June 24, 2019 12:16pm
Sneakers in the Boardroom: Corporate Innovation through Startup Engagement
At the recent Evening of Entrepreneurship, two keynote speakers with world class experience addressed how corporations and startups can best engage with each other. In the first of a two-part series, we explore the opinion of Pilot 44 founder Andrew Backs on the importance of a big corporation’s influence on a start-up.
A complex, but critical component of growing a thriving entrepreneurial ecosystem is the relationship between startups and corporations. “Working with startups is tapping into emerging technology to solve your biggest business challenges. It allows you to change your business dramatically by leveraging top talent in your own backyard.” On the other hand, Backs continued, “working like a startup is a big leap for corporates. They need to find a way to be more experimental, more iterative versus linear. The [research and development] process of the 1980s and 1990s of building the perfect product, spending multiple years in a lab, spending another year getting ready for a scaled launch, and then after that big scaled launch is when you determine if there’s product/market fit? Those days are over. You have to be going to market very, very quickly and determining if your product or solution is meeting the needs of the end user at the beginning.”
For startups, particularly those innovating in the technical space, a relationship with an existing company can mean the difference between life and death for the startup. For the existing company, a relationship with a startup can help the company address critical exposure points and help insure the competitive advantage and relevance of the company in the rapidly changing technology field and emerging verticals. While this symbiotic relationship presents unique challenges and is out of the comfort zone of both sides, when properly executed, it benefits the entire economic ecosystem.
Backs went on to outline critical components needed in a corporation’s approach to working with startups:
- Avoid “tech tourism.” Startups are fledgling businesses, not petting zoo animals. Corporations need to be committed and sincere in their intentions, and willing to put in the resources and effort to truly build a working relationship with the startup.
- Corporations need to understand the ideal stage of a startup with whom they engage. A startup is different from a vendor and is building processes and products as it develops. With the mutual goal of solving the corporation’s business challenge in mind, has the startup matured to the state of being able to run a pilot or fulfill an order, or is the startup in an earlier stage that will need to mature further before that kind of engagement with a corporation?
- Corporations must understand the startup’s perspective, and vice versa. Startups and corporations think, act, and are motivated very differently. As in any healthy relationship, each side must consider the other’s perspective and needs in order for both to thrive. For example, a “long maybe” can kill a startup, where a more immediate yes or no would allow the startup to move on or engage in a way that doesn’t fatally harm it.
- Pilot properly. A good pilot, or a small-scale campaign, should have clear goals, a timeline, tracked metrics, and transparency about what success looks like. Additionally, both the corporation and the startup should approve and be familiar with the agreed upon process. The process will require the parties to pilot, iterate, and pilot again continuously, striving for that right fit; a scalable solution isn’t found overnight.
- Finally, do no damage. It is okay to walk away from a relationship with both parties still respecting the other. Knowing when to do so is the crucial piece.
Interested in learning more about the Louisville startup community and how your company can engage with startups? Connect by emailing email@example.com.
–The Evening of Entrepreneurship was held on June 13 at Actors Theatre in Louisville. The event is led by EnterpriseCorp and Greater Louisville Inc.