A co-operation between a start-up and a corporate can push both co-operation partners. Nevertheless, some co-operations fail – due to problems between the partners. To make a co-operation successful one should keep some challenges in mind before you start.
The World Economic Forum evaluated several co-operation forms and with it also the challenges a co-operation is confronted with. Often the problem is not the general aim the co-operation follows or different approaches towards innovation but rather the interaction or relationship between the two partners. The relationship meaning the communication and other interactions between the partners but also the understanding for each other is highly important because the co-operations stands and falls with it.
“A co-operation depends on the relationship between its partners”
Normally, in a co-operation the partners are equal and like to achieve a common goal. The problem with a co-operation between a start-up and a corporation though is, that maybe one or even both partners see the other one not as an equal player, due to cultural fit, business experience or company structures. Or due to a lack of references the corporate distrusts the start-up or vice versa. Another problem can be that the employees get overprotective to preserve their respective company structures or their jobs. Additionally, several internal as external interests have to be preserved or get aligned.
For this reason one should take more the small and soft factors into account. If one underestimates these challenges a co-operation can easily fail. For a better overview we identified 5 main areas a co-operation can get challenged with and what you can do to prevent a failure.
Not only clear exact settings for a co-operation but ensure smooth co-working through clear responsibilities and contact person or even an in-house point of contact (esp. for corporates) coordinating the co-operation with all departments.
Avoid challenges like miscommunication leading to unnecessary friction and delays, get lost in the corporate’s “maze” of various departments and responsibilities, misunderstanding of aims and needs.
Best: setup a clear communication structure for the co-operation.
Accepting or understanding the other one’s culture is highly important. Sadly, often the corporate sees in the more open company structure of the start-up a lack of professionality and treats it more top-down than accepting it as an equal partner. Without acceptance though many frictions can evolve and distract from the real aim of the cooperation.
Avoid challenges like top-down communication which conveys not only inequality but also mistrust and seeing trial and error as failure and not as a good way to seek innovation
Best: same eye level and tolerating each other’s approach
Without references a young company has it hard to convince a corporate for a co-operation. If once the co-operation had already started the corporate should ensure trust – also within its employees. The employees of a corporate as well as of a start-up can fear the loss of their company structures through the co-operation. Especially, the middle-management can fear that changes through the co-operation might endanger their position.
Avoid challenges like distrust between the two partners through clear legal framework and an overprotective middle-management by informing them and taking their critics serious
Best: ensure trust through clear legal framework and managerial support
The processes between the two companies e.g. the duration of the sales cycle may differ due to company size and experience. In addition, the various business units esp. in a corporate get not aligned what leads again to a siloed approach and with it to frequent changing requirements. Another thing is to clear how many “free” trials there are until one gets finally funding.
Avoid challenges like a siloed approach, too many “free” trials and uncoordinated processes
Best: discuss processes first and align them, clear settings and harmonize internal participation e.g. only one responsible unit or person
It is necessary to be open for innovation – in view of managing the trade-off between long-term and short-term benefits and thereby handling different interests in the company – but also to find a way how to implement innovations from outside into the process.
Avoid challenges like “not invented here problem” through close interaction or internal briefing to the new process and conflicting interests or expectations by clear communication
Best: already work close together to develop innovation or get updated on a regular basis; comparing short-term gains with long-term benefits and communicate them.
As a start-up itself, Talent Tree, knows about the challenges with and within co-operations. A clear communication, a trustful partnership and open minded partners are definitely the essential items making a co-operation working. Besides, acceptance and tolerance are here highly important: Accepting the other one as equal as well as tolerating different entrepreneurial views or cultures. The diversity between the partners can be at the end the innovative factor making the difference.
This implies that nothing endangers a co-operation like a top-down view or a distrustful relationship between actual partners. To ensure a smooth interaction one should keep the 5 challenges in mind. Otherwise the co-operation will fail or even pose a risk on the co-operation partners. To inform you also about the hazards a co-operation can bring with the next article in the Talent Tree Blog is exactly about the pitfalls of a co-operation.