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The balance is tilting

Sander van der Blonk (Netherlands)
Client Relations
June 16, 2021

What's happening?

Companies are looking to leverage the ingenuity of tech entrepreneurs that are out there.

And so startups can tap into a growing number of businesses through engagement mechanisms like supplier arrangements and challenge prizes. Or go-to-market and joint-product development partnerships.

Nevertheless, startups have also become cautious and picky. They have limited resources. So they must be selective in how they spend time with enterprises and with whom?

Challenge prizes, for example, are getting hyped and show symptoms of commoditization. More and more companies are bragging about the fact that 'they have a challenge that can earn you bucks and perks if you can crack it!'

But there is little differentiation between one challenge prize and another. For startups, that leads to a paradox of choice. And companies struggle to get sufficient interest. 

Consequently, we see that the balance is tipping.

Our research suggests that contingent on the intended collaboration type, only 1 out of 6 startups is open to meeting with enterprises because of the perceived slowness and poor preparation. And, sadly, still the wrong mindset. Terms like 'showrooming' and 'innovation theater' were coined for a reason.

It should be a wake-up call for companies who rightly view startups as an essential innovation subsystem. And it requires a change in the way companies search for and connect with startups.

The root of the problem

At Scoutely, we constantly research the characteristics of effective corporate-startup collaborations.

What goes wrong?

Examples of what we see in practice:

1: Collaborations driven by engagement cookbooks and calendars. It gives a sense of control and planning reliability but completely ignores the idiosyncrasies of cooperation.

2: Only doing pilots. It may yield a return on knowledge but a weak return on investment for both sides.

3: Mismatched expectations. Alignment on objectives, mutual needs, time tables, costs, data quality, IP outcomes, decision-making process, and success parameters is not done right or not sufficiently.

The best collaborative innovators focus almost religiously on articulating the link between a business problem or innovation goal and desired startup traits upfront. They also make the implicit explicit together with the startup before starting a particular collaboration.

Startups love that: They feel respected. And it is increasingly becoming one of the benchmarks on which they base their choice of company.

Put differently; Enterprises are more and more sought out because of their diligence in preparing and connecting, not just for their brand and the collaboration subject matter.

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Startup discovery transformed

Therefore, best-of-class collaborative innovators use a structured and repeatable startup discovery management process with a single goal: Quickly reduce uncertainty on either side.

Startup discovery management process

It has a few characteristics such as:

1: Startups come and go, and scouting is, therefore, an ongoing affair. After all, you never know when opportunity knocks on the door.

2: There is no best, only a best-fitting startup. You have to kiss a lot of frogs to find your prince. So, also the assessment of opportunities is a continuous process.

3: One-on-one connections between stakeholders in the business and startups are key throughout the process -without disturbing the daily rhythm.

Rather than running ad hoc on gut instinct, having a structured process to discover startups is invaluable these days.

No wonder more and more companies use an enabling Startup Relationship Management platform - but decisions are ultimately down to humans. In the end, you cannot put your secret sauce into an algorithm.

Any questions or comments? We would love to hear from you.

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