Why Should More Corporates Work with Startups
Startup ecosystem in India, and globally, has witnessed tremendous growth over the past decade. In the current scenario, economies across the globe have acknowledged startups as an integral contributor to the economic matrices and in turn their growth plans. India aspires to become a 5 trillion dollar economy by 2025, the entire economic framework and machinery are gearing up to create a road map to achieve this milestone. However, given the numerous success stories of startups, a section of industry champions is hopeful that India will surpass the vision way ahead of time.
Startups have disrupted almost all the sectors through innovative business models and technologies to solve real life problems across various sectors. The contribution of startups (health tech, edtech, fintech, etc) during the pandemic boosted the confidence of various stakeholders. The steep increase in the number of unicorns and startup IPOs has further bolstered the investors’ belief in the entrepreneur's potential to capitalize on the opportunity in a sustainable and profitable manner.
Given the demographic landscape of India, there remains an ocean of opportunities untapped, especially in the deeper pockets of the country. Path breaking research undertaken in reputed institutions and laboratories requires handholding to be commercialized. The need of the hour is to establish more and more synergies amongst the stakeholders of the startup ecosystem so as to strengthen the nation-building mission.
One of the key synergies/associations is the role that industries/corporates play in the nascent stages of the journey of a startup viz proof of concept or minimum viable product stage. One of the common reasons owing to the failure - is the lack of customers for their product/solutions. In spite of successful lab trials, the market adoption fails. In the process, they are confronted with the loss of resources which, more often than not, leaves an entrepreneur shaken. The lab-to-market journey entails many aspects beyond the core product and the learning/adoption cycle in a traditional way can make the product/solution redundant. Given the dynamic and volatile nature of the environment, the startups, in order to capitalise on the market opportunities have to leapfrog the learning/adoption cycle. This challenge translates into an opportunity for the corporates/industries today. The synergies between the corporates and startups complement each other’s core competencies presenting prospects of mutually benefitting growth and sustainability.
Today for sustainability and profitability, the startups along with the corporates have to develop an ingenious culture and a unique mindset. Some corporates like Intel, Saint Gobain and Infosys have spotted the prolificity of engaging with startups and have endeavoured to redirect their untapped potential as part of their strategies. The models and approaches vary depending on the corporate’s objectives and execution strategies. Adoption of a startup as part of the strategy requires an innovative culture and mindset by the people, processes and policies of the organization. While there are many models to benchmark with, a certain level of customization is required to match the inherent needs of the organization. Some of the benefits of such synergies are:
- Contributes directly to the nation-building activities with significant social benefits to the economy
- Engagement with startups offers both strategic and investment opportunities. While investment opportunities in startups add up to the overall portfolio of the corporates and have a significant financial element, strategic opportunities contribute to the business growth and strategies of the corporates.
- Strategic alignment with startups gives an insight into new innovations and in turn business models emerging in the market, which could be considered/adopted in the short or long term.
- Engagement with startups supports the effort of the core R&D and reduces the turnaround time, quickens the decision-making process, thus saving resources and assuring accelerated growth.
- Enhances and contributes towards value creation for customers through the Build-Integrate-Buy format
- Creates an entrepreneurial mindset amongst the employees of the organization. Working with startup founding teams rekindles the spirit of speed and provides learning opportunities
- Engagement early on during the product development stage gives an opportunity to refine the product/solution and make them more suitable to the needs of the customer.
- Reduces wastage of resources and opportunities to pivot early in the journey
- Opportunity to co-create and co-innovate products/solutions to suit market requirements
- Access to market, mentors, and experts
- Improvise the GTM strategy based on the customer segment, supply chain and logistics
- Access to need-based funding and other resources
- Paid pilot opportunities and access to manufacturing facilities, suppliers, vendors etc.
- Contribute to value creation for the end customer of the corporates.
- Continue Innovating new solutions depending on the market needs/demand.
For any successful synergy, the enablers play a critical role. Some of the key enablers are:
- Engagement with startups should stem from a strategy with clear objectives and an execution plan. Top-down approach.
- Allocation of budgets and sponsorship for such engagements
- Champions across the hierarchy lead the cause and outcomes of such engagements be monitored as KRAs of the champions
- Innovation culture across functions and departments is recognized and encouraged
- The selection process of the startup process is merit-based with a thorough due diligence and onboarding process. Regular review and feedback mechanisms with milestones require to be paid in place so that the concerns from both sides are addressed in a timely manner
- Creating an enabling environment for the startups while implementing is important, leveraging and working with the founders/entrepreneurs during the lows and highs is one of the critical success factors in case of such engagements.
- Entrepreneurs/founders mindset plays a pivotal role in this arrangement. Coachability, adaptability and customer-centricity are required to fuel the successful adoption of the technology/offering. During the journey of validation, the founders may require to pilot their product/solution multiple times or identify altogether different use cases from within the group
- The credibility of the founders is critical in such associations.
- The end objective of the association should be clear in the minds of the founders and must be clearly communicated to the corporate. It could vary from startup to startup or founder to founder
For all collaboration or synergies to work, a reasonable amount of empathy is required from all concerned while working towards a common objective or goal. Likewise, champions/people involved in the collaboration of corporate and startups are also required to approach this association with a great sense of empathy with an objective to achieve common goals/milestones.