What exactly does it take for a startup/corporate partnership to be successful? In our recent blog series, Dating Advice for Startups and Corporates, RocketSpace's SVP and GM of Corporate Innovation Services Michele McConomy explains a four-step framework that guides execution.
But a "getting things done" mentality will not be enough to make your corporate innovation program successful. Just like with entrepreneurship, the ability to be mission-driven and to enjoy the journey are important, too.
Here are three dimensions of success to keep corporates and startups aligned for the long haul.
1. A Mission Mindset for Alignment Around Common Goals
A successful corporate/startup collaboration must be mission-oriented. In other words, it should be focused on something greater than financial success. Let's take a look at an example:
This August, Walmart agreed to acquire Jet.com, one of the fastest growing ecommerce startups in the United States. The price tag? $3 billion — in cash.
In Walmart's eyes, the purchase is worth every penny: Jet is a money-making machine — the startup reached $1 billion in run-rate Gross Merchandise Value (GMV) in its first year! In addition, Jet offers innovative technology that reduces supply-chain and logistics costs, and brings in 400,000 new shoppers every month. However, when it came time to decide whether or not to acquire Jet, executives at Walmart had more than profits on their minds.
That's because Doug McMillon, President and CEO of Walmart, was focused on fulfilling Walmart's customer-centric mission: Saving people money so they can live better.
“We're looking for ways to lower prices, broaden our assortment and offer the simplest, easiest shopping experience because that's what our customers want," explains McMillon. “We believe the acquisition of Jet accelerates our progress across these priorities. Walmart.com will grow faster, the seamless shopping experience we're pursuing will happen quicker, and we'll enable the Jet brand to be even more successful in a shorter period of time. Our customers will win. It's another jolt of entrepreneurial spirit being injected into Walmart."
A fundamental reason why the partnership works is because Jet shares Walmart's insistence on putting customers first.
“We started Jet with the vision of creating a new shopping experience," says Jet co-founder and CEO Marc Lore. "The combination of Walmart's retail expertise, purchasing scale, sourcing capabilities, distribution footprint and digital assets — together with the team, technology and business we have built here at Jet — will allow us to deliver more value to customers."
In short, when both parties (corporation and startup) have a clear mission, it makes it easier for each side to understand the other's goals. It also mitigates any uncertainty, fear and doubt surrounding taking the leap together.
2. Trust Across Multiple Dimensions for Mutual Understanding and Shared Support
Trust is absolutely critical to the success of any relationship, especially a corporate/startup one. Here's one successful corporate/startup partnership that demonstrates capability, contractual, and communication trust:
In December 2015, Google announced Launchpad Accelerator, its new accelerator for mobile startups. As part of the program, startups get “equity-free support, 2 weeks of all-expense-paid training at Google Headquarters in the heart of Silicon Valley, access to Google engineers, resources and mentors, to work closely with Google for 6 months, credits for Google products, and PR training and global media opportunities." In exchange, Google gets its finger on the pulse of Brazilian, Indian, Indonesian, and Mexican markets that are bursting with mobile users. Trust was a key pillar for free flowing communication. Rather than creating a wall between IP and trade secrets, Google found ways to have transparent and open dialogue with partner companies.
3. Long-Term Commitment to Reach Future Goals
A corporate/startup relationship will have a better chance of thriving if there's a long-term commitment. When GM, one of the world's largest car manufacturers, invested $500 million in Lyft, one of the world's biggest ride-hailing technology companies, the announcement made serious waves from Detroit to Silicon Valley. With aims at developing self-driving cars, GM President Dan Ammann insists the investment means General Motors and Lyft are officially in it for the long haul.
For long-term relationships to work out, both partners need to share similar values. Lyft's commitment to diversity, for instance, is important to GM.
“They're focused on female employees, and that's something very similar between us. The reason I sit here as CEO today is because of actions taken [when I was working at GM] two decades ago, to give me feedback, to stretch me into new roles, and I'm incredibly grateful for that. With Lyft, I think there's a lot of similarities," says GM CEO Mary Barra, one of the roughly two dozen Fortune 500 female CEOs.
What are the pillars of alignment between your organization and your startup partners? The answer to this question may be more important to your long-term business outcomes than you originally thought. If you're struggling to answer this question, reach out to RocketSpace. We have helped more than 100 brands work with startups to achieve measurable outcomes.
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