Being small is not easy. Being big is not that simple either.
While a start-up founder might think that it is so easy for a corporation to innovate and introduce breakthrough innovation that can disrupt industry, a corporate executive would think of an opposite. They both would be wrong and they can be right.
A start-up, or young, innovation driven enterprise, can move efficiently through innovation loops, validate or fail fast, and be agile, while a corporation can use its expertise, financial resources, partnerships and customer-base to develop, roll out or test a solution quickly, and all the necessary tools to push it in the market and sell.
A start-up usually lacks resources, such as time, money, HR, connections, or manufacturing facilities, while a corporation always struggles with its stakeholders and board’s inability to be flexible, agile, test out something that is not yet ready, and be OK with letting that something go, if it does not prove to be viable. Or to allow for a possible disruption of an existent cash-cow.
With these challenges, there come many opportunities. Opportunities to collaborate, innovate jointly, and help the other “party” so that each party’s strengths can cover the other one’s weaknesses.
Let’s take it step by step.
1. Pace
A start-up is always more quick in moving through innovation loops and early stages of the product-market fit validation. A corporate, in most cases, does not have processes in place for that. Same with a start-up. The difference is that the latter does not need to work out the processes across departments and get them approved by many stakeholders, and is not kept accountable for outcomes of the process, in opposition to a corporate’s C-suites, VPs, Directors, Board, tons of employees, shareholders, and more.
2. Expertise
A start-up might have a strong drive and its founders could possess deep knowledge in a specific topic, while lacking all the other technical, product, or business skills required to develop, test, or roll-out a product successfully. A corporation has a wide pool of expertise to pick from within its HR, but might not be that flexible in rotating team members from other, more fundamental departments, especially if just temporary.
Corporations have been trying to solve this by renting and borrowing teams or individual members between departments, making things easier for financial and HR departments, as well as the departments’ leaderships.
Corporations as Bosch have advanced the start-up engagement, and are doing well at involving their inhouse expertise powerhouse to help start-ups further develop their innovation, by allocating dedicated technical, business, legal, and other mentors or even temporary team members to the startups.
3. Humbleness
A start-up is humble. Usually. At least until it becomes over-funded. Being humble is something that a corporation is not meant to be. A start-up can, should and usually does start small, and is keen to admit mistakes, learn and move on. A corporation can’t afford that.
A start-up usually has a minor team of founders and possibly some early employees, and can go out and talk with prospective clients, existing customers, partners, and other parties. A humble experience of learning, passing information and connecting. A corporation’s C-suite has zero-chances of having a humble, open and honest conversation with its product’s end-user, or a minor supply-chain partner, or a competitor’s client.
A corporation has shareholders and other stakeholders to please. And the please is usually big. As Clayton M. Christensen discusses in his book, The Innovator’s Dilemma, when Apple was going through its development and growth phases, it was a big deal for the small Apple Inc. back in 1977, just 1 year after releasing its first product, to release and sell 43 000 units of its Apple II computer. Coming up with Newton, then a groundbreaking innovation, 16 years later and making it to 140 000 items sold, over 3x more than the Apple II success, was a failure for the big, public Apple corporation the company had become.
Start-ups are meant to be humble, corporations are not. Any reasonable management of a large company will see value in leaving the humbleness with start-ups, and engaging in low-key experiments with unpredictable results, while contributing with its resources, whether knowledge, connections, channels, or other, discussed before.
4. Ego
Something that is often unifying to all CEOs, whether behind a large corporation’s wheel, or a start-up team of 3 or 10 people hungry for success. While, according to Fortune magazine’s research , it is becoming extremely popular for the world’s largest companies to look for empathetic, somewhat down to earth, and selfless top management team members, the majority of those with the largest power in the corporate world are the ones endowed with an inflated self-confidence, unwillingness (or legally limited) to admit own mistakes, and incapable of distributing the power equally.
Some level of self-importance is of necessity for the survival of a start-up founder and its top management (in most cases the only) team. For a start-up, there is nothing more in the early days, apart from the big idea, rigid trust in themselves and the vision. Without that, the team would break and the start-up would die at first hardships, first “NOs” or first moves of a potential partner’s power-play.
5. Risk-taking
A corporation does not want a problem. A start-up loves problems. Any corporation wants to avoid problems. Both within itself as well as the outside world. If there is a problem, it means the corporation has to experiment, risk, and stress its staff. For a start-up, a problem means an opportunity to look for a solution, test it out, and try to scale it. When facing an inner problem, a start-up’s team sees it as an opportunity to grow, personally and professionally. A start-up life is a problem – solution path.
A corporation can leave the problem-solving risk-taking with a start-up, while supporting it with its knowledge, market data, connections, and funding. Much less funding than it would require for itself to solve the problem, and with much less risks of losing its face.
There are more similarities and differences to discuss, that make a reasonable fit for the both to work out a joint path, but let’s consider these 5 first. I will appreciate if you comment, add to the list, or oppose. If you are a start-up with an experience of working with a corporation, or vice-versa, I would love to learn your experience. Please reach out or leave your comment below.
