Vimi Grewal-Carr, managing partner for Innovation interviews Alex Dunsdon, Co-Founder at The Bakery to explore how startups and corporates can work better together. The Bakery partners brands and corporates with the world's best tech startups.
Vimi: As Managing Partner for Innovation at Deloitte, I am always keen to maximise our relationships with startups. What do you think the main challenge is for corporates looking to work with startups?
Alex: The main challenge often comes down to cultural differences between big, highly structured, generally slower-moving corporates and small, agile, ambitious startups. Big corporates are (for good reason) used to planning and perfecting before executing - betting big on one new initiative or deal and spending lots of time, money and resource making it just right. This is the opposite of how startups work - including those that are now the world's biggest tech companies - time, money and resources are all in short supply.
So, in order to move quickly enough to avoid disruption by smaller, leaner competitors, corporates must revolutionise their way of thinking - embracing the startup mentality of moving quickly and learning fast.
Doing 'one big thing' with lots of strategic thinking feels safe to a large corporate, but in the fast moving world of technology and startups, this is the riskiest thing you can do. A much better approach is to de-risk your innovation strategy, adopting the mindset of the best startups and investors. By making 'lots of small bets' they trial several things quickly and cheaply, testing and learning all the time and then scaling the winners and killing the losers.
Vimi: Many of our clients have strong brands, market access and maturity. Startups have agility and speed to market. For me, the magic is bringing them together. How do you see startup/ corporate collaboration changing, and why?
Alex: The major change over the last two years in startup/ corporate collaboration has been the amount of resource (time, people and budget) allocated specifically to open innovation in large corporates. Two years ago, The Bakery might have run projects with two or three 'mavericks' within a big organisation and helped them turn their belief in open innovation into a formal programme. However, we are increasingly meeting whole teams dedicated to open innovation. We are seeing this trend across all sectors - from FMCG to financial services to pharmaceuticals.
Vimi: Absolutely, when I consider our own innovation journey and those of our clients', open innovation has gathered considerable moment in the last couple of years.
If we move on to trends in the startup space, which one could have the biggest impact on corporates, and why?
Alex: The ecosystem for hot, new startups is becoming ever stronger, particularly in London. This means that the best tech talent get access to great people, workspace, and often investment, more quickly than they used to. In addition, they are increasingly being backed from the outset by forward-thinking corporates who are investing in startups from scratch, or creating their own - so corporates are going to have to move a lot faster and adopt an "always on" approach to collaboration to avoid missing the best companies on the way up.
One of the biggest opportunities in the area of open innovation is how technology will impact on the future of work. Automation is becoming increasingly possible across a broad range of knowledge work, and startups and technology that can tackle these challenges will be increasingly valuable to large corporates. Startups won't be able to tackle some of these challenges without a large partner to develop these technologies with them - a partner that can provide unique insight, expert domain knowledge and data sets. These types of automation companies are usually powered by some kind of AI or Machine Learning technology.
Vimi: I believe building partnerships outside of your organisation is vital to future success. What are your three top tips for corporates wanting to work collaboratively with startups?
- Treat startups as partners, not suppliers. And forget Dragon's Den - the best relationships are built on a foundation of mutual respect.
- Commit resource and budget upfront and have a programme for engagement. Bring in key stakeholders right from the beginning, including those who might need to help you navigate various protocols to get experiments off the ground (procurement, finance, risk).
- Get ready to embrace a new way of working - view this as an incredible opportunity to learn and motivate your team to do things differently. It could well become the most exciting part of your job!
Vimi: I agree Alex, a willingness to embrace new ways of working is vital. Rapid technological change brings with it more opportunity than we've seen before but organisations have to be prepared to experiment.
Finally, what do you think are the benefits for startups to work with corporates?
Alex: There are lots of smart technology entrepreneurs in the world, all developing exciting new technology products and services. But in the early stages, these startups are looking for the right Product Market Fit and often don't know for certain who their customers are or what the commercial model will be.
Partnering with a corporate can be transformational - whether it's as simple as finding their first big client and getting real revenue, or gaining access and insight to unseen problems and challenges. These advantages can turn a startup with some promising technology into a viable, revenue-generating business.
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