In this blog I will give an account of my recent activities and thoughts regarding my current project. Currently I am working on a paper that investigates stakeholder engagement practices between big corporations and startups. The topic is of high relevance in academia reflecting our SDIN Work Package II “Stakeholder Participation in Value Co-creation”, but likewise and ultimately important responding to the industry, calling for support. The “WHY” of collaborations between big corporates and startups is evident from an industry perspective (“innovate or die”) and also academic research has confirmed the necessity and general positive outcomes of these collaborations, although it seems that the “HOW” is still a conflict zone of trial and a lot of error. Needless to say that corporates and startups are very different in size, applied processes and especially culture that as a consequence collaboration in practice isn’t a piece of cake. To get acquainted with the stakeholders in regard and their current pain points, I did attend the Rainmaking Summit, an event designed to address the “HOW” in question. The London based event gathered 280 participants to discuss pain points, learn from each other and get buzzword free advice from the innovation frontline held by experts of facilitating the acceleration of innovation. Besides meeting old friends and colleagues my goal was to touch base with the three stakeholder groups, their perspectives on the collaboration and the practices they apply in order to prepare myself for further empirical research on this issue.
What I learned was that despite the “WHY” is clear to partners they have a hard time to put themselves in the shoes of their opposite, often because of a lack of trust, since the partner is almost the exact opposite in terms of culture, commercial track record and way of conducting business. Many times it is the simple fact of un-aligned interests plus a lack in transparency of who gets what out of the collaboration that sabotages the road to success. Corporates need to stop playing with startups since they can’t afford to wait for the next decision cycle, and startups need to trust their unique capabilities and get over the NDA* drama in order to potentially scale big time. Furthermore, to partner beyond the colored walls of fancy innovation hubs, one needs to get the buy-in of middle management which turns out to be mostly not incentivized yet in contrast to top management. New practices like co-staffing for example “Executive-in-residence” (a well connected high level corporate that is located with the startup) are promising phenomena to mitigate cultural and process gaps but more strategic practices (e.g. portfolio approach) as well as further hands-on practices (e.g. organizational storytelling) are needed to put the corporate engagement needle forward and initiate a change of mindset. The range of engagement practices also needs to span across a partnership lifecycle from onboarding new partners and catering to different needs (e.g. Early Stage vs. Growth Stage Startup) down the road to market entry, scale-up, split-up and exit. Zooming out from my current paper focus at the practice level, the broader question is “How to enable diverse stakeholders to integrate each others resources in a service ecosystem?”
I propose that corporations need some form of an Organizational API** – a kind of stage-gate process for corporate engagement – that aligns culture and processes, enables new practices, distributes risks and shares KPIs between changing asymmetric partners, in order to foster mutual resource integration in an ecosystem of social and economic actors, consequently aiming for innovation and scale.
My current and future work will hopefully contribute positively to tackle this industry challenge and ultimately culminate in a worthwhile dissertation in Service Design for Innovation research under the theme of “Stakeholder Participation in Value Co-creation”.
*NDA = Non Disclosure Agreement. For example, startups often ask corporates for NDA’s when they have unique technology because they fear that the corporate pulls a partnership bluff and develops their own technology in parallel to potentially dump the startup later on.
**API = Application Programming Interface. Third party developers can connect and integrate their technology solution with a supply or distribution platform through an API.