May 22, 2019
How Incumbents Can Smother Startups
by Amy Radin
Too few people in the corporate world act on the recognition that their people, policies and processes can absolutely affect startups’ survival.
One of the most fun and inspiring endeavors I’ve undertaken in my post-corporate life has been to advise select early-stage companies, portfolio managers and accelerators.
Startups need lots of marketing advice, especially early on when there may not be a CMO on board. As a result, my work often involves defining audience targeting strategy and the value proposition (from the buyer’s perspective), building the messaging framework and then spending lots of time advising on how to navigate the corporate gauntlet.
The problem is, even with a well-defined marketing, communications and sales strategy, a startup at the pre-seed, seed or even A-round stages may not have the endurance to make it through the corporate gauntlet. The effort is just too complex and time-consuming given the demands and limitations on a young company’s talent and the sensitivity to monthly cash burn.
You may say, well, the startup world is a bit Darwinian. Only the fittest survive, and that is to be expected.
My bet is that while most everyone at work in the corporate world acknowledges their own bureaucracies, too few act on the recognition that their people, policies, and processes can absolutely affect startups’ survival, which, in turn, hurts enterprise efforts to transform and innovate. Those in the corporate world pay a price for killing or weakening these innovators, who are a source of new capabilities that established companies are unlikely to create on their own.
Corporate leaders can do something about it – if they can summon the leadership, courage and tenacity to do so.
What exactly is happening?
Here’s a sampling of what I see founders run into, once the introduction is made and there is an expression of interest to learn more.
First, a couple of months pass to get a meeting on the calendar, and to take place with at least some of the right people in attendance.
See also: How Startups Win Customers’ Hearts
The conversation after the presentation and demo moves to: “We love this tech, and it would do a lot for our organization…”
Yet, within a couple of follow-up meetings, phone-calls and other internal introductions, the conversation switches over to one of many variations on the big “but” …
- “But we have too many priorities.”
- “But we have to pick our battles with [fill in the blank – procurement, compliance, information security, et al.]
- “But we have so many open roles that there is no one here to lead the pilot.”
- “But we cannot get the support in ‘the business’; they are just focused on this quarter’s sales.”
- “But it turns out we already do this or can do it ourselves.” [This is often untrue.]
These are real quotes from real conversations with well-paid, smart and accomplished corporate managers who get the reality of declining customer franchises, diminished brand commitment, new and unbounded competitors, legacy distribution, etc. Some of them are actually – yes – digital natives, and all are at least digitally enlightened.
I wonder, are they simply beaten down? Are they afraid? Do they define their roles as being great at repeating how things have always been done, and not deviating too much? Or are they trapped inside a legacy mindset, an outmoded idea of the value of speed (no, you cannot expect the world to wait for your annual planning cycle), and higher internal hurdles for getting approval to do new stuff than to maintain the status quo?
There are common characteristics inside large enterprises where the future is being advanced with meaningful adoption of some of the imaginative business models, offerings and technologies developed by startups:
- Leaders are allowing the processes, policies and procedures that are fit for the purpose of innovating to co-exist alongside those that are essential to sustaining earnings predictability.
- Leaders are willing to try new things and know that failure is a natural and expected part of experimentation.
- Leaders are speaking up and advocating for policy and process change and holding themselves and their people accountable for delivering the short term while also taking steps to the future.
- Leaders are developing their people, ensuring collaboration and diversity through action not just talk and having their people’s backs when they take risks.
See also: Who Will Win: Startups or Carriers?
Startups are discouraged by enterprise relationship opportunities where the pace and bureaucracy are simply too slow and complex to be practical when they have to demonstrate milestones every month to their investors.
Is your company or another one you know of missing out as a result? Do you believe something can be done to change?