Tuesday, 22 August 2017

Innovation blog: Work with start-ups, not against them

Kathy Yu of KPMG’s high growth technology group argues corporates need to follow in Google’s footsteps and embrace the ’soul, passion and speed’ of start-ups

According to GVC Analytics[1], more than 1,000 corporates in the world are working with start-ups at one level or another; this is an 80% increase since 2011. What is driving this?

To keep up with the pace of innovation nowadays, corporates will have to attract new talent and ideas externally.

A keynote speech at the recent start-up conference and convention 4YFN at Mobile World Congress in Barcelona emphasised that most of the innovation affecting businesses nowadays comes from start-ups, which is why corporates choose to work closely with early stage businesses.

Benefits

There are many benefits from start-ups and corporates collaborating. For the start-ups, working with a larger partner can help them reach a wider audience, using the large company’s network, credibility and (financial and human) resources to grow. For the corporates, working with start-ups is appealing because they are typically more agile and can often offer fresh ideas and innovative products that internal teams struggle to come up with.

The real question, however, is how does it actually work? Unfortunately there does not seem to be a fixed formula for bringing innovation into corporates. What we often hear when talking to corporates is that it is crucial for them to stress the importance of start-up collaboration and to encourage their employees to support and work with start-ups as part of their career growth, rather than doing it as a favour for the small companies.

Based on our own experience working with start-ups, it is also important for the corporate to constantly deliver feedback to the start-up on what they want, and help the start-up shape the product together from the earlier stages of co-operation.

Thinking like a start-up

Google co-founder Larry Page, when taking over as chief executive from Eric Schmidt, said that one of his primary goals was “to get Google to be a big company that has the nimbleness and soul and passion and speed of a start-up”. That is what most corporates nowadays should do – think like a start-up. To encourage innovation and the start-up mentality, corporates could consider:

  • 1) Investing, for example Shell Technology Ventures and Telefonica’s Wayra
  • 2) Setting up a separate division, for example Walmart Labs
  • 3) Working with the ecosystem, for example KPMG’s High Growth Technology Group
  • 4) Taking staff out of their comfort zone, for example encouraging secondments outside of the corporate

It is inevitable that most corporates have complex bureaucracy, established processes and do not make decisions quickly. It is therefore important for start-ups to understand that there are processes in place for decision making, and they need to understand how to get the deals done.

The best advice for them is to network as much as they can and know who is the most relevant person they should talk to in a big corporate. Many start-ups find themselves disappointed after months of encouraging conversations with someone in a corporate only to find out afterwards that person has no decision-making power. 

Setting the pace

Lastly, managing expectations will be as important for start-ups as it is for the corporates. On one hand, it is crucial for start-ups to set the pace to make sure that they do not get trapped and slowed down in the ‘corporate machine’. For example, set milestones for both parties over certain timelines, and be open and honest so that a good relationship will be harnessed over time. On the other hand, corporates must be open about what they can offer and not over-promise.

As stated before, there is no fixed formula for bringing innovation into corporates, however, the collaboration culture is definitely rising. Let’s hope that it will be ‘David and Goliath’ rather than ‘David versus Goliath’ soon.

[1] Corporates Looking To Start-Ups For Help- February 2016, http://www.informilo.com/2016/02/4211/

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