Innovation Through Startup Partnerships: 6 Key Steps for Large Organizations to Consider When Executing Joint GTM Partnerships with Startups
Authors: Jake Gordon, Ryan Chandra

Innovation Through Startup Partnerships: 6 Key Steps for Large Organizations to Consider When Executing Joint GTM Partnerships with Startups

Executive Summary:

·??????When looking at the shifts in rankings of the most valuable companies over the last 20 years, it’s clear: innovation & disruption are inevitable and continuous in the business world.

·??????For incumbents, the competitive landscape is constantly creating new challenges and pressure to keep up with the velocity of successful products, services, and technology coming from upstarts.

Research from Accenture shows that executing this innovation is hard: While 88% of companies finally have a clear picture of the challenges they face today, only 6% are completely confident in their current abilities to foresee and respond to future disruption.

·??????One path for companies to solve problems and innovate with greater speed & velocity is via highly deliberate startup partnerships.

·??????Why? Startups and Fortune 500 Companies have unique strengths, which are like their competitive superpowers. ?By combining strengths through purposeful collaboration and partnership, both parties can benefit from each other’s “superpowers” to become more successful (1 + 1 = 3).

  • Startup Superpowers (not exhaustive): Cutting-Edge Technology, Rapid Product Development, and Operational Agility & Nimbleness
  • F500 Superpowers (not exhaustive): Operational Scale, Financial Resources, Extensive Customer Network, and Proven Track Record of Delivery Excellence

·??????The right time to partner is when a “burning platform” challenge or opportunity exists for the large organization, and leaders are looking for bold, innovative, and technologically advanced solutions - opposed to ‘building’ themselves.

·??????Here are 6 key steps that leaders at large companies can consider when executing strategic go-to-market (GTM) partnerships with startups:

Step 0: Problem Identification and Internal Executive Sponsorship

Step 1. Startup Sourcing & Market Scanning?

Step 2: Startup Shortlist Diligence

Step 3: Top Startup Selection

Step 4: Running Controlled Pilot with selected startup(s)

Step 5: Deployment in Single Business Unit

Step 6: Scale Across Enterprise

?Read more below for full details!

About the Authors: Jake Gordon is a part of Accenture's Open Innovation team, which enables Accenture's clients to take advantage of emerging startup technologies. This article reflects his experience with the aim of democratizing and sharing insights for the benefit of all companies to be able to take advantage of emerging startup technologies. Ryan Chandra is a Stanford ’21 grad and Strategy & Consulting Analyst at Accenture, where he leads a team of 50+ Ventures Ambassadors in support of the Open Innovation team.

?Introduction:

Over the last 20 years, the wild swings in the rankings of the most valuable (market cap) companies in the world, as seen in the above video - highlight that innovation & disruption in the business world is continuous and inevitable. ?

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History shows that no matter how seemingly powerful and entrenched an incumbent is at the time – there are new & innovative products, services, and technologies emerging around them. Evidence of this: early in the millennium, many of the companies (Apple and Microsoft being exceptions) on the right side were either startups or had not even been born. Today, however, these ‘FAANGM’ technology companies are the largest and most powerful in world.

Despite knowing that disruption and change are inevitable– many companies struggle with adapting and reacting. Accenture research shows that while 88% of companies finally have a clear picture of the challenges they face today, only 6% are completely confident in their current abilities to foresee and respond to future disruption.

?Partnership – instead of pure competition – between incumbents and startups, may be a rapid way that this 94% of companies can gain greater clarity on how they can innovate with greater pace.

Our experience structuring partnerships and engagements between startups and the Fortune 500 within Accenture Open Innovation has demonstrated strong potential for this channel to drive innovation.

Why should Fortune 500 Companies partner with startups?

When a large company has a key priority or ‘burning platform’ area for the enterprise (if you are on a burning platform, you have to do something!), it may make sense to partner with startups operating in that category rather than buying or building. Both startups and the Fortune 500 have inherent strengths that, through effective collaboration, can be used in concert to empower both players.

Specifically, startups have speed, agility, and technologically innovative products / services. However, they often lack scale, infrastructure, financial or supply resources, and operational excellence at global scale. Meanwhile, big companies have massive scale & resources and proven customer demand for products / services. On the other hand, at times, they lack the bleeding-edge innovation and agility that could enable them to quickly deploy new solutions into market.

Importantly, when these two entities effectively partner, they can fill these gaps. Strategic collaboration can drive ‘win-win’ results (1 + 1 = 3): startups acquire large customers to deploy their technology at scale, and enterprise companies unlock new capabilities to remain competitive in their respective categories. In fact, according to an Accenture survey, 85% of business leaders believe that this type of purposeful partnership is critical to their strategic plans.

Example (Public ): The World Economic Forum’s Consumer Industries Taskforce on Future of Work challenges companies to explore new ways to reskill their workforce in a changing technological & labor environment. As part of a solution, Accenture brought SkyHive into collaboration with Walmart and Unilever as early experimental leaders. Through the joint industry effort, the organizations began a ten-week proof-of-concept of reskilling and redeployment effort. When scaled, this program will help workers remain productive and employable in the future labor market.

Having established the importance of partnerships, the next question is: How can big companies begin a partnership with a startup?

Here are key considerations in developing a strategic go-to-market partnership:

The process begins when a business or technology problem / opportunity / priority area exists for a large company and requires immediate attention.

Step 0. F500 team, with executive sponsors and budget for diligence, decides to explore the startup market and embarks on the process to find the right startup partner.

Step 1. Startup Sourcing & Market Scanning ?

With a specific category selected, the company team, an individual, or a strategic consulting partner embarks a startup scan leveraging a combination of public & proprietary databases (CB Insights, Crunchbase, Pitchbook, Tracxn, etc.) to narrow down the list of target partners based on well-defined criteria. Consulting partners often have unique, non-public insights into who the best startups are within a category, which is why they are leveraged at times for Due Diligence as a Service (DDaaS).

Weighting is given to different key criteria based on the company’s preferences. Usually, the scoring of each company comes from data in public resources and a series of screening calls.

Criteria could include (influence out of 100%):

  • Product / technology fit within area of focus (~40%)
  • Existing F500 customers & success stories (~20%)
  • Integration ability with other ecosystem partners / demonstrated ability to scale within large technology infrastructure (Microsoft, AWS, Google, SAP, Oracle, Salesforce, etc.) (~15%)
  • Industry relevance (~10%)
  • Funding & quality of investors (~5%)
  • Founding team expertise (~5%)
  • Geographical proximity (~5%)

Traditionally, a spreadsheet or slide deck is created to rank and prioritize the vendors that are the best fits.?

Step 2. Startup Shortlist Diligence

Once a shortlist is created and the executive sponsor has approved, an internal, external, or hybrid team begins outreach to conduct diligence on each prospective startup.

Diligence items could include:

  • Technology – How does their product work? Does their product work as promised?
  • Customer – Do their other customers like their product? Have they spoken in public or on the record on their behalf?
  • Operational – Does the startup have the people and processes to deliver with excellence?
  • Financial – Is the company in good financial standing, or are they at risk for insolvency?

Acquiring this information often involves signing an NDA and several rounds of demos, pitches, and/or documents transfers.

Step 3: Top Startup Selection

After multiple rounds of demos and diligence, a recommendation is made on who the top partners are. At this point, strategic advisors or consultants are often leveraged due to their unique insights and perspective on the given market and vendors.

The executive team then selects the top 1-2 partners with the strongest leadership buy-in, strategic alignment, and business case.

Step 4: Controlled Pilot

The pilot is an opportunity to assess how the top startups perform within a small use case. The assessment may take the form of evaluating each startup against each other or reviewing each startup's joint collaboration with a single company.

Pilot key considerations include:

  • Executive sponsorship and cadence with an accountable team
  • Clear KPIs and goals
  • Secure but streamlined data / tech access
  • Timeline to decision

Step 5: Deployment

After the product is tested, key outcomes and performance are met, and the startup’s technology has been evaluated in a highly regulated environment, it’s time to deploy at scale. This often looks like a paid license for a deployment within a single product category, business unit, or division to continue de-risking the implementation.

Step 6: Scale Across Enterprise

If the initial deployment is providing a success after ~3 months and a rigorous analysis of performance has been conducted, the large company should seek to deploy the solution enterprise-wide (or at least dramatically increase the scope) to ensure that maximum benefits are realized.

Does that resonate with your experience? Are there things that were left out, or have you had a different experience? Comment below!

Jake Gordon – Northeast GTM Lead, Accenture Open Innovation

Ryan Chandra – Strategy & Consulting Analyst, Accenture

Finally, a shoutout to Lehigh University Professor Josh Ehrig undergraduates, and Gabby Alves, Lauren Pendleton, Veronica Rostkowski, Tracie Dinh, and Zaul Perez for inspiring research from this blog post.

Jeremy Alston

Technology Strategy | Machine Intelligence Innovation

2 年

Amazing work Jake!

Ly Nguyen, MBA, FRM

Accenture Open Innovation I Startup Partnerships I Startup Advisor | Technology Innovation I NorCal Women ERG Lead

2 年

Partnership! Bundle offerings! You rock, Jake!!

Caitlin McMillin

Technology Innovation | Early-stage GTM & Partnerships | Startup Advisor

2 年

Lets gooooo ?? You make it look easy, Jake!

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