1. Give the startup a single point of contact
Appoint someone on your team who serves as a conduit and minimizes distractions for the startup. Remember that startups don't have account management or partnership teams like large corporates. The more of your organization that a startup has to coordinate with, the less work they can do on their product.
2. Allocate a small budget for product enhancements
When conducting a pilot with early stage companies, small product changes are often necessary for successful pilots with corporates.
3. Know the basics of agile software development
You don’t need to be experts, but you should educate the members of your team that work with startups on the basic principles of agile software development. Startups almost always use agile practices (daily standups, weekly builds, etc.). The more your team can align with the startup on these practices, the more efficient both parties will be. It will also help build your credibility.
4. Minimize documentation requirements
Don't expect, or ask for, a lot of documentation. Early stage companies only spend effort on tasks directly related to growing the business and earning revenue. Documentation will often take a back seat to progress.
5. Readiness
To the extent possible, engage with the startup only when you are ready to move forward. Projects that involve stops and starts are difficult for startups to execute on as they will be working with multiple customers.
6. Simplify agreements where possible
Early stage companies don't typically have legal support, and if they do, it is expensive. You want the startup to invest in product work, not legal fees.
7. Pay the startup
Often times corporates will want to avoid paying startups because the technology is not proven. However, paying the startup will allow them to improve its product, which ultimately helps the corporate. This also gives them a chance to refine and perfect their business model, which is critical for its success.
8. Feedback
Always give the startups constructive criticism. Good founders are working with you because they want to improve themselves, their product, and their business model. Healthy dialogue about improvements will create a long-lasting relationship.
9. Get comfortable with your competition
Expect startups to work with other companies in your industry, even your competitors. Cross-industry exposure results in better products for everyone.
10. Get your APIs ready
The best way to prepare for engaging the startup ecosystem in your innovation program is to have well-established, open APIs. One of our favorite stories is the Phillips Hue bulb and IFTTT.
11. Don’t jump into the deep end
Plan for a progressive introduction of the startup technology. Work with the startup on an approach to gradually introduce their technology to your customers — a “big bang” implementation is risky with early stage technology.
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