I begin with a confession: I didn’t believe in collaborative entrepreneurship.
Don’t get me wrong, ‘collaboration’ is one of the core watch-words of startups. The greatest innovation comes from it and unprecedented access to knowledge has been unlocked because of millions having access to each other.
Even in the hyper competitive marketplace, ‘co-opetition’ is only a slight variation on the theme, suggesting that even sometime rivals benefit from synergies and shared learning.
In a similar way, collaboration between big business and entrepreneurs seems a perfect marriage.
Startups are a gateway to innovation that corporations require not only for survival but to thrive in the 21st century. In turn, these great established juggernauts are gateways to markets, capital and potentially exits which can drive the flywheel of success-breeding-success of startups – essential in the creation of any thriving entrepreneurial environment.
But, like most marriages, compatibility is the central issue.
Leviathan and the ant
The core needs expressed by startups are to generate revenue; build a team; obtain investment and expand in new territory.
Great corporations have lived this and more. They have big budgets to spend on the best and most effective goods and services, but less so the speed and hyper focus that is the foundation of startups. Long RFP (request for proposal) processes, large meetings and time to make decisions, simply cannot fit the pace entrepreneurs require to survive and thrive.
The core needs expressed by C-Level corporate executives are to be more leading edge on new technologies - at best that can be essential opportunities, at worst disruptive or even existential threats to their core businesses - and to be systemically more agile around internal innovation and product development.
But, again, they too often move at a much slower pace.
Big enterprises, culturally, have a gravitational pull to whatever they know and works in their existing business models.“How can I get one more percentage of ARPU?” is a more measurable and tried-and-true question than, “What is the incentive to engage with small upstarts seemingly disrupting us?”
At best, historically, big companies make helping startups part of their corporate social responsibility (CSR), rather than a reciprocal, co-authored and sustained engagement to mutual benefit.
A collaborative ‘safe space’
While the benefits of collaboration to both are clear, the cultural barriers seem insurmountable. So why bother?
Andrea Kates is the CEO and cofounder of LaunchPad Central, a fascinating Silicon Valley founded company with global reach looking to bridge these gaps. By leveraging the teaching and collaboration tools of ‘lean startup’ guru Steve Blank and others, she believes success can begin with clear communication and expectations upfront.
LaunchPad Central has created the equivalent of what Kates calls a “Rosetta Stone” or common language entrepreneurs and executives can use, combined with a “watering hole” or a safe setting for both parties to come together where the nimbleness of startup DNA intersects with the dynamics of corporate scale.
The goal is to focus on their mutual needs. This means agreement to throw out conventional views of business plans - few of which last a few weeks or months anyway - and embrace the kind of hard, measurable evidence of what works from the perspective of their respective real customers. Customers, after all, have the final vote on what works.
Carrots and sticks
I think one other essential element is to align internal incentives - both rewards and punishments.
A very impressive publishing executive who really understands the importance of engagement with the entrepreneurial community shared with me KPIs they introduced a year ago for their managers to engage with startups. When I asked him what bonuses those executives get for hitting those KPIs or whether they’d fire someone for continuing to miss them, he looked at me dumbfounded.
Miss a percentage of ARPU you could lose your job, but miss an innovation metric without ramification – which would you bet on will get the most attention internally?
It is not the bias of my background as an entrepreneur and investor in entrepreneurs that comes out here. I do think the greatest onus is on the corporate side of the collaboration.
If history has shown anything, the best innovators simply find ways to scale on their own. The great juggernauts Facebook, Twitter, LinkedIn, DropBox, Salesforce, Amazon and more built their own flywheels of success, perhaps selling to global institutions but certainly not waiting for them.
Juggernauts should walk with some humility.
At the same time, as the vast majority of startups fail within a year, humility on an entrepreneur’s part is equally required. Note I did not say patience.
The result will be a thriving ecosystem that can help the Middle East rise more rapidly as an economic global hub. It is an opportunity that can help both startups and more established players in the region leapfrog to the front in these rapidly changing days.
I believe now.