We need a different approach to innovation and implementation when comparing Startups versus Corporates. To quote Steve Blank: “In the last few years, we’ve recognized that a startup is not a smaller version of a large company. We’re now learning that Corporates are not larger versions of Startups.”.
Large companies have finite life cycles and prefer sustaining innovation. Most grow by offering new products that are variants of their core products. Their size and culture make disruptive innovation extremely difficult to execute. The Business Model Canvas comes in multiple shapes and sizes, but it is the easiest way to outline the structure of the business model and implications for any party involved, and different for Startups versus Corporates departments and culture.
The Startup Case:
Business Model Canvas for a Lean Startup
You may keep things easy using a reduced version of the business model canvas. The Work Order looks like this:
- Unique Value Proposition
- Cost Structure
- Key Metrics
The Product Development comes in 3 stages
Here starts an iterative number of pivots, based on real-world experience, measured by initial results.
- The Low Fidelity Minimum Viable Product
- High Fidelity Minimum Viable Product (Beta)
The Corporate Case
There are some reasons, why corporates aren´t open to change.
- Reputational damage – When a client or corporate data is involved in the product development process, failures may damage the brand and reputation.
- Lost investment– Many start-ups fail, so the investment risk for corporates is high compared to their usual investment projects.
- Misaligned employees – Corporate employees are trained to follow processes and tend to regard failure as jeopardizing their career. They might feel threatened by the start-up’s unfamiliar culture and remain overly protective of the status quo.
- Unsure outcome – When projects include unfinished products or work with start-up entrepreneurs and inexperienced teams, results are difficult to predict.
- Maturity misalignment – When corporates engage with start-ups that are proposing a new business model or a new technology that the corporate enterprise is not yet ready to adopt or to experiment with, this inherently leads to a fruitless collaboration
Prototyping and pivoting hardly work in corporate culture.
If it´s worth to conduct a diligent preparation, then we do it. If it´s not worth it, it probably won´t work in corporate culture.
Collaboration between Start-ups and Corporates – A Practical Guide for Mutual Understanding, published in January 2018 by the World Economic Forum offers some practical guidance to a better mutual understanding as to the basis for successful collaboration between start-ups and corporates. Collaboration could become Europe’s strong point.