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Startups don't have to compete with industry giants if they collaborate.
Large, established enterprises and rising startups reside on opposite sides of the business spectrum. But, magic can happen when the two work together to merge innovation and resources. However, with many startups on shaky financial ground and big businesses often mired in red tape, collaboration can be challenging.
We’ll explore the benefits of big and small players working together. We’ll also share tips on overcoming collaboration challenges to form strategic partnerships.
When rising startups and big companies combine resources, they can experience the best of both worlds — in terms of innovation and clout. This helps complement each other’s strengths and weaknesses.
Here are some enterprise strengths and weaknesses:
Paul Robson, a serial entrepreneur, investor and business consultant, says enterprises have much to gain from a startup’s fresh, innovative perspective and approach. “Startups are inherently more nimble, so they’re faster and more efficient at improving existing products or services,” Robson explained. “They often spot pain points corporations take longer to spot and can create a new product or service to address them.”
In contrast to the enterprise experience, startups typically bring the following strengths and weaknesses to the table:
When they form partnerships, Robson says, big companies can benefit from giving startup partners a direct line to the boardroom. “[Great] ideas within big companies often get bogged down in corporate bureaucracy,” Robson explained. “They have to filter up sometimes through multiple layers of management, and they may end up being diluted or discarded before they reach the CEO.”
However, a startup partner with a fresh perspective often has a direct line to the top. “If [an enterprise’s] startup partner has a great idea and shares it directly with the CEO, it’s more likely to be acted upon quickly and decisively,” Robson noted.
When on the lookout for collaborative relationships, startups and enterprises should consider attending industry events. This can include conferences, hackathons, or competitions centered on a particular solution or market theme. Both sides can use these events to identify companies that share their philosophies and passion for ideas, innovation and partnership.
After forming a startup-enterprise partnership, the entities must spend quality time together — far beyond emails and phone calls; this will help establish a trusting, genuine partnership. Consider the following ways to collaborate and strengthen the relationship:
Startup-enterprise partnerships can be game-changing. “Startups and big companies have a lot to bring each other,” Manasse emphasized.
Startups aren’t strangers to collaboration. They collaborate with business investors, customers, contractors and more to ensure operations run smoothly. Similarly, enterprises collaborate internally and externally to fuel business growth.
However, startup-enterprise collaboration isn’t always smooth sailing. Here are a few common challenges these partnerships face.
These barriers — some real, some based on misperceptions and fears — have kept too many potential partnerships at bay. To forge a successful collaboration, both sides must take the risk and dive into the relationship — trusting that the other party is working toward a mutually beneficial goal.
Here are a few real-world examples of startup and enterprise partnerships.
Cisco partnered with the Japanese Internet of Things (IoT) firm smart-FOA. Both parties recognized that the partnership’s value far outweighed the risks. smart-FOA, which stands for Flow Oriented Approach software, provides an information-sharing platform that can resolve problems and enable real-time decision-making. Because Japan is known for its ability to use data from manufacturing plants, FOA was a natural evolution.
Cisco knew investing in smart-FOA would generate new value by bringing together goods, people, processes and data while significantly expanding Japan’s IoT solutions across global markets. However, to unearth this value, Cisco had to maintain open lines of clear communication, exhibit mutual respect and trust, and relish the quick and nimble pace of innovation that comes almost naturally to a startup.
During the COVID-19 pandemic, there was a mad rush to find a vaccine that would reduce the virus’s impact. In response, Pfizer collaborated with BioNTech to create a vaccine capable of fighting the highly contagious Delta variant.
This partnership actually started in 2018 when Pfizer wanted to access BioNTech’s research and development regarding mRNA flu-fighting vaccines. BioNTech had the technical knowledge, while Pfizer brought its experience in development and vaccine rollouts to make the partnership successful.
Toyota partnered with Aurora to delve into the self-driving car market. The two partnered with a third company, parts supplier Denso, to create a robotaxi. It hit the roads in 2021. This collaboration has led to a more extensive partnership; Toyota has tapped Aurora to help automate Toyota’s fleet of consumer vehicles, starting with the Sienna minivan.
In this partnership, Toyota gets the innovation to add amazing new technology to its vehicles. Aurora, in turn, gets to tap into the largest vehicle manufacturer to grow its business.
Every relationship requires compromise, communication and a little faith. In the business realm, these elements form the basis for a trusting, mutually beneficial partnership in which each side gains confidence by investing in the other. The result is faster innovation, greater market share and, ideally, the ability to create magic together for many years to come.
Alex Goryachev contributed to this article.