Choosing the best startup to collaborate with is about more than just checking out the market. A corporation needs to be innovation-ready, attuned to the needs of prospective partners and able to keep the relationship going.
See the three keys to success:
1) Create the Environment
The first step in choosing the best innovation partner is an internal one – creating an innovative environment within the company. If the groundwork isn't in place to support innovation once the partner is on board, the relationship won't work. It's not enough for the CEO to simply proclaim that the firm is open to innovation.
McKinsey Global says in its “Eight Essentials of Innovation Performance" that any aspiration should answer a simple question: How much innovation is needed to meet our financial growth objectives? Once the company has answered that question, further steps like allocating resources and tracking progress become much easier.
This also means that a silo innovation team from the rest of the company isn't good enough. The entire organization needs to be open to innovation, able to bring new products to market and develop new business models based on input from partners and employees, according to KPMG.
While the company as a whole stays open to innovation, it's still important to have a team that's ready to work with startups. This team, or individual manager, needs to be able to deal with startup partners for set periods of time each week, connect the startup with the business through meet-and-greet events, and have a strong understanding of the challenges the organization is trying to overcome. Once the team is in place, they can start identifying potential targets for partnerships.
2) Tune-in to the Needs of Startups
Now that you're ready to partner up, you need to make sure that your M.O. aligns with the expectations of startups. KPMG recommends being clear and concise communication. Startups and large corporations tend to operate very differently. If a large company suggests starting a project with a small startup, chances are the three-man team will be chomping at the bit to begin the actual work. But corporations probably regard the offer as just a first step, to be followed by weeks of negotiations and hammering out details.
This kind of disparity can lead to misunderstandings and make a large organization feel difficult to work with. To combat the differences in how corporations and startups work, the company needs to be clear on what it expects from the partnership, the challenge it's seeking a solution for and the timeline for the project. Even things like the partnership documentation needs to be re-examined for startups.
Standard partnership paperwork for relationships with other large firms might have long payment terms and ponderous timetables, for example. But a nimble small team may deliver on a project much more quickly and not paying them within 30 days could leave that startup disastrously out of pocket.
3) Sustaining the Relationship
Once the partnership is signed and sealed, the actual collaboration begins and this stage is just as important as scouting for startups. To ensure both sides get meaningful, long-term benefits from the partnership takes effort, communication, and trust.
RocketSpace's Corporate Innovation Services suggests constant monitoring to measure the success — or failure — of a partnership. Periodic strategic reviews will help flag any problems that arise, such as a change in relationship manager or loss of interest in the partnership.
Some employee turnover is inevitable, but if your startup partner is to lose their point of contact in the business, the company needs to ensure that the handover is seamless. The new relationship manager should be as entrepreneurial and enthusiastic about startups as the previous one and stay engaged with the partner.
Many firms are reluctant to discuss how to end the partnership up front, fearing it gives a negative impression, but having a clear way out is good for both sides. Internal priorities and business strategies change for both corporations and startups, so if the partnership is no longer working, it's good to be able to end it easily.
An ongoing partnership needs to have milestones and periodic reviews to address these or any other problems and to assess the benefits of the collaboration for both parties.
How can your company setup a startup partnership for success? Learn more about our Startup Engagement Program and how we help corporations work with startups.
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