5 Questions to Ask Your Organization Before Partnering with Startups

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The global business landscape is transforming at a speed of light. Why? - Rapid digitization. Not only did it boost the creation of many new products and services, but a new way of thinking. Big companies, aka corporates, are now stepping up and speeding up the game by finding external technologies and innovations rather than developing those in-house.

In fact, based on the results of a recent survey (study by the Unilever Foundation) of 204 corporate brand managers and 114 startups about how their companies planned to collaborate together: 80% of corporates believe that startups can have a positive impact on a large company’s approach to innovation; 89% of startups believe they’re able to deliver business solutions which can scale. Great numbers, right?

Before acting on them and starting collaboration with startups, let's review some crucial questions that each corporate and its CTO (or Head of Digital) has to answer. 


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What questions you should ask your organization and yourself before going to bed with startups?

 

Question #1: Do you know what you want to achieve?

Sounds basic and trivial? Maybe. But often companies embrace startup-corporate collaboration for the wrong reasons, that are not aligned with company’s short-term and long-term strategies, across departments or among corporate’s leaders. Understanding what is the main target and why to partner with startup is crucial. It is also about setting preliminary goals in accordance with available resources (budget, people, time, know-how etc.) within organization.


Question #2: Did you decide what type of collaboration is suitable for your organization?

There are many ways to build collaboration with startups. Are you seeking for new technologies, innovations and solution providers to collaborate with? Is your main goal to find an investable company? Are you serious about acquiring a promising startup? Or perhaps you are looking into establishing in-house acceleration program? Or it is just about becoming a client for an interesting startup company utilizing / redistributing their products and services? Could it be something entirely different? Drawing a clear path for partnership is not only one of the main criteria for startup scouting and validation, but a fundamental internal strategy to be agreed upon in advance with staff involved in venture collaboration.


Question #3: Do you have a dedicated person or a team for venture collaboration?

Undertaking a project like finding new technologies or building sustainable relationship with startup(s) is a herculean task, that is not to be tackled alone. It would mean recruiting/assigning a dedicated person, or a team, or even an entire department to oversee venture-collaboration activities. It is of the essence to ask: Can we validate ourselves which startups/technologies are the right ones, or we do recruit an external partner with in-depth knowledge about startup ecosystem? Are we going to scout relevant technologies through digital tools, consulting firms, events or elsewhere, and what human resource do we need in accordance to the chosen path? Assigning roles and responsibilities before diving into the world of startups and growth companies is one way to minimize risks and assure successful collaboration.


Question #4: How do you feel about the future of your industry, and your company’s place in it?

Take a look at your industry, its trends, its market leaders, its growth. Nowadays, timing is a pressing matter. With more Ubers and AirBnBs challenging big traditional players, corporate giants need to act fast to the changes in the industry, predict future trends and compete with new, more agile growth companies and technologies. Approach it as a standard interview question: “How do you see your organization in 5 years?!” And continuing: Will the industry still exist? Are you confident that your current direction will strengthen your position on the market in the near future? Are you fast enough to find promising technologies, growth companies and innovators? What are other corporates doing in this focus area and are they succeeding?“ Senior management needs to understand how new technologies may impact their business field in order to recognize and develop relevant solutions.


Question #5: Are you ready to adapt startup culture?

Good startups are like good programmers. You don't choose them, they choose you. Ask yourself: what can we offer to a startup? Are we sexy enough? Can we move along with the same speed? Here are just a few major differences and pitfalls in innovation and organizational structure that you might face: (1) Startups cannot be approached top-down way, but rather at eye level. (2) Failure is a natural milestone for a young company, wherein in many corporates even the slightest sign of failure has a heavy cost for those involved, hence are often avoided and not openly acknowledged. (3) Things move at a speed of light in a startup company - few months can mean growth or death valley, new corporate deals, radical pivoting etc., wherein corporates might take months just to make a decision on venture collaboration.

At the end of the day, it’s all about expectation management, ambition level, speed and adaptability. Senior management has to be ready to adapt, make fast decisions, and throw overboard conventional and tested ways of thinking, i.e. be curious and open-minded.


Let’s see whether you’re ready to collaborate with startups?

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How to drive customer based innovation as an entrepreneur?

The exciting reality of the digital age is that, every day, there are new technologies and new startups emerging with better business models and simpler products and services. These innovations are making our lives better, but how to keep up with it as an entrepreneur?

Investigate market viability via big data. You don’t need to have artificial intelligence or be a data scientist to test the markets or your idea, and ask big data questions. The simplest way to test your market viability is Google search – find demand by combining complaint words with the keywords of your search.

Another key thing is to focus on the customer. If you want to make a great product, listening to your customers; reading their complaints, issues and comments about your product, helps you understand and help your customers. Don't settle just for big data, get deep feedback. Find the customers who want what you’re selling or that are already using your product/service, and get their insights. Focus on the why they’re choosing you over your competition and why they’re having good or bad experiences. The problems they’re having can work as a push to innovate new and alternative ways of doing what you’re currently doing. It is essential to observe how your customers interact with your product - communicate and meet your customers!

After you’ve figured out what features you need by using big data and deeper feedback, you need to figure our how much it costs. When you know how much your costs are, you need to see about the market fit – how much profit will you have based on the market size? Having established the demand and how much people are willing to pay, it’s important to determine what the potential market is in actual dollars. When you know this you need to ask yourself how much of this existing market you can realistically capture and how you’re going to make it happen. Plan your scaling process. Building a product requires marketing and research. Get big data, customer feedback and analyze costs and markets for every feature of your product or service to determine what set of features gets the best traction and simulate launch.

Have your whole team participate in looking at any possible problems to find alternative ways of solving them. Innovation is a competition, not every ivy-league engineer wants to be an entrepreneur, so get the most innovative talent! Business leaders who surround themselves with people from different backgrounds, countries, genders, age groups and experiences, are some of the best innovators because they bring together a number of different perspectives and ideas. Having a diverse team helps you challenge your assumptions and expand your mind, it also exposes you to alternative ways to approach opportunities and obstacles. It is found that diverse companies out-innovate and out–perform their competition.

Being a pioneer often means sailing into uncharted waters and taking risks that others haven’t taken before. This is what makes people like Elon Musk some of the greatest disruptors of our time, he takes big risks that are calculated. Do your homework, study your data and markets, and balance your risks and opportunities – get comfortable with the unknown.

Another good thing about having a startup and trying to be innovative, is that when you have fewer resources, you're pushed to think differently about how you approach problems and get things done. Valuing ingenuity over investment is key. Strategic cases of restricted resources can lead to coming up with more innovative approaches in marketing and lead generation for example. This enables more experimentation and new effective approaches.