Finding startup partners that you didn’t know you needed — the ones which take you out of your comfort zone — is a key part of making a business more innovative.

Andrew Shipilov, Professor of Strategy and the John H.Loudon Chair Professor of Management at Insead and Nathan Furr, Associate Professor of Strategy at Insead, noted this as one of the key strategies for corporate innovation in their recent Harvard Business Review paper.

Future Proof was intrigued and caught up with Prof Shipilov to ask more about how you might go about finding the “unknown unknowns”.

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First of all — what do you mean by “uncommon partners” for corporates?

Uncommon partners are very important for the transformation of a company. We studied, for example, the transformation of Philips from a consumer electronics company making toasters to a company building healthcare platforms. The crucial partnership there was working with Salesforce.com to build a platform for wearable devices, such as blood oxygen monitors. With wearables like that connected and monitored in real-time, patients could spend less time in hospital. Philips working with hospitals was not surprising. But working with a cloud services company was unusual.

A lot of the time finding an uncommon partner is about branching out of a comfort zone. Renault working with Nissan is business as usual, Renault working with Better Place on electric battery switching services pushes the boundaries [Better Place did go bankrupt in 2013, but Renault’s work developing electric vehicles continues].

What is the best way to find uncommon partners?

The problem with uncommon partners is, of course, that you don’t already have them in your pool. So you have to make some preparations to attract them. As Louis Pasteur said: “Chance favours only the prepared mind.”

First, you need to let the world know that you are ready to work on innovation. Advertise the innovation work you are doing to let startups know you are open to new ways of working.

You need to  meet startups in an open way — a little like asking someone to a party and asking them to “bring their friends”.

Then you need to find ways to meet startups in an open way — a little like asking someone to a party and asking them to “bring their friends”. In 1973, Johns Hopkins sociologist Mark Granovetter wrote a paper called “The Strength of Weak Ties” which showed that people tended to new jobs most successfully by talking to people knew only very loosely — so-called “weak ties”. The same principle applies for corporates looking for new startup partners.

The problem for most corporates is that they have no ties, so they need to find ways to make them. Conferences and events can be ways of doing this and setting up open challenges and call-outs. You need startups to come — and also to bring along their contacts.

Sometimes one contact leads to others. Lowes, for example, worked with a 3D scanning company to build a way for customers to view VR and AR versions of potential home improvements. While this was already an interesting sales project, it later led to a collaboration with Google who wanted to use Lowe’s huge 3D library of objects to train its algorithms on.

 

How do you decide which uncommon partner is worth working with?

You need to understand the cultural fit. Once you have evaluated startups for their capability to do the project, the cultural fit is the deciding factor.

You need a startup that is willing to be quite flexible.

You need a startup that is willing to be quite flexible. If you, as a big corporation, are changing your business model and experimenting, the startup needs to be able to handle some ambiguity as well. Look at their track record to see if they are willing to be flexible and pivot.

Given a choice between a startup with a slicker product but an inflexible attitude, and one that is still working on the product but more adaptable, I would go for the latter. No solution is going to be a 100% fit anyway, so there will always have to be adjustments.

 

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Maija Palmer is Sifted’s innovation editor. She covers deeptech and corporate innovation, and tweets from @maijapalmer