‘Giant’ American companies are obviously a far cry from New Zealand corporates, but a session I recently attended at SXSW about how to work with giant-sized companies had some great advice both for people like me who work in a corporate, and for start-ups that want to do business with corporates.
For the corporate giant, their challenge is how they can tap into the groundswell of start-up digital innovation that is happening, and overcome their innate risk aversion and bureaucracy to ensure they keep evolving. How can they cut through the noise to find the startups which have real solutions to their problems?
Speakers from Walmart, the US Department of Defence (DoD) and an executive from Daimler gave us some great ideas for both the procurer and the startup.
Here are some takeouts:
Advice for corporates:
- Walmart (2.2 million staff) have found that partnerships don’t typically work as there needs to be more of a formalised relationship to ensure aligned objectives. They prefer to acquire. They get deep subject matter experts, or even a safe, clean environment to build something that means that can deliver far more quickly.
- When dealing with a startup, you need to be clear about what you’re going to pay them and what you’re going to receive.
- As a big company, process, regulation and compliance can get in the way of you working with other companies.
- Sometimes you have to take a leap of faith but it’s important not to put all your eggs in one basket and to spread your bets. This increases the chance of commercial success and mitigates the risk of you losing internal confidence in the innovation function and desire to try new things.
- Working with startups brings a fresh perspective into the room – chances are everybody else around the table would have been approaching the business issue from similar perspectives, talking in the same corporate language. Engaging with people out of your corporate environment gives you a different take on these issues, gets you out of your comfort zone and brings a diversity of experience.
- Prioritise where you will focus this kind of activity, not just on where you’ll get maximum impact, but also maximum stakeholder buy-in.
Advice for startups:
- Big companies sometimes fear introducing outside experts because they are wary and lack trust regarding motives and commitment to the organisation. Most startups don’t have a history of delivery to give certainty about whether you can deliver. Be mindful of this and demonstrate persistence and committed relationships when you can.
- Speed matters – big organisations aren’t good at speed so they rely on you to turn things around quickly.
- Many big US organisations, including government ones (e.g. Department of Homeland Security, Department of Defence) have innovation units – precisely so they can properly evaluate and deal with startup businesses.
- You need to find a champion within the target organisation to ensure your startup can be moved through the procurement process. There are lots of obstacles.
- Be conscious that some big organisations will judge a service on whether it is (or should be) a core competency, and this may lead them to do it in-house, regardless of how good your proposition is. Don’t give away your IP.
- Big companies can surprise you – they’re not all boring. I even learned that the DoD sponsor hackathons to expose them to new technologies.
- Ben Rose is general manager of direct and partnerships at NIB, New Zealand’s second-largest health insurer.