Gaining access to a corporate can boost business for startups, help validate their value proposition, give them access to an ecosystem and build credibility. However, corporates are not only colossal, they are also of a very different nature and can literally bring you to your knees – as I learnt the hard way.
A painful experience
A few years back T-Systems International, a tech outsourcing company that’s part of telecoms group Deutsche Telekom, had won their biggest outsourcing deal from oil giant Shell.
T-Systems faced a global challenge: trying to integrate around 1,000 Shell employees whilst setting up a follow-the-sun strategy, meaning that support centres in different time zones provide round-the-clock customer service.
The main challenges for T-Systems at that point were lack of understanding, awareness of different working styles and willingness to work with people they hardly knew. The VP in charge asked for our help.
Due to travelling restrictions, we offered a so-called ‘blended’ collaboration programme (with on and offline elements). We formed a new startup venture within the blended learning space. Because of the new technology and the size of the deal, the VP wanted an external company to measure the ROI. The message was clear: prove this new approach works and you will be recommended to the corporate parent with 380,000 global employees. The carrot couldn’t be any bigger and our entrepreneurial spirits were on fire.
"Corporate and startup culture are almost diametrically opposite. Who wants to fail fast in a corporate environment?" Paul Dowling, founder of Dreamstake Ventures
We rolled out the programme worldwide in three rounds to 1,300 people. We truly engaged with employees, requested feedback, and materials were updated and often improved each round. We reinvested all our takings into engaging content and pushed the project as much as we could for over 12 months.
We clearly surpassed expectations as 1,000 employees requested learning programmes on recommendation alone. The measured ROI exceeded 230%. But what should have been a no-brainer for any VP turned into an 18-month negotiation with corporate procurement.
The matter at hand
Startups are eager to prove their concept and scale their business. Naturally, corporates are huge, but we shouldn’t forget these are two very different business types. You would be well advised to prepare yourself and truly think through how you need to work differently to win big business.
It helps to gain additional understanding of how to deal with organisational bureaucracy. Let’s have a quick overview of the nature of the players, allow me to introduce you to efficiency-driven firms:
|Power-driven Startups||Order and efficiency-driven corporates|
|Indicators||Usually young businesses (less than five years old), growing rapidly, founder still in the business, catering for individual staff needs as long as they deliver, usually operating in markets with growth potential||Often organisations with 10,000-plus employees, known brands, clear hierarchies, clear role descriptions and step-by-step procedures, process and compliance are essential|
|Values||Growth, adaptability, change||Efficiency, certainty, stability|
It helps to start by clarifying that both business types are driven by very different and often opposing values. This fact influences many essential aspects of the partnership. We usually analyse 35 business drivers to gain insight into a business – values directly impact 14 of them.
Let’s illustrate by considering a few aspects of the buying process for large corporates.
The logical set-up: Imagine a human-sized tower of tissue boxes
Most corporates are organised in clear entities, which come under a larger unit, itself part of an even larger organisation. Lots of boxes to deal with. Identify the boxes you are engaging with and the larger boxes to which they belong.
If you ever get the chance to see the play Enron, you will be impressed by the visualisation. So, every box is looking after itself and interested in improving its internal efficiencies.
Considering your product or service, there are three levels of change and complexity to consider.
LOW: Your solution impacts one or a few boxes - you have a good chance of getting through; it will be weeks or months.
MEDIUM: Your solution impacts a large number of boxes, for example, an entire division - you are challenging the status-quo of a bigger number and it is going to be tough; it will be three–12 months easily.
HIGH: You intend to disrupt the entire organisation - you need the stamina to see this through and a focus on corporate politics as much as your service offering; six months will be the starting point and it's best to begin with a pilot.
What are they buying?
Entrepreneurs and startups love the idea of that game-changing new service which helps re-invent the entire organisation, but this threatens the status-quo. After all, everyone looks after their own remit and, understandably, seeks to improve efficiencies rather than disrupt the status-quo.
You also have to consider matrix organisations with cross-functions like legal, compliance, HR etc. looking after their horizontal boxes.
You may think your new tech will just help increase the sales and services of your target corporate, but note that this still means changing a stable system. Perhaps some of the improvements you bring are not being measured. And if your idea will help downsize business units, think about who you are targeting.
Who is buying?
Investments are usually simple for startups. If something helps to grow the business, even if it means radically reshuffling the football-team-sized bunch, and the boss agrees, why not?
Corporates have various stakeholders and the higher the impact level, the more stakeholders get involved, like it or not. Hopefully, you will have a ‘head of box’ on your side.
As the change level increases, so does the number of committees charged with considering the matter at hand. Some people get involved to minimise disruption. As soon as cross-functions enter the room you need to completely rethink your value proposition. Believe me, you don’t want the compliance department minion against you!
Finally, procurement departments also look after their own unit. The head of procurement’s Christmas bonus may be linked to how much his team saves.
How are they deciding?
As with everything else, decision-making follows processes and guidelines. Fortunately, most corporate employees would relish the opportunity to take you through the entire process. So find as many people as you need to understand the entire flowchart.
You might think you are unique but you will soon learn from procurement that you need to tender to ensure equality, fairness and value for money, and to provide them with additional facts and figures for the final negotiations.
“Never totally rely on a corporate unless you really have to. There is always a possibility of unpredictability and what looks like irrational actions when dealing with a corporate entity.” Kerstin van Eckert, Co-founder of Pathfinder
With the right business contacts, you can ensure your specifications end up in the tender. However, this step alone can add another three-six months.
You would also be well advised to clarify who owns the budget, who decides and who influences decision-making. If you ever come across a decision-making matrix, take a closer look as this tool captures a lot of the corporate psyche.
Be clear about the two very different worlds coming together. Your pragmatism, common sense and willingness to rock the boat will be looked on with caution by people on the organisational chart. Learn more about different business cultures, the corporate world and how big business can help scale-ups.
Assess your impact level and prepare accordingly. The more radical, the more people will be affected, the more stakeholders you will engage with and the more time you will have to invest in managing people’s expectations and concerns. Even if there are job titles and people you cannot relate to, they may be critical to your moving ahead.
In hindsight, I am sure we might have been successful in the end, had we invested more time in managing key stakeholders in the parent organisation. I now appreciate it is better to be cautious when engaging with the often non-transparent and schizophrenic-looking giants of this world. They can help you scale, but could also cost you a lot of energy and maybe even your business.
In our case, undoubtedly, we did an effective and well-needed job. Nevertheless, we lost time, money and some faith in the business world. Ironically, we have come to understand that we can’t blame the corporate, but only ourselves for misjudging the situation and clients’ needs. We live and learn.