Why startups and corporates don’t always work so well together

I recently interviewed for a role where I would be helping startups and corporates in the #fintech and #insuretech space to engage and partner with each other. Whenever I look at a new opportunity I like to think about what it will take to really succeed in the role. I started thinking about the challenges startups and traditional corporations sometimes face when trying to work together and how to overcome them.

A day in the life of a startup working with a corporate
A day in the life of a startup working with a corporate

1. Failing to create a concrete delivery plan from the outset

Generally, there is a lot of excitement and goodwill when traditional organisations collaborate with a startup. Executives are happy to listen to the pitch and attend working sessions. It’s a breath of fresh air from the daily grind and often accompanied by a more relaxed atmosphere and fun approach. However, taking that initial enthusiasm and leveraging it to create a solid delivery plan is often missed at this point. Without a plan and commitment on the next steps, the engagement can lose momentum.

Startups must have a road-map for how they will deliver the ‘Minimum Valuable Product’. That’s not a typo. Unlike investors, corporate teams are not partnering with a startup to benefit from a lucrative exit — they are looking for ways to add value to their core business. Startups should focus on how to deliver this ‘Minimum Valuable Product’ early in the engagement and use the initial enthusiasm to kick start this plan. It’s always easier if the value can be measured in the P&L accounts but whats really important is to have quantifiable evidence that the partnership is adding value for the business.

Delivering a ‘Minimum Valuable Product’ ensures that startups can build the longer term support they need in terms of time, investment and business buy-in to deliver on their potential. It also allows the relationship to stand on its own merits in the event that a key sponsor leaves the corporate or there are budgetary constraints.


2. Underestimating the cost and effort of integration

Both corporate’s and startup’s often underestimate the effort and cost of integrating their product within the large corporate ecosystem. By integration; I mean both technical integration of data and systems and also integration with business processes. The latter often requires a people and change aspect to succeed. Integration is the single largest reason that large corporate’s struggle to modernise — I’m not even suggesting innovate, but just that first step of modernising their IT systems and business processes.

Corporates often take the view that this shiny new tech startup will overcome their legacy challenges with integration. Startups on the other hand trust that the corporate’s with their large IT teams and budgets will handle the integration with their stack. In order for a start-up and a corporate to succeed together, there needs to be an acknowledgement of integration challenges, a plan in place for how the integration can happen and clear ownership for each area or responsibility.


3. Not embracing a true partnership model

A lot of corporate’s look at start-ups and think what solution do they have and how can we apply it to some of the business problems we are facing. That’s not a real partnership. It actually reflects a more traditional vendor selection approach that corporates have traditionally followed.

Corporate’s know what their business problems are and they have people who understand them — startups rarely have that same level of insight when building their offering and certainly not the specific challenges each organisation faces. An expectation that a start-up can create a perfect solution to a problem they don’t know about is like playing the lotto.

Corporate’s need to look at startups more holistically. They need to understand their teams and technology. Then they can really partner with them to understand how this capability can be honed to meet their business needs and help the startup to shape their product.

There are great benefits for both sides when startups and corporates collaborate together. Consider these points to increase the chance of a long-term partnership that delivers value for both sides.

  1. Use initial enthusiasm to plan the delivery of a Minimum Valuable Product.
  2. Plan system and process integration — don’t underestimate the challenge.
  3. Embrace a true partnership model.

I haven’t heard back from my interview yet. If I get the role then I’ll add it to my LinkedIn profile. If not then, of course, I’ll never mention it again! If you are interested in this topic then reach out to me on linkedin or any of the social contacts on my about page.

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