Why Corporates Should Work With Startups
Jun 19 , 2016 | By Omar Hassan
If your business isn’t tapping into the startup ecosystem yet, then you may be missing out.
Just a few years ago startups and corporates would have made uneasy bedfellows, with mutual mistrust and culture clash on-the-whole likely to prevent worthwhile benefit.
Increasingly though, both extremes of the enterprise spectrum have begun to discover that a more collaborative approach to proceedings can lead to some very valuable arrangements.
With the pace of technological change and the emergence of new business models driven by new technology the ability to work with startups is becoming increasingly important. Oftentimes what corporates lack, startups can bring in abundance, and vice versa. We highlight 5 reasons why your business will benefit from getting on board with an innovative and high-potential startup.
1. The Culture of Innovation
It’s simply a reality that the more established businesses become the more challenging the natural processes of creativity and innovation can be. In-house teams can adopt a cautious and protective stance, overly concerned with maintaining the status quo and too frightened to risk rocking the boat.
Startups have no choice but to innovate- it is the lifeblood of their business and a complete necessity if they are to survive from one week to the next. This creative pressure breeds a culture of innovation within the ranks of a startup. Motivated by potential rather than fear, startups are open to trying those ‘outside the box’ ideas which develop into high-impact innovations.
Startups are nimble, and their internal organisation simple enough to allow innovations to be pushed through quickly and efficiently. This stands in stark contrast to many established businesses, whose many layers of bureaucracy can chip away at innovative ideas until only a hollow and useless husk remains.
Having a startup as an innovation partner creates the opportunity to inject some new vitality into your business, to put innovation back at the forefront of your operations and deliver potentially valuable change.
2. Looking Outward, not Inward
Working with startups is a sure-fire way to present your business as an outward-looking, progressive organisation that is keen to keep innovation at the heart of what it does.
But this is about so much more than simply how your business is perceived by your competitors, your industry, and your customers, it’s about infusing your operations with that outward looking zeal that newcomers to the market have become so adept at. It’s why the term ‘ecosystem’ is so important to startups, they know the value of looking outward to those around them making connections and establishing partnerships / collaborations which can be mutually beneficial.
Just spend an evening trotting the startup circuit of any major city and you will see ‘big business’ names stamped all over events, meetups, and workshops. These corporates have realised the value of embedding themselves within innovation hubs, and that by reaching out the hand of support to startups they not only get the kudos of being ‘forward thinking’ but also access to the vast network of valuable connections these communities have created.
Establishing your business as a ‘player’ within a vibrant startup community can lead to all manner of opportunity your way, to say nothing of the cultural influence that such environments can have on your own day-to-day operations.
3. Nurture Industry Disrupting Innovation
Just because your business is not working with startups, doesn’t mean that your competitors aren’t, and what happens when they come across a team which is creating the next major impact innovation in your industry?
It is not at all a stretch of the imagination to suggest that this could be happening right now, all you need to do is look back at some startups from the last decade that have all but turned their marketplaces on their heads. Uber, airbnb, Dropbox, Plantir Technologies, Square, Netflix… the list goes on, but even on a smaller scale if there was a startup out there working on an innovation that could potentially give you a crucial edge over your competitors, wouldn’t you want a hand in nurturing that startup? Wouldn’t supporting such innovation be preferable to simply sitting back whilst they trail blaze through your marketplace, perhaps on the crest of one of your competitors?
Needless to say, becoming a stakeholder, nurturer, or early adopter of valuable innovation can leave you in an extremely enviable position. It’s the reason why so many corporates are running in-house innovation programmes / startup accelerators; they want to be on-board with startups doing exciting things at the earliest viable opportunity.
Of course it would be naive to assume that every startup you will work with will become enormously successful- some will fail spectacularly, some will achieve moderate success, and some might surpass all expectation. This is part and parcel of nurturing innovation, nothing is certain!
4. Efficiency and Problem Solving
Too often the complex structures of corporations stifle their ability to conceive and affect meaningful change- many issues and difficulties can result from this, especially when it comes to increasing efficiencies and solving chronic problems.
The issue is not that established businesses lack the desire for change, indeed on a micro scale you may see this desire manifested on a daily basis, but the rigidity of long embedded internal procedures make exacting the changes sought almost beyond the realm of possibility.
Creating a corporate environment where positive change can be more easily delivered is a matter of giving staff the tools necessary to develop a culture of creativity and entrepreneurship, where employee led innovation is encouraged as a vital part of the business’ ongoing success.
Working with startups in a way which exposes existing staff to their creative and innovative mindset is a promising place to begin this cultural shift. The infectious enthusiasm and passion that startups have become known for will inevitably give rise to a more entrepreneurial spirit within your own business- the kind of staff personal development which can have significant and long-lasting benefits for your business.
5. New Perspectives on Customer Relationships
One of the most striking ways that many corporates differ from their startup counterparts is in the approach they take to understanding their customers. Within big business this endeavour is almost always an intellectual exercise, with whole departments dedicated to meticulous data crunching, and endless reams of self-satisfying charts and graphs. This can make for a technically proficient, yet inherently shallow understanding of customers and often enables an arrogant ‘we know what our customers want’ attitude to develop.
Startups, on the other hand lack the resources or motivation to interpret their customers in such a singular manner- they are often the very customers they seek to engage, their innovations borne from frustrations with other business’ shortcomings. Because of this they are compelled to step outside of the office and actually engage with their customers to market themselves and get a first-hand, non-scientific understanding of the issues they face, and how their services can help alleviate the associated difficulties. They can empathise directly with their customers, and this gives them a substantial competitive advantage in some respects.
But, this is far from an ideal situation. There are not many startups that would argue in favour of a purely low-tech approach to business intelligence, and it is here that exchange between corporates and startups can deliver great benefits for both parties. By working with startups, corporates can reap the benefits of a more ‘ground-up’ approach to customer relationships, allowing staff to develop a more person-focused attitude that seeks to better understand the problems they seek to solve.
Above we have highlighted 5 standout reasons why corporates should be working with startups. In a world where technology and business models are rapidly changing, brands with the ability to work effectively with startups are much more likely to survive the disruption of their industry and sustain competitive advantage. Brands that choose to ignore startups and their culture of innovation risk being left behind.
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