By Stefanie Wolter, Head of Startup Partnerships at dynamics – powered by MHP
Startup- Corporate Collaboration — a tale as old as Harry Potter. But despite much progress having been made, and there being a myriad of collaboration vehicles to choose from, success (or survival, in the startup’s case) is still not guaranteed. So what can be done to establish fruitful partnerships for both parties?
We went to Paris last week to visit the Autonomy & Urban Mobility Summit, meet with superb B2B startups, and throw in our two cents on the “Startup/Corporate Interfaces: How to drive successful collaboration in the transportation sector” panel. The insightful discussion covered the following topics, which I will break down & share with you below:
- Finding the right vehicle for startup-corporate collaboration
- How startups should position themselves in order to work with large corporate clients
- Navigating complex organizational structures within corporates
- Incentivizing colleagues to drive innovation
- Why it’s extremely helpful to work with partners
Here are our key takeaways:
1. Getting in the door: Picking the right vehicle to engage with corporates and offering a strong value proposition
There are many different collaboration interfaces and corporates have stepped up their game in terms of clarifying their needs — startup safaris and innovation theater are passé. Let’s have a look at which vehicles were represented:
The host of the session, Beyond1435, is an open innovation platform set up by Deutsche Bahn that brings leading industry corporates together with innovative tech companies in the transport sector. Together, corporations explore and pilot new technologies and ultimately integrate them into their respective organizations. The platform has four long-term cooperation partners, who would traditionally be classified as competitors — DB, Siemens, SBB and Bombardier, as well as ad hoc partners who participate in select projects.
Sebastian Greiss from Siemens Mobility advised corporates to be very clear on the WHY — this helps with investing in the right collaboration interface.
A learning for him was that corporates don’t necessarily need to invest in every startup they want to work with.
In many cases, it is better to collaborate on a business level. Therefore, Siemens invests in startups via Next47, but also collaborates with more mature startups on a project-basis.
This is a lesson we at dynamics-powered by MHPalso learned. As some of you know, we started out as a multi-corporate accelerator program, but quickly learned that we could add more value to both our clients and our startup partners by bridging the gap from POC to longer-term project collaboration. My colleague Karina Schultz highlighted the huge advantages that come from being part of a company like MHP, a large systems/IT integrator & consultancy to +300 corporate clients in the Automotive and Manufacturing sectors. As a trusted technology partner, we can leverage our decades-long relationships with our clients in order to implement innovative solutions into existing IT-infrastructure through joint projects with startups.
Powered by Jaguar Land Rover, InMotion Ventures supports companies building products and services that aim to change the way the world moves. Alex Smout shared how InMotion Ventures acts as financial VC Seed-to Series B, then, when portfolio startups have the scale to bring value to Jaguar Land Rover, it helps to bring them into the JLR ecosystem.
Before engaging with a corporate’s program or VC, startups should do their research and critically check the alignment of the WHY, and the process offered by corporate-startup interfaces with their individual offering and goals at their current stage of development. In the B2B context, corporates are usually more interested in the technology behind the product and how it would benefit a joint solution than they are in the product itself.
There has to be a clear proposition from the startup side, how a joint solution would be beneficial to the corporate and/or their clients.
An example: at dynamics, we look for more mature startups with existing corporate clients, a strong joint business case potential for MHP, a strong technological USP, relevant project references, a solid financial situation, and most importantly, a great team. These criteria will be inherently different from, for example, the requirements of a CVC like InMotion. Therefore it’s important for startups to understand the individual needs of different corporate collaboration vehicles and adjust their pitch accordingly. Once you’re in the corporate door, the real games begin, which leads us to the next part:
2. Navigating complex organizational structures: Understanding stakeholder motivations & incentives
Representing the startup perspective on the panel, Lars Herold from Dromos Technologies shared his story about how, five years ago, they started by sending their 40-page pitch deck through fax directly to the CEO of Siemens — (communicating the corporate way ;-)). Despite getting a positive answer within 2 days, it still took them a marathon of conversations and demos to eventually set up a strong collaboration.
So, what are some hacks startups can do to facilitate this process?
Although admiring Lars’ bold move to directly contact the Siemens CEO, the other panelists advised against this approach, as corporates have learned a lot in the past five years and accordingly set up their startup engagement interfaces, processes, and teams.
For startups, it is highly beneficial to exactly understand the collaboration process and the motivations for the different stakeholders involved.
The people in charge of startup engagement are usually excellent multiplicators, whose job is to understand and promote the value a startup brings to a potential partnership. They align all different teams involved in the process– from management to business units, to tech experts, to the legal team, in order to enable a partnership. This process usually takes quite some time.
1. As emphasized by Alex from InMotion, communication & transparency are a huge problem at corporates due to their sheer size. It’s not uncommon for different teams to work on the same projects without realizing it. For the people in startup engagement, detailed documentation is super important in order to find, align, and inform all relevant stakeholders, and this will inevitably slow down the process. Therefore, one driver for corporates to further accelerate partnerships would be to enable the startup engagement team to facilitate the processes for startup collaboration, i.e. create a fast track for startups (Alex, InMotion) leaner purchasing agreements (Sebastian, Siemens), or a leaner NDA-process as set up by us and our legal team — all would be means to get to a go/no-go decision faster.
2. From our experience, it is usually easy to get people excited over a great startup. But once you get to more advanced talks, you realize that working with a startup is a lot more difficult than working with your regular suppliers. Often, it is a lot easier to work with an “ok” product from an existing supplier, as all the processes are in place and the risk is much lower than it is to make a much bigger effort and take a great risk for a new, innovative supplier.
In our case, our consulting experts at MHP have to take a chance and give a preliminary high-risk investment for startups, as every hour spent on evaluating and promoting a potential collaboration is an hour less billed to a client. Not all people in the corporate-startup process have innovation KPI’s and still passionately promote startup collaboration in their evenings and weekends, although not officially incentivized. To overcome this hurdle, corporates could prioritize innovation by building it into their employee’s individual KPIs and strategy goals.
Startups, be aware of the pain points of the stakeholders you are in contact with, as the organizational structures and processes often will not facilitate such a partnership. However, you still need to have a lot of breathing room, and as Lars from Dromos mentioned, likely struggle with the chicken-egg problem: needing customers to get investments, and investment to get customers. Alex from InMotion mentioned the danger of the long “on-hold”-times, which are not easily manageable on the startup side.
Collaboration with corporates is a marathon, so try to understand different stakeholder incentives, use documentation in your favor, and diversify your financial risk, if possible.
Every marathon is easier with professional help, so our final advice would be:
3 Minimizing collaboration risks: Forming strategic alliances
In the last few years, corporates have started to embrace open innovation. And what once were 1:1 startup-corporate collaborations expanded to multi-partner partnerships with other corporates, technology leaders like startups, strategy & implementation consultancies, and freelancers in order to be a) faster and b) more effective when improving a process or creating an innovative product/service.
Take the automotive industry as an example: OEMs as traditional hardware manufacturers are becoming more and more software-led companies. But this is not their biggest strength, so they need to fight the “not invented here” syndrome and find a partner whose core business is on the software-side.
While startups can offer highly innovative, complementary technologies to corporates, the integration of these technologies in core company processes or products is very risky from an OEM perspective, which is one reason why collaboration often ends at the POC stage. This is where we at dynamics/MHP come in as a third party.
As a trusted system/IT integrator of OEMs, we can help startups that we believe in by partnering with them to implement their solutions into OEM processes, products or services, and thus mitigating the collaboration risk.
Another example was presented by Sebastian: Siemens joined Beyond1435 to form open innovation partnerships managed by an intermediary, where they can work with corporates and startups at eye-level.
Having operations managed by a neutral party helps them to overcome compliance issues occurring when working together with competitors, which helps to accelerate innovation for all stakeholders.
To summarize, finding the right partners can help startups to understand and successfully navigate the complex corporate landscape. Alex from InMotion also raised the point that getting an investment from an OEM doesn’t guarantee that you will get to a POC. We can add that getting a POC doesn’t mean you get follow-up projects, and even completing several projects still not automatically guarantee in a longer-term supplier-partnership. So find trusted partners that help you to reach your goals at the stage you’re currently in.
In order to facilitate collaboration with corporate clients, for startups it’s crucial to fully understand the different corporate collaboration interfaces, to pick the ones which fit your goals, to understand the incentives for collaboration of your stakeholders, and to involve strong partners along the way. This, coupled with a lot of patience and grit, will put you on the right track to build successful, scalable partnerships with corporates.
A big thanks to Siemens Mobility, DROMOSTechnologies, and InMotion Ventures for sharing your perspectives and especially to our hosts, Beyond1435, for putting together such a thoughtful discussion!
Interested in learning more about the exchange between startups and their collaborators? Check out these UMDaily articles:
dynamics is the startup/corporate matchmaking arm of the Porsche subsidiary MHP, a management and IT consulting firm with over 300 corporate clients across mobility and manufacturing. We find great technologies and help ambitious teams navigate joint projects & partnerships with large companies – from ideation all the way to validation and implementation.