How startups can capitalize on IoT's new shared economy
The common economy is here, inspired by the ideas behind collaboration, cooperation, common development, common innovation, common support, common competition, common everything and common everything.
We can think of the shared economy as a mindset, a process, and a value proposition for organizations to collaborate with other organizations. From one-off projects to ongoing initiatives, they bring their skills, talents and resources together. In the common economy, the customer is at the center - and likely to be one of the active players in this work.
The co-economy stems from an environment fostered by the Internet of Things (IoT) that demands speed, improved customer service, greater business agility, better responsiveness, lower costs and a compelling customer experience. Add to this a complex, fast-moving technology landscape, and it's clear that no one company can do it all alone.
This is especially true for companies working to co-develop or co-implement IoT solutions in the business-to-business space. IoT is built on complex technologies and processes, from sensor technology to networking to big data and analytics. No single company has expertise in all of these areas, especially if the solution needs to be tailored to the requirements of the industry segment. Collaboration is no longer an option. Suppliers must work through a select group of partners, each contributing their specific horizontal or vertical capabilities to provide a complete solution.
This is where startups come in. There are hundreds of IoT startups vying to deliver robust horizontal capabilities, modules or platforms to deliver IoT solutions, or specialized applications for specific vertical industry segments. Because IoT is such a large, complex, and rapidly changing field, it presents a unique opportunity for startups to carve out their place in the market and innovate with established players -- if they do it right if.
Co-innovation is easy to want but difficult to achieve.
According to a recent BCG study, while 95% of startups say they want to develop long-term corporate partnerships, only 57% do. Co-innovation between startups and large corporations can be tricky. Differences in size, culture, expectations, and behavior often hinder true collaboration and productive partnerships. Another recent study found that half of the startups working with the company rated these experiences as mediocre or worse. The dismal record isn't because companies don't value the contributions of their startup partners -- 82% say their interactions with startup partners are in some way very important, and almost a quarter of companies believe their startups Relationships are critical.
So why can't they do it right?
To ensure a successful partnership with a large company, keep the following lessons in mind:
Both parties should take the time to ensure their vision and values are aligned, with clearly defined and realistic roles and expectations. Startups should be careful not to be drawn into bespoke single client development or several different bespoke projects that take up a lot of resources or even divert resources away from core competencies and do not result in scalable and repeatable revenue-generating projects s solution. Startups should ask, is this real, or is it a science project? If you're working with a large client, make sure to work with their production team, not an advanced research group. If you're working with a large supplier, avoid projects that focus on thought leadership or "innovation as a sales tool." Consider possible culture clashes. Businesses may not be able to move as fast as startups are used to, and startups may not have all the formal processes a business needs. Startups should consider how to get through with the experience, resources, contacts and credibility in the market. This is especially true if a start-up is looking to expand its reach globally. When businesses bring new entrepreneurial solutions to their clients, they take ownership of the solution's success and reliability, so they should choose an entrepreneurial partner with a chance of stability and longevity. Both parties must commit to a solution and a long-term roadmap for their partnership, not just short-term revenue. Start small and build on incremental success. There are achievable milestones, fail fast, correct things in the wrong direction quickly, and move on.
When it works, it works for everyone.
When partners keep these tips in mind, co-innovation between startups and large corporations benefits both parties.
Let's look at some of the advantages from the perspective of a large supplier. First, by partnering with an agile startup, vendors can often fill in the missing pieces for their solutions — and deliver them to customers faster than they can do it themselves. Additionally, many large vendors focus on offering broad platforms, or developing common horizontal modules that can be used to provide vertical solutions. They typically rely on channel partners, application developers, integrators, and yes, startups, to develop these solutions for specific markets. Startups can differentiate products from large vendors, offer specialized features to help sell to customers, and might otherwise partner with niche companies.
Co-innovation with industry giants can be scary from a startup’s perspective, but when done right, it can improve a startup’s credibility and help bring it to market. When startups co-innovate with large suppliers, they gain access to customers and channel partners that may not be accessible on their own. As Brian McGlynn, COO and co-founder of IoT startup Davra Networks, told me recently, “When you work with a large vendor and are proven in their ecosystem, You have a stronger play.” Or, if the startup co-innovates directly with a large customer, it develops a targeted product that can then sell the original customer to other customers as an important reference account.
From a startup perspective, what factors contribute to a win-win co-innovation experience? Co-innovation between startups and businesses works best when each side fills the gaps in the other's capabilities and the work and rewards are shared fairly.
Josef Brunner, CEO of IoT startup relayr, points out that it is important to be guided by your overall strategy when evaluating co-innovation opportunities. "Sometimes it's hard to say no to a big company," he said in an interview. “Founders and CEOs want to take this opportunity to work with industry leaders, but you have to make sure it’s the right thing to do strategically. Otherwise, it’s easy to lose your identity.” Another guiding principle for relayr is to always focus on on the client. "Don't fall in love with technology. Co-innovation should be about helping customers succeed in business. The most important thing is to put customers at the center of what we do, understand their challenges, and always think about the business case."
Davra's McGlynn also noted: "You can bring in partners by having the right architecture, but you need the right governance to make it work." It's important to revolve around who owns what, who decides what, how prices are set, and A clear agreement on how to share the income. “With the right governance environment, both parties can make money.”
In the end, it's important to develop relationships incrementally, taking the time to get to know other partners and define appropriate roles. As Josef Brunner told me, "Many companies want to boil the ocean in one day, which is very challenging. The approach we took was, 'Climb before you walk, run before you walk. '"
Therefore, start to take the first step of common development. Get ready with a clear value proposition, application and proof of concept, then find the right corporate partner to develop it and bring it to market. Welcome to the Common Economy!
Comments