Corporate Innovation Fails: Getting An Approval To Work With A Startup Is A Battle No One Wants To Fight

It all sounds great on paper and in press releases. Corporates have established user bases and customers that trust the brand. Startups have innovative technologies and energy to disrupt the status quo. Joining forces they add value to the customer while generating more business for both companies. So far, so good. Yet, in reality, outside the PR it’s rarely all roses.

We are starting this series, in which we ask startups about their experience with corporate incumbents. About their real experience – rejections to pay for the Proof of Concept after promising, no governance and painful processes. No names of corporations will be mentioned as the goal is not to expose anyone, but to gather learnings and contribute to the improvement of the processes and communication.

Our first guest is Svetla Simidchieva, co-founder of Maj.io, a four-year-old company, which develops AI solutions for talent acquisition in the IT sector. The venture, which was first launched in the U.S. market aims to improve candidates’ and recruiters’ experience through transparency and efficiency. Svetla is also the CEO of New-York based Placement Feed, a matching product designed for staffing firms.

Trending Topics: With how many corporates have you had discussions and negotiations? 

Svetla Simidchieva: More than 10 in the US and the UK.

What are the usual topics – selling them a product, PoC or something else?

PoC sort of (MVPilot). With new tech you have to prove first it works and then to integrate it in their systems making sure you give users what they want, in the case of point solutions.

Has there been a case while trying to work with a corporate client/ partner that you could call failure or a lesson on how things don’t work? What was the problem from your point of view? What could have happened better? 

Engaging the Head of IT early on could have saved the pilot. We did a pilot with one division of a Fortune 500 company in the US. We fostered great relations with the Innovation Hub, Division Leadership and users. We had open doors to see how users use our product and find ways to integrate with their systems (more than one). The problem came when it was clear we had to implement on-premises, which is not ideal for us, but quite manageable. What fucked up, was that the client corporate structure depended on approval from the Head of IT. Although the Division Leads tried everything they could, they were not successful and soon gave up the battle. It is a battle no one wants to have in the corporate world 🙂 

What’s the lesson you learned from this situation?

Get the Head of IT in the pilot as early as possible. Not an easy task at all in a Fortune 500 company, but hustle and support from stakeholders users can get you there. 

Based on this experience, what have you changed in the way you approach corporates?

Do not expect your client (typically a division within a large corporate) to fight battles for you. 

What’s your one piece of advice for someone who’s just approaching corporates?

Make sure you understand the roadblocks, the corporate structure, who is accountable for what, and except to identify the biggest pain point (startup are good at that), identify early which stakeholder can veto the pilot, even if the pilot metrics are great and users are happy. Also understand that people are lazy by design, all of us, and you need the right incentives so they go the extra mile. Normally, the incentive is solving one of their top 3 problems.  

When does corporate innovation make sense and when doesn’t, for you as a startup? Can you think of a good and bad example from your experience?

From my experience – both as running a startup and a coach in a corporate innovation program (SoInventure, Visa) – corporate innovation has to do with new ways of work. Change takes time, commitment and building new habits for a massive number of people within the organization. It has to do with breaking the silos, which does not happen overnight. The good part is, that corporate executives have FOMO too and they know that “objects in the rearview mirror appear closer than expected”,I think this is a Marc Andreessen quote, but not sure, got it from their podcast :). So there is the right trigger and motivation from the top. 

Back in 2014, I saw the first Innovation Hub within a 500 company in NYC. Those guys were running lean, had several products in their pipeline and were able to attract talent from the startup world. They were successful because their reporting line was directed to the Global Business Unit Head grossing the top dollars in the company and knew they had a say. 

Another great example of another Fortune 500 – they knew they were running late on the innovation wagon and hired their Head of Innovation in late 2016. But they build such a strong team that within 6 months, the new Innovation Hub was transformed into a separate company (sort of Google Ventures model) and they are rocking it.

Do you see any patterns or issues that need to be addressed in the communication between startups and corporates? 

For startups – don’t wear a t-shirt or hoody when meeting face to face and train yourself to ask good questions :). Unless it is a straight sell, do not approach it as a sales process, but initially as customer development. This is true unless you already have 20 great clients and have made a name for yourself :).  For corporates – be more transparent. The corporate world is still extremely siloed, which is baffling in an age of transparency.