This is Why Open Innovation Teams Exist
Thoughts on corporate-startup collaboration
Back in 2016 I contacted for the first time with the startup world and had no idea it would define my future. A couple of friends and I decided to embrace the challenge of one of those entrepreneurship classes that make you write a business plan for the next 5 years of an idea yet to be thought.
The team was young and naïve, but we kept motivated and the idea evolved to a concept we really wanted to build.
After months of research and trial & error, we managed to put up a prototype with the help of our professors and using resources from the university, and we were happy. Although at the time, we knew nothing about MVPs and other jargon, we had a fully functioning prototype proving the core feature of the product. This core feature would enhance an existing product that was being mass-produced and we just didn’t know how to merge them. We felt we’re getting somewhere but we needed an educated opinion to guide us through the next development phase.
We were a bunch of kids messing with the e-mail and agenda of big suited guys — it felt wrong and intrusive.
One medical device company had a strong relationship with the university, and we thought they would be the best people to give us feedback. We were thrilled with the opportunity to showcase and eventually co-develop something with an established and well-known company.
We found the best humans! Open-minded people, eager to know everything about the project, and always helpful. They invited us to their offices, showed us the production line, prepared cookies and croissants — we were in heaven!
Our interlocutors were primarily the Marketing Director and the CEO of the subsidiary and later a business developer for the area that our product would fit in. We started to feel right away that behind the interest and curiosity was some reluctance while interacting with such a rough and ugly prototype with little resemblance with the vision we were “selling”.
Weeks were elapsing between meetings and we felt bad every time we needed to follow-up with the company. We were a bunch of kids messing with the e-mail and agenda of big-suited guys — it felt wrong and intrusive. But when e-mails arrived back they‘d say the project was being discussed internally, that they were presenting it to other stakeholders and waiting for feedback from the headquarters.
Those endless weeks were difficult to deal with, and the discomfort was palpable. The process of improving the prototype was constantly put on hold because we needed validation. Some of us were starting to plan our soon-to-come working life after and the dream was losing strength every day.
Eventually, the final word had come. They wished us the best of luck and declined to pursue the opportunity. Those were the words we needed to hear to end it. Our weak beliefs fell, and a more stable life was ahead of us.
Mind the gap
In retrospect, we were at a fairly early-stage and it would be very difficult for the company to commit their time and resources to join the journey. And as a team, we just didn’t have the capabilities nor the drive to continue.
Now that I’m on the corporate side I come back to this story a lot. We felt we were in different time zones, it was difficult to communicate a vision that was so clear to us and it was hard to wait so many weeks for feedback. So, I feel empathy for the Startups that knock on our door.
Everyday, I try to convince a giant and heavy organization to test new solutions coming from startups — I know, it’s the best job in the world! — and it’s a part of our broader Open Innovation strategy. Sitting in the interface of these two radically different worlds allows me to see and feel the goods and bads of both sides.
What is an open innovation team, you ask?
I think we’re someone with a brain of a corporate employee and a heart of an entrepreneur. Our job is to help a giant cargo ship that is moving slowly but relentlessly in an agitated ocean with Nazaré-like waves, to be faster, more aerodynamic without losing its containers in open waters.
In our case, the ship has nearly 35.000 people making sure it arrives safely at the port where 4 million families are waiting to get their goods.
The conflicting worlds mentioned above pretend to set a generic profile of both corporates and startups’ way of working and developing themselves. The aspects in it are not zeros and ones or black and white, they’re a continuum and context-dependent.
An established organization, like the ship, has a very well-defined route and many people working to build a secure and reliable journey. In business, this is not easy to achieve. Success is the compounding result of years of incremental changes happening slowly but steadily in search ofquality delivery and sustained growth.
In a ship, people have different roles in different parts of the vessel and are not able to communicate with all the other crew members due to the distance — some work below deck to keep the machines running, others in the bridge looking to the charts and setting the path to the next port.
Sometimes in the corporate environment, people are also distant, teams have few interactions and communication can have obstacles along the way. Processes become slow and bureaucratic to make sure the decisions taken are well thought and go through various gates before implementation. The goal is to effectively gain market space, dominate an industry and consolidate the business with the minimal setbacks possible. Only after securing that the core business is running smoothly and the variables are all under control, the corporate seeks new products, new markets, new challenges.
Or so it was…
In contrast, the startup life is both exhilarating and frightening. Entrepreneurs are motivated and resilient people that would do anything (in most cases) to ensure the success of their endeavor. Even pivoting from the original concept.
This shows exactly the way of thinking inside these smaller organizations. The way to deal with the high risk of failing is to never stop chasing their ideal product, market, business model, whatever it takes. And for that, they need a support network and to fully embrace openness to partners, suppliers, clients, mentors, investors. The information flow is quick and the decision chain is flat. Agility is the rule of thumb.
That way of working is a great contrast to the generic corporate environment and culture. In which change is seen cautiously and not always well accepted. But audacious and forward-looking organizations know that this fear of the unknown is not good for long-term success. Science and technology are moving faster than internal technical teams can learn and markets are changing in ways that management can’t predict.
The solution is to build permeable boundaries and start collaborating with excellent sources of knowledge, technology, ambition, and fearlessness — Startups.
For a successful collaboration, corporates must mind the gap. The gap between them, their culture, their working process, and those of the startups. Timings are different, needs are different and so are expectations.
There’s where we come in!
The goal is to Learn
Don’t get me wrong. Ultimately, corporates want to find a competitive edge to fight for consolidation and Startups want to sell to survive and grow. But down the road, this is a learning journey for both parts.
While working for a retailer, we don’t know what to expect in 2, 5, or 10 years, right? Demographics change, technology evolves, a pandemic may appear *cofcof*… And that radically impacts how people need, choose and buy products. Our only chance is to follow the shifts and to quickly learn and understand them. That will allow us to be ready to act upon an unexpected market change or accelerate a new strategic bet of the organization.
Technologies like Blockchain, AR/VR, and the endless possibilities of AI, are and will have a great impact on our business and in retail in general. In some cases, we can already see patterns and more obvious use cases but others are harder to figure despite the potential. Nevertheless, many are the entrepreneurs willing to dedicate their skills and time to advance those technologies and build businesses around them.
Corporates can and do develop their own solutions, of course, but it comes with a high cost and commitment — which we can discuss another day. So it is more obvious and even easier to open doors to Startups and be willing to complement the technology with market and industry knowledge, provide testing conditions, and truly commit to this relationship.
That sets the ground for Startups to develop their products and services in a more sustained way backed by validated knowledge. Not only the solution will be more robust, but the relationship will also be the selling platform they need once the corporate partner is able to understand the product, contribute and gain confidence. Openness builds trust.
Back in 2016 when we were developing our medical device it was obvious for us that we wanted to learn, and we were willing to dedicate ourselves to the project. But on the other side, despite the high interest, there wasn’t much willingness to do the same journey. I’m not sure why, a thousand reasons could back that decision, but it is clear to me now that established companies that have the vision and structure to build these bridges will eventually be more successful in the long run by facilitating this cross-pollination.
Interesting reads on this subject:
After the Honeymoon Ends: Making Corporate-Startup Relationships Work
Each side also lists several reasons for failure that the other does not. While startups cite corporates' inability to…