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How to partner with startups to drive value from emerging technologies

  • Posted on February 9, 2022

To renew and grow through continual change, organizations must get creative to relentlessly exceed the expectations of stakeholders. While organizations have been working with startups more closely over the past decade—slow and steady won’t win this race. The problem isn’t a lack of startups to find, it’s making that right bet on how you build your businesses together and going from that initial bet to scaling across the enterprise. Based on our experience working with clients globally, we’ve identified three tips to help your organization drive value by partnering with a startup:

  1. Identifying the right startup for your organization
    In our experience, choosing the best startup to partner with requires an assessment of the key talent. Who are the founders? What is their track record? How do they develop company culture? Beyond paperwork and trend reports, how the startup’s people communicate with your team will give you a good sense of the potential for cultural alignment. Deep knowledge and openness about their metrics including growth rates, sales, and marketing spend will speak to their inclination for transparency.

    However, to choose the best startup partner, you need to know what your organization needs. What objectives are you trying to achieve? When? For how long? Also, be prepared to conduct a critique of your own organization to identify the cracks in your culture and operations that might prevent achievement of these objectives. DBS Bank in Singapore transformed from “damn bloody slow” to world’s best bank by thinking like a startup and becoming digital to the core.

    Even as you assess strategic fit, it is important to understand that there are a wide range of startups and maturity levels, so avoid judging one by its age or funding stage. You may realize a series A-startup can be as worthwhile as a series B after researching their enterprise partners and learning about their customers. The ideal track record comes with startups in Series C and D funding phases, but ensure they are continuing to deliver satisfied customers and business value. Organizations can take a few other steps to further ensure a proper fit:

    • Talk to the startup’s other clients and venture capitalists
    • Research the startup’s public documents
    • Research industry trends and competitors
  2. PoC to Prod is the hardest part
    In our experience working with clients globally, organizations enter into partnerships with startups to rapidly bridge a gap in these internal capabilities. Similarly, organizations can fast-track innovation by partnering with a startup. Just think about how many times you’ve tried to ideate a solution on your own, only to shelve it after a few years.

    In our new global EmTech Index research that will publish shortly, survey responses show organizations’ investment plans. They intend to allocate just under one-third of overall technology investments to improving COVID-19 pandemic responsiveness and solving short-term problems to ensure business continuity.

    Working with new technologies and especially those that you are trying to integrate into an existing business is challenging. Many organizations, once they identify startups they want to work with, begin with a proof of concept to test the technology. These experiments result in many learnings that are adapted over time. What we continually see is the hurdle of moving a successful proof of concept into production—and usually it is not the technology. The challenge stems from an organization's culture and trying to fit something new into existing business processes.

    Methods that we have found successful involve all key stakeholders from the very beginning—this includes making sure the business owner has the budget to support the scaling. IT will also want to make sure that a startup meets all security and policies of the organization, which can be challenging for a startup (depending on the size of their business).

    Whether to mitigate disruptions or meet competitive demands, partnering with a startup can help your organization continue to renew and grow. Take the example of Walgreens in the US, which is partnering with Pager to deliver health care on demand. Earlier last year, Microsoft began partnering with ITM to enhance its IoT capabilities and deliver hardware-level security.

  3. Continuing to drive value from your startup partner
    Once you’ve invested and begun working with the startup, it is important to continually assess and evolve through the course of your partnership. Here are three tips for continuing to drive value from a partnership with a startup:

    Ensure aligned values and business outcomes. Like any partnership, it’s important to ensure the startup aligns with your company’s values and that each organization is working toward a shared business outcome that drives mutual success.

    Be proactive with governance and stewardship. Don’t forget about governance and managing the relationship with the startup. Recognize that a startup may not have the same resources as a large organization. It takes constant communication and transparent dialogue.

    Set realistic expectations. Many times, organizations think they want to move fast, but in actuality it’s not as quickly as startups can move. Set realistic timelines and expectations. Three months for proof of concept may be lightning speed at a large enterprise, but that could be an eternity for a startup.

    Ready to get started?
    Wisely partnering with startups can help your organization renew and grow through continual change. Avanade can help you on this journey. Contact us to learn more.

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