Four enterprise execs explain how to forge successful startup partnerships
Executives at large organizations often look to startups to inject fresh energy and innovative ideas into their companies. While there’s an inherent risk associated with working with young, unproven companies, the reward can be significant when it works.
Over the past several months as this publication has come to life, I’ve had the opportunity to speak to a number of executives, and a common theme emerged: startups provide a vital supply of innovative solutions that established vendors might not even consider. That’s partly because it would undermine their existing markets or may simply be due to institutional inertia. Whatever the reason, large companies often need the creativity and inventiveness that startups bring to the table.
Sharon Mandell: Follow the money
Juniper CIO Sharon Mandell has encapsulated this sentiment when she said, “We are always looking at startups because you have to, because the big guys aren't solving every problem.” However, she emphasizes the importance of hedging bets and thoroughly vetting potential partners: "We try to do our best to know who we're buying from and who's backing them."
Martin Brodbeck: Have a clear roadmap for integration
This drive to work with innovative companies has led some executives like Martin Brodbeck, SVP of consumer engineering at PayPal, to develop their own strategies for evaluating and engaging with startups. Brodbeck has honed his own 4-step methodology over 20 years as a technology buyer: “Number one, do you have a unique set of capabilities that can help us solve a problem? Two, how would this solution integrate into our existing tech stack? Three, how would you operate and support this thing at scale? And four, what's your feature roadmap for future capabilities we're going to need as part of this platform?”
Juan Perez: Ensure alignment on strategic goals
Even large organizations like Salesforce are actively seeking out innovative companies. CIO Juan Perez highlights his own guidelines for assessing startup partnerships: “When I look at startups, first of all, their technology needs to be aligned with what we're trying to achieve in the organization. It has to be something real, grounded in reality, not imaginary things that will come in time. And third, there needs to be financial support from others who believe in the value of the technology,” he said.
Rinki Sethi: Mitigate risk with innovation labs
But it's not just about technology. Rinki Sethi, CISO at BILL, stresses the importance of a structured approach to working with startups to provide a way to test and evaluate them in a controlled way. “The key is to mitigate the risk by having a lab environment or innovation space where you can test their products and ensure they meet your security and operational standards before scaling,” she said.
In addition to all of this, these startups are building stuff so you don’t have to. In the build versus buy calculus, it’s sometimes easier to bring in a startup already doing it, rather than trying to build something from scratch.
Andy Thurai, an analyst at Constellation Research, sums it up by saying that startups are where you find bleeding-edge ideas, but they also sometimes come with certain risks around viability and ability to scale, and you have to acknowledge and prepare for that. “The trick is to validate their use cases rigorously and ensure their solutions don't introduce vulnerabilities into your ecosystem. It's about finding the right balance between innovation and governance,” he said.
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