"You can’t go alone. You need to partner."
That statement is lifted directly from the pages of a best-selling book by one of America’s best-known and most accomplished entrepreneurs. In "The Third Wave," AOL co-founder Steve Case envisions a radical new future for startups and corporations that’s built on collaboration—not cutthroat competition.
As an entrepreneur who has dedicated my entire career to bridging the divide between corporations and startups, I’d argue the future is already here.
Today, more than 60% of CPG brands are now collaborating with startups, and the corporate appetite for startup partnerships shows no signs of slowing. Just look at all the brilliant work coming out of corporate venture funds like Diageo’s Distill Ventures, R&D labs like Unilever's Foundry unit and Kimberly-Clark's global D’Lab initiative.
The flurry of activity begs an important question: What is the best way to partner with a startup?
To drive true innovation within your organization, here are three best practices you can implement today:
Know that innovation starts from within. Most brand innovation directors I’ve met are under intense pressure to deliver big game-changing results for their companies. So I can imagine how exhilarating it might be when you come across that gem-in-the-rough startup that can help rocket your company into the next stratosphere.
The biggest challenge, however, is internal innovation literacy. Just because you might understand how an augmented reality app can open up an entirely new revenue stream for your brand, doesn’t mean your set-in-their-ways marketing team does. (Or the procurement team, for that matter.)
You are the central point of impact. It’s your job to help them see the magic you see. It’s your responsibility to tell them why innovation is an investment, not an expense.
One place to start is to have the startup do some of the work for you. Ask the company to arm you with concrete information on exactly how their technology can tackle your company’s business objectives. Collaborate with them on establishing realistic KPIs and success metrics for the duration of the engagement.
If they’re a true peer, they’ll be more than willing to find ways to help you get your internal stakeholders on board.
Be mindful of the startup’s ambition. Ask yourself: Are you a tire-kicker or a serious player?
I hear from startups all the time who say they’ve "got a bite" on a partnership with a big brand. (I would know, I was one of them.) More times than not, they soon learn: that it was just a flirtation, there was a misunderstanding over what their technology could actually deliver, or the brand’s timeline for the partnership was wildly different than what the startup had in mind.
It’s why mutual education is so important.
Startups should be completely transparent about what they can actually deliver and when. And brand innovation teams need to understand exactly what the technology can and cannot do, and be completely up front with the startup regarding realistic budgets and timelines.
In other words: Don’t give a startup the "come back to us in three months" line if you really have no intention of partnering. Cut them loose and let them find another partner who is better suited to their ambition.
Realize that less is more. Brand innovation labs are littered with discarded pitch decks from startups that didn’t quite hit the mark. Is it a startup problem, or a corporate problem? I’d argue it’s both.
Brands must maintain a streamlined system to enable their teams to filter and select the best startups. They must resist the temptation to engage in what Fortune’s Erin Griffith lovingly refers to as "corporate innovation theater." If you’re galavanting around Menlo Park with no real strategy, you’ll have little to show for your efforts when you return home.
Instead, invest in establishing a filtering mechanism that works for you. Constantly assess the "tools" in your startup evaluation arsenal—from your acceleration program, your hackathon series, your startup challenges, your partnerships with the VC and startup accelerator communities. Are they all yielding good results, or are some merely PR stunts?
Be vigilant about your processes and document your best practices for the next wave of brand innovators. As the role of the Brand Innovation Team continues carve out a bigger role in the C-suite, now is as good a time as any to start putting your best practices down on paper for the next generation.