Imagine you are the CEO of a large, well-established enterprise. You are under increasing pressure to address the demands of continued growth; a meaningful ESG strategy; a fickler and more diverse customer base; a changing regulatory environment; and all the fallouts of the pandemic—just for starters.
Or, perhaps you are not the CEO, but you are on the team at such an organization, close enough to the action to understand the business model and to see the need for change. Read on.
While the organization is full of talented people who are experts at running the business, the CEO knows (as do you) that more is required to transform into the future, adapt to ongoing and unpredictable change, and get better at anticipating what’s next.
One day the enterprise CEO meets a startup team operating in the same sector, whose technology is proven. The startup team’s goal is to scale quickly, and it is seeking strategic partnerships with large enterprises to do so.
This CEO is captivated by the idea of engaging with the startup to help transform the enterprise. The large company needs to find significant new sources of value, but in order to do that, it has to break old habits that are inhibiting innovation. The CEO imagines this partnership is a win/win. Success will mean that the enterprise becomes a 21st-century business, able to compete under today’s terms. The startup, meanwhile, realizes its goal of scale. Everyone’s investors should be happy.
It’s possible. Success begins with the enterprise and startup leaders anticipating how to:
• Bring together two radically different cultures, ways of working, and talent profiles.
• Ensure the machinery of the enterprise does not stifle the startup’s agility.
• Transfer (at scale) new mindsets and ways of working.
• Convince stakeholders this is a smart strategy that will deliver results.
So, how can these two teams turn their vision of enterprise/startup partnership into a happy ending?
The answer starts with three shared priorities that require immediate focus. All demand the enterprise CEO’s leadership and engagement, alongside that of the startup founder and their senior team. Here are three action items to set off in the right direction.
SET A SHARED NORTH STAR
This means coming to a common understanding of the partnership’s mission, vision, shared ambition, and success metrics. The best North Star ambitions are built around the customer and their experience of doing business with the enterprise. Together, the two teams should be able to envision a successful partnership. And then, with that vision in mind, they should be able to complete the following statements:
• Customers will value the experience with us when they feel…
• We will deliver the desired customer experience by being…
• As a result of delivering the intended experience, our performance improves…
• We will have succeeded when customers say…
ESTABLISH AND ENGAGE IN SHARED GOVERNANCE
Even the best, most motivated, and most resourced team tasked with bringing to life an enterprise/startup partnership will fail if the right governance for such a significant transformation effort is not in place. This means:
• The CEO is directly engaged as an active sponsor with sleeves rolled up, i.e., the entire organization must see this as a corporate priority, not a passing fad or another item on the to-do list.
• The CEO holds the executive team accountable for the success of the partnership, alongside the designated operating executive who has daily oversight over the partnership along with the startup founder.
• A routine is in place and adhered to for communications sharing, agenda setting, and decision making, and all members of the governance team are expected to participate consistently and actively in the process.
Resource and implement disciplined and agile experimentation.
Big new growth stories do not emerge as overnight miracles. They come about through cycles of testing, failing, learning, iterating, and improving.
As the capability for agile experimentation is created, consider:
• How to operate outside the annual budgeting process. Experiments likely won’t deliver according to the fiscal year timetable, and forcing them into that calendar can undermine their chances for success.
• Whether the data analytics talent exists and can be dedicated to these efforts. If not, how will they be identified and attracted? This includes the mathematicians who love to excavate data to find the truth, as well as the operations and technical experts who can extract data from unfriendly data stores.
• Why it is critical for experiments to have established metrics by which each will be assessed from the start.
• How important it will be to strengthen the culture to see failure as learning, not as a mistake or a reason to stop work.
Experiments designed and executed with agility create value well beyond the answers they yield. They also:
• Build new execution muscle in the organization.
• Create development opportunities for high-potential employees.
• Signal commitment to the rest of the organization.
• Force a reexamination of the “industrial strength” processes that might be great for a massive scale business but are utterly inappropriate for nascent concepts.
As talented as the cross-business partnership team may be, they may benefit from external facilitation or coaching from a third party with no stake in either entity’s pre-existing norms, and that is only focused on helping the partnership succeed by bringing objectivity and operating knowledge. This person or organization should keep the team focused on their North Star through the many challenges and doubts they will face, ultimately keeping them on track to pursue proven practices and ensure they achieve their ambition.
Amy Radin is a director, advisor, and operating executive who helps boards and executives anticipate and adapt to change.