2B context, like in the dating scene, letting yourself be vulnerable is hard. But showing your weaknesses and asking for help often gets rewarded with honesty and openness on the other side, making collaboration transparent and efficient.
Sometimes you must sacrifice your short-term comfort to achieve your long-term goals.
#6: There’s someone out there for everyone
If you just take the time to look, you can find an ideal solution perfectly tailored to almost any need. When you zoom out into the broader enterprise software sector, you’ll find there are dozens of companies offering really specific tools for really specific applications. It gets even better: because it’s their core business, their products are optimized continuously, and their USP has been proven in the market. Regardless of how good a team of consultants is in product management, software development, and UX/UI design, the end result will never be as good as that of a company whose sole mission is to create the best possible version of this product.
Integrating an existing solution from an external provider into a bigger project framework could enable consultants to deliver better results and implement them more quickly for their clients. Successfully completing more consulting projects leads to happy customers and frees up resources to continually generate more business. Plus, your clients are more likely to come to you for more projects in the future.
#7: Timing is everything
At dynamics, we high key stan strategic partnerships between deeptech scaleups + IT consulting firms like our parent company MHP. Like an overly enthusiastic secondary character in a will-they-or-won’t-they romantic drama, we’ve made it our mission to help them find each other and realize they are meant to be.
For consultancies like MHP, collaborating with carefully selected & vetted external suppliers has enormous potential to be a win/win/win. But of course, the timing has to be right.
In fact, the raison d’être of our small dynamics team is to keep on the lookout and maintain an overview of very specific B2B software solutions in the startup ecosystem that could be a good fit in our client projects — whenever and wherever they may arise.
We’re always looking for that sweet spot, the a-ha moment where a client’s need can be solved by integrating a deeptech startup’s technology as a core component in a bigger end-to-end transformation project. That’s why we build and grow relationships with excellent companies, and maintain a collaboration portfolio of extensively vetted, highly innovative scaleups that can help us deliver better solutions for our clients and strategically extend MHP’s service portfolio.
We can never know when that moment will come, but at least we can be ready for it.
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This is Part II of our series on deeptech startups. If you haven’t read Part I, read it here.