Startups and established companies should better work together, to grow and innovate each other. ITnation asked some startups CEO and CIO of large enterprises to share with us the keys to a win-win collaboration. Michel Hazen, co-founder and COO of Synedge *, prefers to speak of the concept of symbiosis – By Sebastien Lambotte
In what way do important economic players work best with startups?
A term not so much used in the standard corporate dictionary is ‘symbiosis’. We’ve all heard of win-win situations, synergy, operational excellence, corporate agility and other contemporary corporate clichés but symbiosis is rarely heard.
In nature, symbiosis can be seen as two unequal life forms cooperating for mutual benefit. It is seen with the little bird eating the parasites from the rhino’s skin. Both creatures are at opposite ends of the spectrum in terms of size, force and competence but both benefit greatly from their co-existence.
This metaphor sprung to mind when thinking about in what way can startups be promoters of innovation for important economic players. Just as the small bird helps the rhino, a technological startup can help a large corporation with efficiencies that they cannot develop internally.
What are the main differences between a startup and a big corporate company?
What needs to be considered first is why it might appear that large corporations cannot be innovative on their own. It is definitely not the case however it is also not uncommon for corporates to struggle with their innovation and especially find the time to market it.
After some desk research (Google is my friend), I’ve read through some articles of renowned sources like Harvard, Forbes and McKinsey. According to their thinking the main reasons why corporates struggle to innovate are related to the maturity of the organization. A startup’s success is measured by how well it identifies a problem in the market and matches it to a solution. The most important goals are to get into the market, find the right sweet spot, grow and eventually make some profit of it.
Corporates have already gone through those fazes and operational excellence, efficiency, quality control, compliancy and profitability. Share holder value are now factors that are driving the company. Once a business figures out how to solve its customers’ problems, organisational structures and processes emerge to guide the company towards efficient operation.
You could say that the focus for mature organisations is mainly internally as their position in the market and reputation are more defined than young companies.
For established companies, what are the challenges in terms of innovation ?
As a CIO you need to be in control of various, sometimes contradicting, force fields. To name a few: IT operations, innovation, compliancy and accountability. So you need to keep the lights on at any given circumstance but at the same time you need to innovate so as not to become obsolete and give full accountability over your spending. Sounds like a tough balancing act: a robust can-do-everything system that is easily adjustable to the latest market trends (with the same corporate robustness) at reasonable costs.
Corporate CIO’s need to pick their battles on this and understandably choose robustness and accountability over innovation as most of them are judged more on the first two short term criteria then the latter, long term criterium.
The bigger or more mature the company gets the more risk averse it gets, regardless of whether or not the company had innovation running through its veins as a startup from years ago. Forbes also points out that a shift in ownership, a shift in leadership and a shift in human resources are important drivers behind this. The tendency for a big corporate to manage in a consensus atmosphere and promotion from within are other reasons why corporates loose their innovative appetite.
All in all, corporate innovation is more focused on efficiency and optimising current processes to do more with less. Recognising the limits of organisation innovation can lead to the need of working with outside organisations and empowering teams to operate with very different goals and metrics.
Now this is where the symbiosis with startups steps in.
How the symbiosis should operate?
Innovation is not a structured process. It happens all the time at any level, at any given moment. Most often frustration with current suppliers/products are driving innovation. Every innovation starts with questioning the status quo. I’ve never seen a Gantt-chart that pinpointed the exact moment when innovation will take place. Or corporate agility or operational excellence…
Corporates can help startups with their internal structuring, administrative and legal aspects and in return startups can act as off-shored innovation centers where all energy goes to innovation, not admin or extensive reporting. This only takes time and energy away from innovation.
It needs to be remembered that a startup does not mean ‘instant success’. As always things have to grow and develop. All startups are convinced of their possibilities in the global market place but they all need to find their exact sweet spot and ‘modus operandi’ mostly by trial and error. They do it by taking a few steps back or pivoting on a dime and moving in a different way. Again, no Gantt chart available for this. Corporate agility sounds like an oxymoron in this regard.
As with all relationships, the keys to success are communication, respect and knowing where the boundaries lie. The little fish knows not to venture too far into the sharks mouth, lest they be eaten. The shark doesn’t eat the little fish when having an off day. Once the parameters for the symbiosis has been set and both sides are mutually benefiting, a continued respect for what the other does is crucial and if there are any changes then this must be communicated.
If life is a journey, being an entrepreneur and starting up your own company is the most exiting part of it: you have to persist, you have to dare to travel uncharted territories and per definition you will get stuck in the middle of nowhere one day. Just keep the faith you will find your way back.
Bon voyage, Michel
*. Synedge has developed and is operating the fastest content delivery network (CDN) in the industry for the mobile world. Synedge is part of POST Group Luxembourg.