Corporate organisations typically have more communications work to do than their startup counterparts. They must communicate not only between themselves and the startup, but also with internal departments, senior management and, in some cases, the board. To ensure that the whole organisation understands the innovation agenda and is ready to execute it well, Touchpaper advocates prioritising clear communication at both a strategic level and a tactical level.
“Large corporations must create a framework and a process that will increase the comfort level in taking risks and making decisions, across the many different departments that are stakeholders in those decisions.”
(Source: Coca-Cola Blog: How Big Companies Can Work With Startups)
Clear communication is a cornerstone of the corporate innovation agenda. Conversely, a lack of effective communication can set the innovation process back. Innovation by its very nature requires a non-standard approach, heightening the need for cooperation between departments. In many corporate-startup collaborations, a member of the innovation team owns the relationship with the startup: they’re responsible for progressing the transaction through the organisation and ideally, they’ll be a consistent point of contact across relevant departments.
Corporates should also consider the likely impact of innovation on the business and plan communication accordingly. Mainstream adoption of new technology within a corporation is often challenging not only from a technical standpoint, but from a people perspective too—particularly where resulting efficiencies mean fewer people are needed to perform certain functions. Resistance to such change is common, so there is a clear mandate to communicate clearly and manage expectations.
Innovation or startup engagement strategies should align with the organisation’s long-term business strategy and goals. These strategies must also be prioritised and supported by executive-level sponsors, then articulated clearly across the company. The programme’s significance to the organisation and expectations about the delivery timescale are key points to communicate.
It’s also important to communicate with relevant departments beyond the innovation team. When they lack awareness about the project or overall innovation initiative, or if they don’t understand the priority of projects, it can result in low levels of responsiveness to the non-standard transactions being asked of them—and that may mean delays for the process.
“Sometimes getting people internally to see the benefits of a startup collaboration can be difficult - people want to use established processes.”
Corinne Fitzgerald, Catalyst Community Lead, Swiss Re (Source: Touchpaper research)
Innovation projects need more time than standard projects to process. This demands additional work of the budget approver, procurement department and a host of other stakeholders—which can result in unintentional de-prioritisation and process delays.
Non-innovation teams that can help execute an innovation project might know nothing about the startup or project until they are asked to take action. Without understanding how their cooperation feeds into the innovation or wider business agenda, they may simply see a complex transaction that requires increased resource to process. As a result, it may not be given priority.
We recommend identifying an internal innovation champion—typically someone on the innovation or digital team—who is supported by a senior manager or board member. Having someone focussed on building relationships and trust within the company and able to explain the strategy and objectives of innovation projects will save time. This person will also be able to facilitate the journeys of successful projects as they scale into the main business.
Another option is to second people into the innovation team from other parts of the organisation. This can lead to greater understanding and embed competency and innovation practices across many departments. It may also help people identify new areas where innovations could be applied.
There are many assumptions that can be safely made when running the core business elements of a corporate organisation. The same assumptions often do not apply for startups, with their differing organisational structures and terminology. That’s why asking the right questions—even those whose answers seem obvious—is important, to ensure clear understanding across the collaboration. This is particularly relevant to technical areas, where a startup might assume a certain technology or capability would be in place, but due to corporate legacy systems, it is not.
The execution timeline should never rely on mutual assumptions. Discuss early on how long each phase of the collaboration will take, making sure there are realistic estimates for elements that sit outside of each party’s direct control (such as budget sign-off processes, procurement, contract negotiation, technical development and integrations).
“Clearly outline what your relationship with startups is and what you are trying to achieve.”
Dell (Source: Winning Together, Nesta)
From the outset, both parties should know what they are looking to get out of the partnership and exactly what they will need to put in to get it. It’s when deliverables and associated risks aren’t explicitly discussed or agreed early on that problems, delays and even abandoned transactions further down the line occur. From discussing timelines and technical or data integrations to agreeing costs, intellectual property ownership or approval processes, clear communication is essential. It’s just as important for communications to be concise.
There are many different approaches to corporate innovation and many potential goals. Being candid about what you hope to achieve is the best foundation for a relationship with a startup. If acquisition is the long-term goal, it should be mentioned as a potential outcome. After all, this may not be the direction the startup wants to take—or it could be exactly what they aspire to. If it’s not explicitly discussed, however, you may end up working on a successful shorter-term collaboration with no chance of achieving your eventual objective.
Discussing any uncertainties in the project helps counteract avoidable risks, enabling you to deal with them promptly and manage expectations with all parties. It’s also important to discuss any blockers or deviations from expected timelines that you encounter. The sooner issues are discussed, the easier they will be to solve.
Projects often have a sole lead within the startup and one within the corporate organisation, both managing the project, relationship and all communications from their respective sides. But unforeseen circumstances (like a sudden absence) can swiftly halt progress, especially where the corporate project lead has responsibilities alongside their innovation role. To avoid bottlenecks, make sure other team members are up to speed with project, if not directly involved.
Startups have an equivalent challenge: due to their size it may not be possible for more than one person to work on the project. Check that there is at least an alternative point of contact at the startup.
Bear in mind that incentives for some departments may not be in line with the innovation agenda; in some cases they may be totally at odds with it.
Large corporations need robust and rigorous processes to enable their core business to take place effectively. People are motivated to ensure that these processes are followed. But occasionally, they may unintentionally delay or halt innovation transactions if they happen to fall outside of these processes.
Identify where there may be conflicts between departmental incentives, or where spending time on innovation projects may damage a colleague’s ability to do the rest of their work. Find solutions that strike a balance. For example, quarterly sales targets may be threatened for a team member who is required to train in a new product from a startup, but a pro rata method for sales targets which excludes training time could be adopted.
Those unfamiliar with the innovation ecosystem may not be aware that execution speed is critical to the success of innovation projects. It’s also important that people understand the value of time to startups.
Consider creating a critical path diagram or other visual representation to demonstrate the end-to-end process and clearly communicate timelines. This can help all relevant departments to visualise project priorities and understand the window for escalation and execution in order to prevent time delays.
“Companies need to devise mechanisms that will provide them with the necessary speed and flexibility for their work.”
Amalia Agathou, Innovation Manager, XVIII Havas UK (Source: Campaign)
Familiarity and trust garner successful long-term relationships, but a common pattern for startup engagements is that one person in a startup forms separate relationships with the corporate innovation team, procurement team and the legal team. Because it takes time for relationships to develop and for trust and understanding to be built, delays in the process can occur at this point.
We advise corporates that if a transaction looks likely to proceed, they should share the project with procurement and legal departments early on, to enable a faster response when it does go ahead.
Where possible, the appropriate person from procurement and legal should be part of (or at least associated with) the innovation team and aware of the transaction from the beginning. This could be a formal arrangement, with specific innovation sub-teams in each department, or it may take the form of innovation training and secondments across departments to improve understanding within the organisation. These kinds of collaborative approaches allow the extended innovation team to identify and resolve issues faster and improve the execution time of any transaction.
“It might sound obvious, but in a massive organisation with different agendas it can be hard to bring people together. We ask people to leave their day jobs and move in as a resident in the space for 10 or 12 weeks and focus on the challenge we’ve been set.”
Kristen Bennie, RBS (Source: The Drum)