CORPORATES: BE LIKE STARTUPS, WORK WITH STARTUPS, OR JUST BUY STARTUPS?
No matter your size, history or market cap, startups have the potential to disrupt (a part of) your business. That is why a corporate growth strategy should be in place to ensure sustainability. In fact, it’s probably happening- whether you like it or not. Our CEO Jan Kennedy discusses this topic with the Intrapreneurship Conference and 2 other experts in the field. Originally published by Intrapreneurship Conference.
So, what to do? Should you adapt methods for product development and innovation used by startups, become more like them? Or should you play a leading role in the ecosystem, scouting for the best startups and then work closely with them to scale their innovation by leveraging the resources you have available? Why not just invest in and whenever feasible, take ownership over the startups most relevant or potentially disruptive to your business?
We sat down with three experts featured at our upcoming Intrapreneurship Conference: Tanja Kufner, Philippe Thiltges and Jan Kennedy– all highly experienced in working with both startups and corporates, and in some cases with both at the same time.
You have worked with several startup teams. Across the board, can you share what factor is most important when it comes to successfully getting from idea to venture?
Tanja: It’s always the team that comes first when we look at making investments.
We are looking for great teams and team members that compliment each other.
As we work with early stage startups, the teams often grow during their time at Startupbootcamp. Together with our mentors, we help them make smart hiring decisions.
Product/Market fit is also an important factor. We dedicate a few weeks of the accelerator program entirely to customer discovery. If founders are too much in love with their technology, they run the risk of building a product that no one wants to pay for.
Philippe: The most important factor is how much time you lose doing the wrong thing at the very beginning. Nobody starts off with the perfect idea and the perfect execution plan.
Learning is key to success and doing first things first saves you a lot of money.
One of the most common ways to waste a lot of time and energy is building your product before really understanding the customer’s problems.
Jan: If you want to be successful at developing ideas into ventures, I think any corporate would do well to study what makes the Founder Institute so successful in developing early stage entrepreneurs and new ventures.
For me two factors stand out. 1) Selecting the right people and 2) A structured and time boxed curriculum inspired by ‘been there done that’ mentors.
I believe these two factors are key in Founder Institute experiencing a 79% survival rate of all ventures that get launched at the end of the program (now at 1000 ventures per year with a portfolio worth $25 Billion).
1) Over 7 years and 35,000 entrepreneurs, FI developed a social science personality test which is now able to predict with 85% accuracy if that person is likely to be successful at entrepreneurship or not.
This is possible because it turns out that successful entrepreneurs share certain personality traits such as how open they are to new ideas, their tolerance level for stress or their ability to solve problems or degree of social intelligence.
Based on this test alone, about 50% of applicants don’t make it into the program. Anyone can contribute to ideas, but not everyone will be good at developing those ideas into businesses that make money.
2) Once you have the right people they need to follow the right process for developing their venture. The original FI curriculum, which is updated about twice per year, resulted from consolidating what 2000 startup founders wished they had learned before they (or as they) were first starting out in with their ventures.
Based on this, Founder Institute offer weekly company building assignments and offers exposure to 2-3 successful startup CEO mentors each week who help reflect on their personal experience and offer their own lessons learned for that particular stage of the curriculum. This covers topics such as vision and ideas, customer research and development, revenue models, legal, team and advisors, product development, fundraising etc with about 25hrs of work each week required.
How do you translate the learnings into your work with corporates?
Tanja: The entire Startupbootcamp experience helps our corporate partners to innovate. For starters, we offer them several masterclasses on how to work with startups, how to be a good mentor to startups, and how to stay agile when working with our teams.
Afterwards, they have endless opportunities to put what they have learned into practice. In the vast majority of cases, our partners’ interactions with our startups will turn into long-lasting, mutually beneficial relationships.
Philippe: Corporate teams face the same challenges as startups. In a first step they also need support to leave their comfort zone and start integrating potential customers into the early innovation process. Often it is very challenging for them to share a product with their clients that is still far away from what the team wants to build. We also see that some of the very successful internal incubators established a mentality of “breaking the rules or do not follow the established processes” to be faster.
That brings me to the fundamental difference between intrapreneurs and entrepreneurs: the amount of money on the bank account and/or the distribution of income over time.
While the intrapreneur is often receiving a constant salary, the entrepreneur is not earning any money at the beginning. But hopefully a lot (or also nothing) after some years. Beside that I believe consistency, drive and a strong imagination are important characteristics both need.
Jan: Through the Academy for Corporate Entrepreneurship we essentially offer a Lean Intrapreneurship Program to help corporate startup teams go from idea to new venture. While we try to follow a lot of the lessons learned by the Founder Institute, we have had to translate / adapt many elements to fit corporates.
The most obvious translation is that we develop new ventures as cross-functional teams and not as individuals (which is 95% the case at FI). This is due to reducing the overall time commitment required of individuals to about 10hrs per week but more importantly it helps to foster a culture of collaboration to increase employee engagement. Also, the venture can benefit from the different skill sets of employees at an early stage. We’ve also adapted the Founder Institute test (using the help of social scientists) in order to seek out personalities that are a strong fit for Intrapreneurship.
One key personality consideration that differs from entrepreneurs to intrapreneurs is “mannerliness”. This is the ability to be tactful and keep others adequately consulted despite pressing deadlines and to build strategic relationships with difficult people. See www.afce.co/dna for details and to take the test. Our curriculum is also less focussed on the “personal journey” of the entrepreneur but more so on applying Design Thinking and Lean Startup tools and methods to develop the venture itself.
If a corporate would ask you: shall I try to be like a startup, work with a startup, or just buy a startup – what would you say?
Tanja: I think they should consider all of the above depending on what their needs are. Lean principles and rapid prototyping are already used by many large corporations to help them innovate.
Working with startups can be great for a corporate, but there also needs to be a significant level of dedication from the corporate to achieve actual progress and real results.
Successful collaboration is about using a startup’s products to solve internal challenges or partnering with them to create a new service for your clients. It might also mean acquiring a startup before they become your biggest competitor.
Phiippe: My bet? “Corporate power and startup agility.”
Taking the best of those two worlds offers a huge potential.
That is why so many big organizations are now implementing lean innovation methods or trying to cooperate with startups. The existing network, the brand, existing technology or infrastructure are all aspects that you can find within corporates and that help internal innovation teams to develop their solution faster. On the other side, rigid internal processes can slow down extremely which leads to frustration within the team. The combination of applying startup-methodology and cooperating with startups in specific cases is very promising. Startups can help you speed up things, this is one of the reasons why we promote and recommend this approach.
Jan: This is a great question! I would say all are potential solutions to slightly different problems the corporate could be experiencing. But if we got talking some more and it came up that they were starting from a blank sheet and trying to figure out which of the 3 solutions might offer the best ROI over time, I would definitely say “be like a start-up”. I don’t mean that the entire organisation should be structured like a startup, but they should invest in creating their own “army of intrapreneurs” as I discuss in this keynote so that employees can act in an entrepreneurial manner.
It also has the advantage that you 100% own what you create with little upfront investment versus acquiring a start-up or partnering with a startup. So for me, it’s really about learning from those that are disrupting us and learning how to apply those entrepreneurial methods within the organisation.
The more intrapreneurs you develop creating new ventures that have impact, the more likely you will create a culture of innovation and stay ahead of the curve. Working with a startup or buying a startup will not achieve this – not in the long run.
From history we know that acquisitions and mergers don’t really work – 80% fail. You can buy innovation but does that now make you innovative?
It’s a bit like copying the answers of the guy next to you when taking a test. You might pass for now, but down the road if you don’t focus on increasing you own ability you’ll unlikely pass the next test. Working with a startup can be a viable option if the organisation is truly ready and prepared for it.
I’ve seen a lot of failures though because the startup gets annoyed that the corporate can’t move as fast as them and the collaboration ends up holding the startup back which can ultimately cause them to fail. We have two partners D-RAFT and Startups For Brands that are good at helping corporates to partner with startups successfully. These partnerships are typically for a certain purpose and run over the short – medium term.
So it’s really about what problem are you trying to solve and it’s not necessarily one or the other – many corporate try to do all 3. But if it’s about creating a culture of innovation and keeping and attracting the best employees, then I think learning how to create your own internal “Academy for Corporate Entrepreneurship” that develops intrapreneurs where you 100% own the ventures, is going to give you the best chances to thrive!
What will we get out of your workshop during #IntraCnf Munich?
Tanja: If you are interested in working with startups or want to improve your work with startups, then this workshop is for you. We’ll discuss the important aspects of a successful collaboration and look at different ways corporates and startups can work together to achieve real results.
We’ll present case studies and share our experience and perspective to get your questions answered. You’ll leave the workshop with fresh ideas and inspiration on how startup collaboration could fit into your company. We’re looking forward to it!
Philippe: In our workshop, you’ll find out how you can guide your innovation teams from idea to investment readiness. Instead of setting up complex and complicated structures and processes use simple tools that provide your teams with a clear structure in developing their business idea, helps you to coach your innovation teams and results in a validated concept that makes the investment/execution decision much easier.
Jan: No Intrapreneurship program is the same. My workshop will have you evaluating the different building blocks required for successful programs that develop early stage ideas with corporate employees. From team selection & formation, to curriculum and mentoring structures, to governance and air cover, you’ll leave this workshop with a full understanding on how to start building your own Intrapreneurship Program.