We live in a VUCA World (volatility, uncertainty, complexity, ambiguity) - Unknown Unknowns characterize our current regulatory and economic environment. Especially when you are NOT a big corporate with thousands of engineers, software developers and UX experts collaborating with start-ups helps you to address some of these unknowns.
It does not only help you as to finding and scaling product and process innovations, it helps you to transform your company and adapting your teams to these strategic uncertainties: while I was heading the Corporate Strategy Department at Webasto, I was also responsible for our start-up collaborations, mainly pursued via StartupAutobahn by PlugandPlay. We have successfully initiated also a mindset change at our teams – product and process teams get inspired by the start-ups and start thinking more out of the box. Webasto is successful in turning collaboration with start-ups into valid process and product innovation with a high success rate from pilots into implemented process and product changes.
So how do you shape such successful collaboration as a corporate?
I believe there are 4 key elements:
1. Start with the WHY: Which goals do you want to achieve – e.g. new product ideas or process digitization? Mindset Change or venture capital investments?
2. Find the right HOW based on your goals: Use accelerated, less complex purchasing, IT and legal processes in the beginning in order to get the pilots done. Also think about decentral vs. central approaches when it comes to orchestrating your collaboration efforts. Do not provide a central budget but let the teams that want to pursue a project finance it. That really helps to focus on ideas with a higher success probability.
3. Empower your teams and celebrate success: Like with any agile way of working also cooperating with start-ups critically depends on leaving many decisions to the teams who will finally implement and work with the introduced solutions. Use the power of enthusiastic innovation scouts rather than providing a start-up roadmap from the top management.
4. Channel the forces: When your collaboration efforts have gained momentum, i.e. more and more pilots are getting implemented, more people want to start projects, you need to step back and re-evaluate your efforts to ensure that resources are spent wisely. Make sure that your collaboration is not just a one time effort but closely interlinked with your innovation processes.
Start with the Why
As always, be sure WHY you want to do it: Which goals do you want to achieve when collaborating with start-ups as a corporate? Do you want to act as a venture capitalist and search for investment opportunities? Do you seek to gain exclusive access to innovations at an early stage? Do you want to benefit from already tested technologies that just need an industry partner for scaling? Which kind of problems do you want to solve by collaborating with start-ups – specific products or process digitization? Are you looking for changing the mindset within your company towards a start-up mentality? For successfully collaborating with start-ups, you should answer these questions and define for yourself what you do NOT strive to achieve. Resources as well as attention spans are rare. Therefore, define and set the focus early on.
Find the right HOW
Depending on your goals, you can choose among different approaches on HOW to successfully cooperate with start-ups as a corporate. For example, if you want to position your company as a industrialization partner with experience and sufficient scale to really test a new product / process idea, then ensure that your internal process support this approach and that the start-ups are also clear about your goals (e.g. that you are not planning to inves into the start-up, at least in the beginning). If you strive for a mindset change within your company, you need to ensure that different teams are involved and that it is easy to join the collaboration initiatives for interested employees.
Keeping this in mind, you should mainly look for start-ups which are already sufficiently funded, have already tested their technology and now stand at the threshold of scaling. As to the mindset change, involve people from different levels, business units, functions, and locations to interact with start-ups. This differs much from a centric-specialist focused approach, where a group of central tech managers mainly interacts with the start-ups.
Besides the start-up enthusiasts you also need support by other functions such as Purchasing, IT and the Legal department. Many times, start-up collaboration with corporates fail due to long, standard procurement, legal or IT implementation processes. When start-ups are confronted with the standard procurement terms and conditions many will shy away, simply because they do not have the resources and the focus to comply to all these standard. Yet working with start-ups means by definition that you are taking some risk – it is not your well-developed, long year partner, but a company sometimes only consisting of 10-15 employees. Consequently, you will need to create some accelerated, short-cut processes for the pilot project phase, e.g. for purchasing. Don’t worry you will not switch-off the standard processes for good. When you approach the industrialization of the pilot projects it is still sufficient time to return to these standard processes. An easy way is to use your processes that you interact with prototyping or advanced engineering suppliers / cooperation partners.
If you really want to successfully cooperate with start-ups, you need to empower your colleagues: Make them accountable for successfully accomplishing pilots with start-ups. Create networks within your company of enthusiastic start up collaborators. Use internal meet-ups, innovation fairs, pilot reviews, chats and so on to create a community across functions and business units. This community will identify technology needs, scout start-ups, create and conduct pilot projects and drive industrialization. If you successfully establish such a community, your central team can be rather lean and focus on promoting activities and scouting start-ups.
Thus, you do not need heavy investments in special teams to set up successful start up collaboration. Trust me, the outlook of getting into touch with new innovative ideas, being able to try out new technologies and creating sound competition will motivate your teams to collaborate with selected start-ups. Celebrate successful pilots and show your appreciation. Encourage them by continuous top management attention, e.g. internal awards, regular project reviews.
Channel the forces
After having successfully created a mindset of experimentation and piloting new ideas, there will come a time, when you need to further channel these “forces”. Now begins the tricky part, you do not want to kill the collaboration. Yet you will need to steer the funnel more actively the more projects are started. Go back to your WHY when you want to re-fine your focus. Which technologies or processes do you prioritize? Which regions, functions, business units should be more involved?
At this part the top management or the innovation / strategy team may start being more stringent as to payback time or as to other financial decision criteria. Think about how to align your collaboration processes with the “normal” advanced engineering and innovation process. Include start-ups as another channel and try to avoid the “not-invented-here” trap in the engineers’ mindset. This last step of channeling the forces is crucial to ensure that your start-up collaboration is not only a one-trick pony.
Hence, if you are looking for successful start-up collaboration, start with identifying your goals of doing so and build up your efforts accordingly.
What is your experience when collaborating with start-ups? What went well, what did go wrong? Why are you collaborating with start-ups?
Looking for your comments.