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Tales of wildly productive partnerships between startups and Corporations are only a Google search away.
Success stories are well promoted, to the point it can feel that every other startup out there is effortlessly securing perfect relationships with multinational businesses, and going on to do pioneering work. The reality is rather different, of course.
Even the most innovation-savvy founders will put considerable effort into selecting a suitable Corporate partner, and building a relationship can be a very delicate and protracted process. There are, however, several relatively simple things you can do to better your chances of landing a partnership that matches your startup’s ambitions, needs and hopes.
Here we’ve rounded up some of the most important considerations as you begin the process of establishing an innovation-focused relationship with a Corporation and included links to resources that go into further detail.
Do the right research
It’s undoubtedly obvious that you should research any Corporation when there is an opening to partner with them. But what should you be thinking about when you do that research? The basic questions absolutely matter. You don’t just want to understand their profile, but also the profile of their customers or target demographics.
What motivates their innovation efforts? Be wary of ‘innovation theatre’, where innovation initiatives effectively serve as a marketing exercise. How is innovation integrated into the business’ goals and process? What have been the Corporation’s previous innovation partnerships, and how did they serve the corporation? And how have they handled failures?
Those are all essential questions, but there is more you should be thinking about in your research phase.
Liaise with the business department
The innovation team within a Corporation will be the most productive point of first contact. That team will also be where the relationship continues to be built. But it can be productive to find a foot in the door of other departments; particularly the business unit.
As pointed out in World Economic Forum’s whitepaper ‘Collaboration between Start-ups and Corporates: A Practical Guide for Mutual Understanding’ (PG11) “the innovation department is often willing to test new technologies but hardly ever signs deals lasting more than 3-12 months”.
Working with a business department in conjunction with an innovation team can help you align expectations and establish a workable time frame from a financial and commercial perspective.
Conflicts of timeframe
Related to the above point, the likes of two-year sales cycles can be common at Corporations. That can make your investors all the more vital to the longevity and growth of your business. The solution is as simple as open and realistic communication. Liaise with the corporates over their sales cycles, and be frank about the time frame constraints around which you operate as early as possible. As noted by the aforementioned World Economic Forum report, it is equally important to align those expectations with your investors.
Consider a pilot
The relationship between startups and Corporates certainly isn’t symmetrical. Corporates bring the resource, network and clout. But it’s worth remembering your own value. If startups had nothing to bring to the table, Corporates wouldn’t be interested in partnerships. Founder’s bring new ideas, expertise and agility. But how do you find out if the asymmetry of contribution is balanced enough to be worth signing on the line?
A pilot project with a Corporate can provide a valuable way to test the working relationship, compatibility and process. And Corporates are open-minded to pilots for the same reasons. Of course, a pilot will consume your own time, energy and resources. That, however, may be a cost worth stomaching; either to find out a partnership is highly valuable, or may simply be unsuitable for your needs.
Consider cohorts and funnels
Pilots aren’t the only means to test a partnership while addressing the relative asymmetry that makes coupling the mechanisms of Corporate and startup businesses challenging. As noted by the Harvard Business Review, Corporates that endeavour to work with founders should provide interfaces that meaningfully connect the two.
The most common interfaces are cohorts and funnels. Cohorts typically see Corporates partner with a number of startups simultaneously, and for a set time. The approach provides resources, mentoring and networking building to founders while encouraging peer-to-peer engagement between startups. Collectively the startups are better suited to match the scale of a Corporation, while the framing provides an interface, and the short time-frames a chance to ‘pilot’ a partnership. The majority of startups stay within the process throughout.
Funnels, meanwhile, offer a more competitive format that sees only a few startups complete the process. Startups are screen out throughout the process. A funnel may not guarantee completion, but founders will only have to commit as long as the partnership is valuable to all concerned.
Recognising cultural compatibility’s importance
Corporate and startup culture are famously distinct, and bringing contrasting business cultures together can be understood as being fundamental to what Corporate innovation is. However, just as every startup carries its own culture, so does every Corporation.
As such, it is worth considering how you frame and manage your own company culture, and how distinct a potential Corporate partner’s culture is. Cultural compatibility – and cultural contrasts – are easy to dismiss as ‘soft’ factors when considering a partnership. They are, however, extremely important, and to dismiss them as an important factor is unwise. That you bring different thought processes, ideas and outlooks to the table will be important to a Corporation. But personal compatibility, shared philosophies and aligned priorities may define a project’s success. A Corporate innovation partnership, after all, can be a lasting, intense and close relationship, where the ability to be honest and explore conflicting ideas amicably is key.