She gives the example of the start-up Shyp, which offered pop-up free shipping in the stores of a major retailer during the last holiday season. The stores got to experience working with Shyp, while the start-up got visibility and the opportunity to meet many potential customers. “It’s try before you buy, have fun and keep the stakes low rather than spending months negotiating a deal,” says Sharkey.
Lessons learned by the little guys
Partnering takes focus, discipline and commitment from both sides to succeed. However, the asymmetry in the start-up/corporate relationship means that the start-up has more at risk, whether in time, focus or opportunity cost.
“As a little company, the partnership is one of the most important things you do and takes up a lot of your time. If it fails, you might have wasted months of time, but literally no one notices at the big company,” says Dachis.
“The wrong thing to do is to just litter your start-up with a lot of corporate logos and become distracted from execution. You’re looking for the corporate to accelerate execution, not decelerate it,” Sharkey observes.
Another common mistake that Sharkey sees is start-up founders trying to build a partnering relationship with the CEO of the corporate. Better to use the CEO as a channel to finding the right person in the organization and then cultivate that relationship closely, says Sharkey.
Ultimately, success depends on creating a win-win scenario with equal commitment on both sides. Too often big companies only “think win, not win-win,” cautions Dachis.
Banerjee recommends that start-ups keep a clear-eyed focus on measurable progress. “Don’t be too excited about the first meeting. This large company is potentially talking to a thousand start-ups. Make sure that after the meeting, the next steps, the actions, are very well defined. You need to say to the corporate, we expect these things to happen or we walk away.”
The executive sponsorship of the corporate business line that wants to work with the start-up is critical, notes Banerjee. “The first time the thing fails, you can’t say, ‘this isn’t a good idea, end the contract.’ That’s not how start-ups work. Start-ups work by persistence; this thing doesn’t work, no problem, we’ll fix it another way. You have to be willing to try agile and lighter ways of engaging with start-ups.”
What to consider in your partnering strategy
- Corporates are under pressure to generate their own disruption rather than be disrupted and offer access to a variety of resources that can accelerate a start-up’s business plan in return for an opportunity to tap into its agility and innovation.
- While the traditional partnering structures remain an essential part of the toolkit, there is growing emphasis on quicker relationships that don’t require months of negotiation.
- Partnering takes focus, discipline and commitment from both sides to succeed along with a clear win-win value proposition.
- To reduce the risk of distraction and lost time, start-ups should demand clear definitions of progress and next steps from corporate partners.
- With start-ups, corporates must deploy more agile, lighter forms of engagement that incorporate a tolerance of failure.
Generated by EYQ, an EY think tank that explores leading and emerging trends, focusing on “what’s after what’s next?”.