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The difference between active and passive scouting explained

Sander van der Blonk (Netherlands)
Client Relations
October 13, 2020

Do you intend to scout for startups?

I have a few tips.

No one-size-fits all

Most enterprises have to make bold moves in the aftermath of Corvid-19. And to keep their choices fluid and their bets loose, they also want to collaborate and partner with startups.

It makes much sense.

But, how do you find and select the best partners among thousands of small players?

If you were to seek external help with searching startups, there is a lot to choose from. Think of: Tech crawlers, tech transfer marketplaces, innovation consultants, challenge listing sites, industry-specific search engines, curated directories, incubators and accelerators, professional networking tools, and (online) conferences.

Most notably, when thinking through scouting approaches, the difference between problem-oriented or vision-driven scouting aka active and passive scouting is often overlooked.

Let me clarify.

Active versus passive scouting

Even though all corporate-startup engagement formats and scouting mechanisms have their merits, it starts with the problem you are trying to fix.

There are several ways of approaching problems. Most often, we like to think in from A to B paths. We frame problems through things we see and know, and these are usually product-related. And then we search for a product or solution that does the job.

This might lead to tunnel vision - a sole focus on the own industry, product, customers, and capabilities.

Innovation today generally means running into unchartered territory, not exactly knowing what to look for. This especially is true now that businesses need to prepare for a post-pandemic future.

Refer to the below table for the main differences.

Two main scouting approaches
  Solve problems and challenges Explore visions & future business building
Trigger There is an apparent problem. You know what you need and how to determine whether the startup matches or not? You might have a scenario in mind, but you do not know how to frame the problem, let alone the solution, and sought startup qualities.
Engagement formats Applied: E.g., procurement, venture clienting, challenge-prizes. Explorative: E.g., co-research, co-innovation.
Deliverables Capability prototypes or pilots that show Proof of Value. Experiments, pre-prototypes, proof of concepts, joint-research outcomes.
Metrics to report on Pilot fails or wins. Business case outcomes (top line, bottom line, speed, etc.). New insights and innovation capabilities in a broad sense.
Scouting approach Short-cycle, asset-based, and moment-based scouting. Long-cycle, compatibility-based, and nonstop scouting.
What does it mean? It comes with clear problem statements, challenges, or solution requirements, including aspects like the desired startup development stage. The startup scouting and ensuing vetting process are relatively straightforward. It comes with broad use case descriptions or vision statements. You'll learn from serendipity, interpreting, and synthesizing while you talk to startups. The startup scouting and vetting focus on building trust and mutual understanding.
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Why is this distinction vital?

Most enterprises at the moment are happy to survive between quarters. If they were to scout for startups, they would scout for tactical goals, off-the-shelf solutions, and calendar-driven projects.

However, the real need for enterprises is to re-imagine their business. It comes with a longer cycle of sensing opportunities and acting on it. The scouting task is not to drum up a list of startups but to configure strategic partnerships of companies that share the same vision, goals, and needs.

Strategic partnerships enable teams to lean into each other’s strengths.

To summarize, enterprises that realize that collaboration with startups has become a multimillion Euro business opportunity should build an organization strategy around it. Scouting then becomes an ongoing process. Active and passive scouting go hand-in-hand. And planned projects and unexpected opportunities get managed holistically.

Bear in mind that the startup landscape is in a period of both hyper-growth and hyper consolidation. The dust won’t settle for years. A skilled scouting service provider, therefore, is instrumental in helping you navigate the startup ecosystems.

Any thoughts? We'd love to hear from you.

Photo by Frame Harirak on Unsplash

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