Global business leaders from Ford (D-Ford) to Airbus (Acubed) have specialty departments focused on driving innovation and keeping up with the pace of rapidly changing technology. While internal development is certainly a way to introduce innovation into a company’s product line, working with startups and small businesses is often the method of choice for infusing a big company with a new technology advantage quickly. We can see examples of such successful collaborations in Luminar and Volvo, with Luminar supplying its lidar sensors for Volvo’s driverless cars, or NTopology and Yamaichi, with NTopology working with the Japanese electronics firm for software development.
With this philosophy in mind, one of the most active investors in Silicon Valley, Plug and Play, exists solely to pair big companies with startups for developing partnerships and proofs of concept.
While joint development between a startup and corporate innovation department can lead to innovative outcomes (just see the plane seat of the future from Airbus and Layer), sometimes it’s a challenge to get on the same footing and get a project moving.
So, how can both a large company and a startup make their innovation collaborations a success?
To start, here are some tips for the corporate side of the partnership.
Keep Collaborative Projects Tightly Scoped
The great thing about innovation — that it can generate tons of new ideas and excitement — can also be its downfall. It is extremely easy to want to keep projects wide open to let every idea have its chance in the sun. However, both you and the startup eventually want to see this product be picked up by a business unit (a group not in the innovative department and that wants to bring a product to market).
Therefore, it’s best for both parties if you choose a specific goal that already has an existing business unit involved before you start building. One way to do this is to make the scope of work focus on fixing one or two existing problems over inventing something new.
Be Prepared to Do Your Part on Schedule
Whether it’s sharing sample code, a data set, or a swatch of fabric, there will likely be some exchange of assets in this collaboration. Startups can often share their materials quickly, but larger companies with innovation departments may have to spend weeks getting the approval of several managers to just send over some materials. Unexpected delays like these can really slow down a project, so it’s best to get timelines on all of your deliverables before signing on the dotted line.
Discuss What Would Be a Win for Your Team
Often startups won’t fully understand your objectives in an innovation project unless you spell it out. Who has to approve of the project for it to be a success? How much time do you actually have? Do you need to meet a certain price point after the innovation stage? Sharing your vision of a win means that the startup can better support your needs in the development process. For example, a win might be cost savings, or it might be an awesome presentation for your management. It’s helpful for your collaborator to know which one takes precedence.
Share Your Budgeting Cycle With the Startup
Small startups control their own budgets, so they might not understand your process for obtaining budget approval for innovation projects. If you let the startup know that you’ll need to get a new budget approved every six months to continue working together, they can support you in sending assets and materials according to the timeline you share to better demonstrate progress just before your review.
For Startups: Ensuring Productive Collaborations
On the startup side, it’s often a challenge to understand exactly how your new corporate partner operates — and it’s your job to find out as much as possible by asking questions. Here is how you can make sure that your collaboration is adding value to both you and your corporate innovation partner or customer.
Establish a Master Timeline
Before any project kicks off, there should be a master timeline that everyone is following. The timeline should highlight deliverables from each party and when they are due.
While it can be tempting to do any work presented to you from a brand name company, if any new action items get introduced, resist the urge to just accept that extra deliverable. Take the extra step of working it into the timeline first. Once you see how much time it adds, it will be easier to know if you also require an additional payment to complete the project profitably.
It’s also important to ask detailed ownership questions that determine responsibility for specific aspects to establish how each add-on could change the project timeline and cost. And if you say yes, keep it as tightly scoped as you can. You will be thanking your past self when the project is six months in and everything is taking longer than you expected to complete.
Understand Corporate Schedules
Don’t make the mistake of assuming your corporate partner will move at the same speed as you. It’s important to ask questions around anything that might make the timeline slip from their end. If a corporate innovation department is supposed to send you a code snippet, ask them who has to approve of this exchange, and how long that could take before adding it to your planning.
To fully understand their schedule, ask about budgeting cycles and fiscal years too. Corporates will often need to get rid of a budget at the end of the fiscal year and will need to ask for a new budget at the end of their cycle. Make sure you know these timelines so you can include them into your planning and ensure you’re supporting the innovation team in both requesting a new budget and spending the old budget.
Make Sure You Know What Will Make the Project a Success
Is it cost savings, light-weighting, or simply a great marketing project that will make your collaboration a success? Make sure you understand the ideal outcome as it may not be the same as your internal goals. Startups always want to see something lead to recurring revenue, but an innovation corporate partner may just want the project as a one-and-done marketing project. Make sure you know their aim so you can both price accordingly and provide the proper support.
Consider a Case Study or Logo as the Definition of Success
It can be hard to ask, but if a corporate partner is seeking a discount, try and make it a win for you by requesting logo use, a reference call, or a case study. These marketing materials are invaluable down the line. One case study or one powerful logo can potentially build trust for new customers — inherently making the collaboration more successful for you.
Taking these steps can help corporate innovation departments and startups work together more efficiently. Ultimately, smooth projects means less time and financial waste for all parties involved, making these arrangements a win-win all around.