orking with startups is not a one way street for corporates: if you’re looking to work with exceptional startups, you must think not only about what’s in it for you, but also about what’s in it for them.
In the past, there were only few corporates that were open to collaborating with startups, and startups were chasing these few to try and impress them. Today, it is clear that corporate-startup partnerships are essential for most corporates as well, as they try to innovate and remain competitive.
This is why today, it is not only about the startups competing for attention, but a challenge for the corporates to locate relevant startups suitable for their needs and form successful partnerships with them. It is also clear that for these partnerships to be fruitful, they need to serve the needs of both sides.
Why should corporates partner with startups?
Before we get into how corporates can make startup partnerships a success, let’s discuss why it’s so important to invest in these relationships.
A study shows that 80% of corporates believe that collaborations with startups can have a positive impact on the organization’s innovation levels. Startups can elevate corporates’ industry status and, more importantly, offer new channels for revenue growth. It is no surprise that corporates are competing over promising startups, hoping to be the ones to form meaningful collaborations.
To win this competition, corporates must learn how to form strong relationships and offer clear value to the startups as well.
This, however, is not easy; according to a McKinsey study, less than 30% of startups that are collaborating with corporates are satisfied with the relationship. It is a challenge for corporates to solve, if they want to stay ahead of the competition.
3 Themes to help you take your startup partnerships to the next level
At Quantum Hub, as part of our Champions Program, we were fortunate enough to hear about the challenges of corporate-startup collaborations and how to overcome them from three innovation leaders; A panel hosted by yours truly included Shai Albaranes, VP Innovation and Ventures at Orbia; Hadar Pode, Director of Porsche Digital in Tel Aviv; and Ofir Bar Levav, the Chief Business Officer of Indoor Robotics and former GM Open Innovation at Johnson Controls. The panel discussed how corporates should best approach open innovation and form strong collaborations with emerging tech companies.
In the panel, three main themes repeatedly came up - the importance of setting the right goals, collaborating with the right people within and outside the organization, and providing real partnership value.
Theme #1: Set clear and aligned goals - along with realistic expectations
For a corporate-startup collaboration to work, both parties need to be transparent about their definition of success.
In the process of defining the goals, you might discover that your partner has very different ideas regarding what success looks like. Here is where communication is critical - you must get on the same page to prevent misunderstandings and frustration later down the road.
Corporates should be clear about what they hope to gain from this collaboration, where they see this technology implemented, and how. Startups should not shy away from communicating their own goals and hopes - this can save a lot of frustration as the collaboration takes form.
Corporates can, and should, help the startups think this through, as it might not always be clear to an early-stage company. Shai Albaranes explained that “We ask startups where they see the company in five years and what we can do to help them get there. Some startups struggle to answer these questions, which is another thing we’re able to assist them with.“
In parallel, corporates must also maintain transparency and describe their organizational culture to set the right expectations around pace and procedures. For corporates, this is usually a marathon, not a sprint, and both parties should be aware of that.
Setting very specific KPIs, based on business and commercial use cases, helps get everyone working toward a common goal. It helps the startup understand what’s important for the corporate and what’s the corporate’s aspiration; It also aligns everyone on a common timeframe and commits the corporate for action. Our panelists shared a few key points to take into account when thinking about KPIs:
- Embrace a mindset focused on the practical and scalable implementation of the startup’s solution; Draw the KPIs from this aspired state - the KPIs should help you get there.
- Decide how the KPIs will be measured and using which tools.
- Combine quick wins with long-term goals and consider seemingly peripheral objectives such as actionable insights regarding your company that the startup may provide based on the data you provide them with.
- Treat innovation as a portfolio of activities rather than a single project and set its overarching KPIs accordingly.
Theme #2: Empower people to act
One of the main challenges in collaborating with startups is preventing the infamous corporate culture from killing innovation and bringing the entire process to a standstill before it even started.
You’ll need ‘innovation champions’ across the organization to remove some of the obstacles you’re bound to meet. Innovation champions are individuals that accept the challenge of promoting innovation throughout their business unit - on top of their existing responsibilities.
Innovation champions should include not only the CEO and top management representatives but also mid-management and employees who will end up doing the hands-on work. Hadar Pode described it accurately by saying that “You can’t innovate without the support of those who will eventually incorporate innovation into their daily work.”
The immediate “go-to” people when it comes to innovation are usually the tech people in the company. But they are not always the best fit for this sensitive task. Instead, you should strive to have a cross-functional approach with people from all parts of the organization. Start by mapping out and identifying the right ambassadors across the organization and match them with the startups and technologies you want to introduce. Understand the mindset of different organization members when embarking on this matchmaking journey.
Last but far from least, be sure to give your innovation champions credit and always consider it a team effort.
Theme #3: Be a true partner
Corporates have a lot to offer startups. They should provide real value in promoting the startups’ business in order to keep the relationship mutually beneficial. There are several ways you can do so:
Start by introducing the startups you work with to relevant departments across the organization. This may seem like a given, but it takes time to patiently map out various collaboration areas, discuss potential mutual projects with managers, and build a detailed plan.
Another great way to offer value is by introducing startups directly to customers. You can offer them a spot at your event booth, invite a representative to join you on roadshows, or other opportunities to give them the floor. This will open doors to the startup and simultaneously position the corporate as innovative and build an excellent reputation with clients and business partners. Ofir Bar Levav mentioned that Johnson Controls allocates a hefty budget for business integration. He stated that the corporate “offers startups a direct channel to business partners and clients as well as the opportunity to implement their solutions within company products. This creates real opportunities for both parties.”
By acting as a true partner, you’ll be able to help startups overcome critical obstacles. Ofir mentioned a less-successful drone demo that seemed unsalvageable and explained how Johnson Controls helped the startup continue the conversation with the prospective partner and turn things around. By committing to the startup’s success, even with the risk of failure in front of a client, the corporate was able to both help the startup, help the customer, create a true long-term partnership with the startup and develop its reputation in the startup ecosystem.
Innovation leaders specialize in closing the gap between corporates and startups. They do so by setting the right goals, collaborating with the right people, and building strong relationships with business partners. Here at Quantum Hub, we consider this to be a key ingredient in our mission statement. On this two-way street where both corporates and startups are trying to find their way, we want to offer support, guidance, and opportunities.