Having real and honest conversations between Buyers and Sellers of innovation services is mandatory and not nice to have. These interactions must start from the basics of where we currently stand and where we want to be in the future.
Both buyers and sellers need to get quicker and more efficient at engaging with each other, better understanding each other’s want and needs and getting the agreed job done. I’ve sat on both sides of the table, and hard leaned takeaway lessons from my professional experiences are summarized as follows:
Lessons for Sellers:
- Don’t assume the corporate knows either the what to do or the how to do it. And never assume that getting their business will be an easy feat. Ask your counterpart key questions like “What is your end-to-end process?” and “Could I talk to a partner that you’ve previously gone to market with?” to get a sense of how open and mature their processes are and adjust your efforts accordingly. The bottom is that, investing three months development power for a deal that never got signed is clearly a waste of time and valuable resources.
- Your Buyer will be a project sponsor and the services / product bought will consume budget from a limited pool of project funding. Bad performance regarding this project will follow your sponsor around for years to come and decrease their ability to do other projects. In some cases the “three strikes and you are out” rules apply.
- The activity undertaken always entails an inherit risk and if the service/product fails there could be massive reputational, economical and / or operational damage to the company that will cost more than the € figure of the POC/project.
- Don’t ever over-promise. Be realistic and honest with how you are solving the problem and what your solution can or can’t do, misinformation and grey zones have a tendency to blow up during project implementations and are very difficult to mitigate. Be a firm believer of the mantra “Under promise and over deliver”.
- Internal culture, boards and approval gateways may seem absurd to you as a third party, however it’s to your best interest to help your sponsor pass through them quickly and provide him/ her with all necessary information to speed up their own internal processes. Your sponsor may be equally frustrated with the way things are done internally but one deal (yours’) won’t change the system. It takes a significant amount of time and energy to change internal processes due to inertia and it’s a challenge you do not want to undertake; unless that is the undertaking per se.
Lessons for Buyers:
- You need to understand that timeframes for startups are highly accelerated i.e. three months for a Corporate is anywhere between nine to fifteen months in startup time. Simply put, no startup can’t afford to wait for your next quarterly Investment Committee meeting, it will probably be dead by then and I have seen my fair share of them. This means that you need to adjust your action plan and not only engage as quickly possible and but also be extremely clear about what the next steps in your processes for search, buy, integrate and execute are.
- Reply quickly to the sender and be honest and straightforward if the deal is going forward or going nowhere. Avoid radio silence at all cost, since this will stall the startup, have them wait in limbo for you to get back to them, when they should be doing other revenue-generating activities. Startups have targets to achieve, work to be done and goals to implement at an accelerated pace and a high monthly burn rate, please respect that.
- Asking for free services/non-cash payment is not a sustainable way to treat startups, they need cash to grow and scale on the one hand and on the other hand no one will want to work with you if you are always interested in free-rides only. As a Corporate buyer and a market maker, use your market power wisely and effectively, and stay away from abusive behavior.
Lack of empathy and understanding between buyers and sellers, causes problems for everyone. Well-intentioned service providers hit long procurement cycles and buyers get their budgets drained by innovation circuses that can’t deliver a bang for a buck. With no tangible outcomes (€) to show for these projects, overall confidence in real life impact of innovation will decrease.
Want to learn more on how-to-do, drop us an email and we will be happy to share our knowledge and insights with you!
Christos Lytras – Managing Partner