Given the rise in new technologies disrupting industries such as insurance and financial services, corporations are eager to work with startups and test their ideas and solutions on a larger scale. However, these partnerships are complicated due to the potential for these startups to drastically disrupt companies.
In order to address and correct the problems identified in these relationships, we have conducted a Best Practices project with our startups. Over the course of numerous interviews, we have devised a set of guidelines that should be followed when our corporations and startups partner with each other.
1. Establish a Clear Problem Statement
Corporations can have a more productive experience by establishing a clear problem statement and informing startups about their goals and motivations. Even if a corporation is unsure of its specific goals, giving startups a statement such as “We would like to learn about your product” can facilitate a more effective meeting: startups can make their pitch more informative and tailored to the corporation’s goals.
Conversely, if a corporation has a specific need, startups can be more targeted in explaining how their products or solutions will address that problem. This will allow both sides to get into detailed discussions over whether the startup truly fits the corporation’s needs. Moreover, this gives the startup helpful feedback on the benefits and drawbacks of their solution.
2. Ensure Startup Fit
Companies need to determine if a startup will be a good fit within the organization before they agree to a partnership. They need feedback and input from relevant business units and decision makers before agreeing to a POC or pilot. If a corporate innovation team wants to work with a startup but does not have consensus from the business unit who will be responsible for implementing the idea, neither party should collaborate.
Startups need strong buy-in within the organization if they are to run an effective pilot that is productive for both parties. Ensuring that the startup fits the corporate culture will result in a productive partnership.
3. Provide Startups with the Right Connections for Success
Innovation is difficult to foster in any company; navigating hierarchies and bureaucracies take time. However, corporations must help startups in this process by providing them with the right connections.
Innovation team members, who are often the main point of contact with Plug and Play, must provide startups with the requisite connections to advance their ideas through the company. They must be able to put the startup in front of a decision maker who has the power to help the startup advance or make a decision regarding their implementation and partnership.
4. Establish a Clear Post-Pilot Framework
The corporation and the startup need to establish a clear post-pilot framework so they are aware of the next steps following the pilot. First, both need to clearly establish the KPIs and the metrics that indicate if the pilot was a success or not. In order to avoid being stuck after the conclusion of a successful pilot, key elements such as the commercial budget and timeline of implementation must be determined.
The corporation must decide how they will proceed with the startup’s solution so that they don’t leave the startup in limbo in regards to their future within the organization. While it may be difficult to follow a detailed plan for post-pilot implementation, laying out a basic framework for how to proceed after the pilot will generate a smoother innovation process for the startup and corporation.
5. Establish Strong Communication Channels
Plug and Play’s most successful partners have a strong culture of innovation built on communication and empowerment. Innovation teams are connected with various business units throughout the company and obtain strong buy-ins from relevant teams before agreeing to a partnership with a startup. This allows them to provide value to the different teams within the company and creates a solid foundation for change .
In addition to communicating effectively within the company, our most effective partners also communicate well with startups. They are able to make decisions quickly about whether or not they will work with various startups, streamlining the innovation process. This encourages startups to work with corporations and helps move them through the collaboration process quickly by not leading them on about the organization’s intentions.
6. Shorten Procurement Processes
Corporations should streamline the legal and security processes that startups must go through before agreeing to a POC. Instead of giving startups lengthy security documents consisting of hundreds of questions, corporations should provide startups with a specialized questionnaire that is unique to the startup.
Redundant questions should be eliminated so that startups are able to review documents quickly. Moreover, if the startup’s solution is relevant to different departments, both parties should establish a standard document that applies to all sectors within the company so the startup does not have to go through the procurement process with different branches in the company.
7. Provide Startups with Testing Data
Many startups need corporate data in order to gain insights about customers and how the corporation can more effectively conduct its operations. Given the need for data and the lengthy security protocols that startups must go through in order to acquire it, partnership processes would be streamlined if corporations created a model data set that potential startup partners could use to test their solutions. This would shorten the security protocols that corporations use and save both parties time and resources necessary in working with corporate data.