I have a thing for corporate innovation because I believe there are benefits fast growing tech businesses could bring to corporates that traditional business solutions giants cannot.
In the last 2 years of my career, I had the pleasure of meeting many start-ups in Europe and Asia, I also spoke to corporates about innovating and worked on a corporate innovation project which brought start-up solutions to the core of a business’ service offerings.
Through the first hand experience I had, there are a few learnings I would like to share from both the corporate and start-up point of view:
- Corporate needs to get real stakeholders’ buy-in
This is the most important but also the hardest thing to achieve. By getting stakeholders’ buy-in, it is by no means just a ‘yes’ or a ‘sign-off’ of budget to go and work on a project. It means getting the right stakeholders from the business units to drive things forward and make things happen. It means getting stakeholders who are senior enough to make decisions and at the same time know the day-to-day processes enough to give input to the start-ups. It means time commitment on top of the day-to-day job. Working with start-ups can require a lot of handholding, even for the ones who are established enough. Therefore, it is difficult to just pick a start-up and expect them to operate on auto-pilot and get things done. The benefit of working with them is that their solutions for you can be highly bespoke and they can produce something very quickly, but in order to do that, a lot of time commitment will be needed from the corporate. Apart from telling the start-ups what you need, it is also crucial for corporates to take the time to explain to the them why you need it.
2. Corporates need to plan their timeline and commitment
Continuing from the last point on commitment, corporates need to plan it too. Is it a good time to start an innovation project now? How will it affect the BAUs? And are there interdependencies with any other projects in the pipeline of the day-to-day business? When can the corporates realistically start implementing the start-up solutions? These are important questions to answer before engaging with start-up companies. It is an exercise between the in-house innovation teams and the business units: innovation teams need to facilitate this planning process to ensure business units understand the risks of the start-up projects and what can realistically done, and business units should consider their own time commitment and their preferred way to work with the tech companies.
3. Thinking about sustainability
It is by no surprise that corporates think about ROI when engaging with start-ups, therefore, sustainability of the partnership with the them will subsequently come into the same picture. Corporates need to think about a model where the start-ups could thrive and grow whilst working with them, so that the tech solutions implemented will not be a short-lived one in case the start-ups go bust. The initial costs of investment to get the pilot prototype going will be the first step in most cases, however, enough due diligence should have been done beforehand to ensure the pilot will lead to enterprise-wide implementation going forward. A constant feedback mechanism should be in place between the start-ups and the corporates so that the prototype could form into what the corporates really need during the pilot phase. Once the pilot phase is over, the long term sustainability of the project should be taken into account: the commercials, the resource needed on both corporates and start-ups side, exclusivity etc. And beyond that, investment commitments from the corporates, and perhaps M&A decisions might be made in order to guarantee the technology solutions implemented will continue to improve and will run smoothly.
5. Start-ups need to be realistic about their commitment
Moving on to the start-up point of view. Before engaging with corporates, the start-ups need to understand their own timeline. How much time will be anticipated to work on the solutions for a particular tech solutions? Is there enough resource in the team to deal with that whilst the rest of the team is working on something else equally important? The start-ups need to map out their own timeline first before agreeing or sometimes before proposing a working agreement with a corporate. This will allow better expectations setting, hence a smoother working relationship. Weighing up between press exposure, client portfolio and the business’ readiness is an important lesson to learn for many start-up businesses when working with big corporates.
6. Start-ups need to know their commercials
Last but not least, start-ups should not be scared of negotiating viable commercial terms with a corporate. It might seem obvious, but this should absolutely be clearly defined and agreed before a working relationship with the corporate begins. Critical items such as costs for development and implementation, ongoing costs after implementation, payment terms, exclusivity should all be well thought through. Know your secret sauce and do not give it away to one corporate you work with just because they were the first company who would like to use your solution.
With all being said above, I didn’t mean that corporates/start-ups I worked with did a bad job at all. It’s an evolving learning process and it is a journey to embrace rather than to scare away anyone from innovating. It is amazing to see more and more companies trying to engage with start-up businesses, and I am writing this in the hope that I will have even more learnings to share with you in the future.
I have also written a blogpost for Insurance Times a while back on corporate innovation, click here to read it.