NBAS Tech Circle #2 (24 Feb 2022) Key takeaway.
NBAS invited to the second event of the member’s series “Tech Circle” on Thursday evening 28 Feb 2022. The Tech circle event is an sit-down group discussion hosted at Antlers. The audience was a range of representatives from the Norwegian business community in Singapore brining and sharing their perspectives and insights on Corporate-Startup Collaboration and Partnership for Co-Creation.
Corporate-Startup Collaboration and Partnership for Co-Creation.
The two moderators helming the session were Ine Jacobsen the Investment Director of Cocoon Capital and Nakul Malhotra Vice President at Wilhelmsen Ships Service. Zooming in on opportunities and challenges for structuring a cooperation between new startups and established enterprises. The aim of this cross-industrial discussion is to elevate smaller NBAS member and to forge relationships between groups from different sectors and sizes.
Partnerships kick-off. The incumbent corporation vs disruptive startup innovation.
The Teach Circle #2 discussion sought to tackle the issue of “how to structure a partnership so to be mutually fruitful for both parties”. The open discussion invited the members physically in the room to contribute with their own perspectives and examples. Dissecting what characterizes a win-win cooperation and to identify when to collaborate (and when should they not!). The result is a rich discussion on how to create cooperation platforms and which structures can create synergies. This requires inviting inputs from every stakeholder.
The discussion is kicked-off discussing how incumbent enterprises bridge industry domain expertise with new age technology capabilities in startups. The battle between startups and established enterprises boils down to incumbents holding great value propositions. Capital and talent are moving away from established industries. In the DNA of large corporations to change and refresh their approaches. In the lifecycle of a business it goes from offensive to defensive after a takeover of market positions.
The shift leads to an optimisation based not on growth, but mostly on risk and governance. Corporations are taught to optimize for risk and governance, instead of growth. Startups can help eliminate a process and reduce paperwork.
Structuring win-win Corporate-Startup Collaboration and Partnership for Co-Creation.
The overview of the key factors for startups and enterprises to keep in mind when engaging in partnerships and building meaningful collaborative relationships.
The viewpoint of the corporation:
- What is the problem you want to solve? The answers indicates which lens enterprises apply when engaging with Startups: Development vs Procurement.
- Contract overload or lean legal? Ideally the enterprise should demonstrate a legal-leniency in the partnership terms. Risk overburdening the limited capacity of a startup.
- Avoid demanding exclusivity. The relationship should be mutually beneficial from co-creation and growth optimisation.
- Anticipate internal resistance. Expect any push-back from the middle manager within the enterprise.
- Nurture creativity. Encourage creative thinking internally for managers to look out the window and find innovation. Don’t silo the startups operations in a corner.
The Startup’s perspective:
- Find the entrepreneur in the enterprise to help navigate the corporate landscape.
- Original idea vs final product. Entering a partnership risk alter the nature of the product and can change the nature of the startup’s original idea. Review the technological readiness level.
- Where is the exit? Keep an end-strategy in mind for the partnership. Is the exit-goal to be bought by the enterprise or diversify to more costumers.
- What your technological readiness level? Beware of consumption threats where the enterprises use the startups ideas, avoid the only talking to the procurement department.
In sum, the key in engaging in a partnership is understanding each others lens. Should the corporate work with a startup? If so, when? Then comes questions of “Why?”, and “How?”. Important for corporations to understand that their lens needs to considered and clear to the startup. The last part of this article unpacks the components of an effective and productive partnership terms.
Unpacking partnership-killers “exclusivity” and “procurement consumption”.
Firstly, the word “Exclusivity” because it is mutually destructive. It signals that corporations have not thought through why they want the start up. It often results in the startup drowning in large and costly legal documents.
The good thing with exclusivity however is that it can signal that the enterprise is confident enough in the startup to take a bet on it. It means that enterprises cannot to tap on other startups, which may suffocate both sides. Exclusivity only works if there’s a clear market entry- and exit strategy. The exit-strategy can be to for the corporate to buy-up. If a startup wants to expand to other investors then – pull out!
The legal documents from large enterprises can over-absorb the startups resources. Startups need good templates for good legal contracts. A “lean legal” principle should be exercised for corporations to show maturity. Rule of thumb is to avoid legal non-disclosure agreements that are over 2-3 pages (that is a red flag).
Secondly, the other deal killer is a “consumption threat”, and it occurs when a corporation tell a startup to “speak to the procurement department”. The Startups solution is then evaluated by the procurement department according to efficiency and impact based on delivering results. This is the wrong starting point for a fruitful partnership.
Startup navigating the enterprise landscape.
The founding team of startups knows how to navigate the landscape. The “Great Resignation” is workers that shift from the corporate world into becoming entrepreneurs so those know the pain points. Identifying these areas allows startups to pitch ideas for how to build corporate-startup collaboration and partnerships for co-creation. The repeat founders have experience and can therefore hook onto the experiences of others startup alumni, which spin off other startups such as what Ex-Googlers and Ex-Grabbers have done in Silicon Valley and Asia.
Resistance. The middle manager and breaking the 3D printed mould.
The largest issue is the buy-in of the middle manager. Like a white blood cell rejecting a foreign body. The transition to the mindset that the startup solution will improve on the middle managers with the domain expertise with the technology capacity. Hence the natural reaction of corporate manager and mid-level workers is to pushback.
Maritime is a conservative industry, most run on 2G network and apply a fax-network. Change is uncomfortable. On container ships there is resistance from the crew. The crew will demonstrate that new solutions, such as 3D printed parts, will not work. In this example the engineer on deck will check if she/he can break the 3D printed plastic part with their hands.
The win-win formula: Collaboration partnerships aimed at growth leads to collective creation.
By design when something is ready to take off it does not require a partnership. Relationships should be based on “co-creation”, creating solutions collaboratively. Enterprises should partner with startups that have a Technological Readiness Level and are prepared to work in cohesion.
Building partnerships takes time and it is facilitated by the “entrepreneur in the enterprise”. An inside advocate that can help the startup navigate the internal structures and communicate the needs of the organization.
Articulating the pain points opens up for outsiders to provide solutions. Moreover, they can only emerge once the challenge is articulated, because when an issues is communicated in a way that is open then the solution can be found. There is no winning without sharing the information.
Find the entrepreneur in the corporate to help navigate the landscape. Corporate-Startup collaboration takes time. Corporate jargon needs to be broken down. Everyone around the table from the corporate-side needs to agree and everyone must have the mandate to sign-off.
Startup disruption and creativity: “Encourage employees need to look out of the window”.
The early introduction of entrepreneurship in education, because we are retracing our roots as humans so by solving real problems and delivering real value. Automation will overtake most hardware jobs.
Creativity is fostered and ideally corporates give their employees an opportunities to explore new topics and projects with artistic freedom, because it leads to greater innovation, but examples such as a “Friday project”. Because workers play around with new ideas on Friday afternoon.
Employees work hard to complete their work and follow up on their no-strings attached Friday projects. Everyone needs to share the good, the bad, and the terrible ideas and work collectively to improve them. Such Friday projects needs support from the entire corporate ladder.
In conclusion, the enterprises and startups to engage in fruitful win-win relationship when collaboration drives co-creation, growth development, and have a clear vision on the engagement from start to exit. Based on the products technological readiness level and the clear expectations that underpin the direction of the partnership terms.
The startup bring creative infusion to the enterprises that allows it to innovate and optimise its operations based on risk and growth. These key ingredients allow for corporate-startup collaboration and partnership for co-creation.
Coming up: Tech #3 (30 March) and the Annual General Meeting.
Upcoming: Tech Circle #3 – 30 March. Annual General Meeting and Tech Circle #3
We always appreciate your feedback on our events, so please let us know if there is anything we can improve, or if you have a topic you would like to focus on for upcoming Tech Circle events.
NBAS hosts its Annual General Meeting at the newly opened TechLab by Innovation Norway Singapore in Hong Leong Building. In conjunction with the Annual General Meeting, we will host a Tech Circle-special, focusing on the Business Climate Survey, conducted by Team Norway.