Why work with startups? How to rejuvenate corporate culture
Many firms wish to innovate and encourage entrepreneurial behaviour among their staff. A good way to start is through collaboration with startups, that put innovation at the core of their business.
Why work with startups? How to rejuvenate corporate culture
Many firms wish to innovate and encourage entrepreneurial behaviour among their staff. However, a common problem for mature businesses and large organisations is how reconcile this desire with established - and often very rigid - internal procedures. This is sometimes described as the ‘exploit versus explore’ problem - a firm which has shaped itself for the efficient exploitation of a particular market often becomes very poor at developing and exploring new ideas.1
Part of the solution may come from new processes and informed leadership. But a large part rests on corporate culture and the attitudes of staff. This is not an easy thing to change, not least because culture is diffuse and intangible. Nevertheless, people are the core asset for most businesses, and their motivation and approach is crucial for corporates to innovate and perform well. So how can a firm persuade its employees to embrace a more entrepreneurial culture?
The infectious enthusiasm of startups
A good way to start is through collaboration with other organisations, especially startups, that put innovation at the core of their business.
As mentioned in 10 top tips for working with startups, startup competitions, hackathons, accelerators and incubators all provide exposure to startups in a way which can help foster an entrepreneurial mindset within a firm (read Winning Together- A guide to corporate-startup collaboration to find out more).
This exposure provides an opportunity for the passion and infectious enthusiasm of startups to rub off on staff. For instance, Dell for Entrepreneurs is ‘helping Dell team members to understand the passion and the energy of entrepreneurs around the world’, according to Sarah Shield, Executive Director & General Manager for Dell UK. Shield continues: ‘if we can emulate this drive inside of Dell, motivation and performance is impacted positively.’
Google is another firm which has long understood the motivational benefit of working with startups. Google famously contributes to the startup community by providing spaces, events and free resources. Mary Grove, Director of Google for Entrepreneurs, told us that apart from any longer-term economic benefit to their firm, one of the advantages of working with startups was that ‘it makes Googlers feel happy to be at Google’. At Google Campuses, employees can spend 20% of their time on a project which is separate to their day job, as part of Google “20% projects”. As Sarah Drinkwater, Head of Google Campus London, affirmed: ‘if your corporate does anything with or for startups and the only team that speak to entrepreneurs are those that run that program, it’s a real missed opportunity’. Drinkwater continues: ‘Seeing how small teams move fast and iterate is more powerful in person than on paper. Large companies need to make the most of their most valuable resource; people.’ In return, startups can get high level mentorship from Google employees, who can help entrepreneurs solve problems, from marketing to engineering.
Besides this infectious enthusiasm, exposure to startups can also open the eyes of staff to new business models, technologies and industry trends. This has knock-on effects in other parts of the business. As Harrie Vollaard, Head of Innovation at Rabobank, commented: ‘our startup programmes help us understand what’s going on, understand new trends of the future and technologies, find new business models and collaborate with the startups’. This opens new opportunities to Rabobank, that considers collaboration with startups an important way to differentiate itself from competitors and create value for clients.
Internal incentives and KPIs to make it happen
Passionate startups can provide great inspiration. However, if a firm’s internal processes and incentives dissuade staff from acting, that inspiration will soon be lost. A firm that does not reward employees who 'get their hands dirty’ with innovative (and risky) projects, cannot expect them to explore new initiatives and try radically different ways of solving problems. This is a role for leadership; such incentives must come from the top-down.
Dell is one firm which claims to have thought a lot about leadership and incentives for innovation. CEO Michael Dell refers to Dell as ‘the world’s largest startup’. Todd O’Brien, Co-founder of Dell for Entrepreneurs in the UK (watch interview here), says that employees and managers ‘are all encouraged to reach out to the small business community’. To ensure that this is taken to heart, Dell includes ‘entrepreneurial spirit’ among its key performance indicators during staff evaluation.
In a similar way, Mike DeNoma, CEO of glh Hotel group, has set up incentive structures for the CEOs of each subsidiary hotel chain, giving them the mandate to investigate new technologies and develop innovative solutions that improve customers' experience.
Create a startup environment with internal competitions and challenges
A positive spillover of working with nimble startups, is that it fosters creativity among employees and their desire to start something new. To make it real, corporates can promote internal competitions among employees.
Rabobank, for instance, has an internal campaign called ‘Moonshot’, which is a competition that aims to selecting the most groundbreaking technological idea from Rabobank staff worldwide. 'Moonshot refers to the quest to make the impossible possible and is a term that was coined by President Kennedy in the famous speech he gave in 1962’, explains Vollaard. After evaluation by a jury of professionals, the Innovation Board, and eventually the Executive Board, the best idea is selected and receives the resources (budget, time and mentoring) required to make it real. ‘I think that’s a really nice way to push innovation within Rabobank’ commented Jeroen Brouwer, Community Banker at Rabobank.
Power company Enel set up a similar programme called the ‘Innovation World Cup’. Employees submit their ideas and the most interesting ones receive both mentorship and money to turn the idea into business - which is owned by Enel but managed by the employees with a possible stock option plan. These ‘intrapreneurs’ are rewarded with an ‘innovation career path’, which is seen as an acceleration of their career.
This week top tips from corporates:
You need to have people internally who really want to move forward working with startups, and do it, no matter what other departments say. These are the real champions who create the right atmosphere inside your company to embrace startups.
Clearly outline what your relationship with startups is and what you are trying to achieve. Set clear expectations and invest for the long term, not for a quick sale.
Do your research to understand from the community what their specific needs are and what’s in it for you. Understand what impact you want to have in the long term.
Would you like to add your comment? Do not hesitate. We love to hear from you, keep the conversation going!
 See Charles A. O’Reilly & Michael L. Tushman (2004) ‘The Ambidextrous Organisation’: https://hbr.org/2004/04/the-ambidextrous-organization