Large multinational corporations often ask, “How do we best innovate and compete with the smaller, fast moving and well-funded startups?” At the same time, startups are desperately trying to figure out how to best work with large corporations who can provide opportunities, scale, infrastructure, systems, etc. Thousands of corporations are attempting to bring a startup culture in-house, yet often failing to realize what actually makes a startup culture and how to reward and recognize “intraprenuers.” So, how do startups and multinationals best work together? The answer is: collaboration.
Commercial collaborations are often one of the easiest and most efficient ways to innovate. Corporations can quickly “test and learn” while gathering valuable data, consumer insights and customer feedback. Startups can tap into the vast resources of the large companies and leverage the experience, connections and resources that are often taken for granted.
In 2012, while running SoloHealth (now Pursuant Health), a self-directed health kiosk, I got a call I had waited nearly five years for; it was from the largest mass merchandiser on the planet. They said, “Your pilots exceeded our expectations; how soon can you be in 3,000 locations?”
I will never forget that moment. It was exciting, and it was terrifying. How could we possibly develop, build, deliver and serve 3,000+ health kiosks in all 50 states. How would we get the money to make this happen?
Dig your well before you are thirsty
Fortunately, we had been “digging our well” (Thanks Harvey MacKay) for nearly four years. We had formed relationships with large multinational corporations including DELL Computers, Intel, Wellpoint, Blue Cross Blue Shield, Redbox and Walmart. Each of them had a vested interest in our success. When we got “the call,” I scheduled an emergency Saturday meeting with the management team. We made a list of all the activities that had to get done and all the resources that we would need. The list was long, and it was scary – security, privacy, logistics, distribution, finance, marketing, contracting, just to start. We then looked at our various partnerships and realized they each had much more than cash to bring to the table. They had teams of resources, experience, knowledge, systems and infrastructure.
On the following Monday, I started making calls to our partners. I explained our situation and asked for their help. They came through in a big way.
In the summer of 2012, SoloHealth was producing more than 50 units per day and installing over 40 units per day in retail locations throughout the U.S. It was amazing. DELL provided us with USD25 million in debt to scale. However, equally valuable was their legal team, who helped us with security, privacy and contracting. Redbox, who once had over 50,000 units in retail, brought in their logistics team to help us figure out how to deploy quickly and efficiently. In less than three months, we had installed over 3,000 units, each of which was being used an average of 40+ times/day. More than 3 million people a month were testing their blood pressure, vision and body mass index. We couldn’t have pulled this off without our strategic partners.
If you are wildly successful, who wins?
When I advise other startup founders and CEOs, I like to ask, “If you are wildly successful, who wins?” The “winners” should be early investors, partners, customers, board members and advisers. They will be the biggest champions and are able to offer their vast resources. After all, they want you to be successful. For large corporations wanting to be more innovative, I suggest they do an exercise I learned from Solve/Next called, “asset jam.” It is a visual inventory of all the resources you currently have available that could help a startup succeed. Most companies are surprised at how extensive this list is.
Startups can disrupt and create a lot of angst for large multinational corporations. However, with effective collaboration programs, this angst and be converted into opportunities. ”
— Bart Foster, Managing Director Sanitas Advisors share
Here is a list of the top 10 assets most companies take for granted:
- Customer relationships and access — to drive revenue
- Regulatory resources — to reduce risk
- Marketing/communications — to get the word out
- Customer service/opportunities — to manage satisfaction, returns, call center
- Corporate strategy — to refine the revenue model
- Human resources — to assist with hiring
- Legal — to help with contracting, IP strategy
- Security and Privacy — to button-up backend systems
- Engineering / IT — software architecture
- Finance — cash flow management, debt, etc.
80% and go
Another concept I like to introduce to corporations is, “80% and Go!” Don’t expect 100%. Consumers are no longer wary of products that are not perfect. According to Bruce Haymes, “Consumers want the latest and greatest and they are willing to experiment. Enterprises are coming to the same conclusions — fast, innovative solutions no longer need to be 100% or offer five 9’s of reliability.”
He continues, “Consumers are now active supporters of startups, participating in the startup phenomenon on easily accessible platforms like Kickstarter and Indiegogo. Startup culture is now mass culture. For large companies, traditional defense tactics are no longer an option to stave off the competition posed by the relentless innovation and disruption of startups.”
Startups can disrupt and create a lot of angst for large multinational corporations. However, with effective collaboration programs this angst and be converted into opportunities. Make it happen.