6 Startup Qualities Enterprises Must Understand for Effective Collaboration

Communication between enterprises and startups can sometimes make it seem like the two parties are speaking different languages. With collaboration between these two worlds increasingly common, it’s important to understand where the other party is coming from.

To make it easier for enterprises to understand startups and to improve the corporate innovation process, we looked into what differentiates the two types of organizations.

Here are six qualities that impact the perspective and priorities of startups collaborating with enterprises, and how it can impact innovation partnerships.

Startup Quality #1 – Appetite for risk

Creating a startup is an inherently risky endeavor, and estimates suggest that 90% of all startups will fail. There are a whole bunch of reasons for this, from a lack of funding to poor product-market fit. The flip side is, of course, that when things do work, the rewards tend to be considerable. This kind of high-risk approach goes against the strategy of many corporates, however, who wouldn’t dream of doing something with such a high chance of failure.

Startup Quality #2 – Overwhelming sense of purpose

It may be uncomfortable to acknowledge, but many Gallup state-of-the-workplace studies report that employees of large organizations feel a tremendous sense of disengagement when they clock in each morning. It’s the kind of thing that is largely impossible in a startup. It may sound like a cliche, but many startups are formed by a strong desire to make something better. What’s more, by the time they fall onto the radar of a large corporation, the founding team will have gone through a lot together. Their bond—both to each other and to their purpose—will be considerable.

Startup Quality #3 – A tight unit

In recent years there has been a lot of thought given to the way organizations function, with theories such as agile and holacracy gaining advocates. It’s an approach that revolves around small teams, with more fluid job roles seeing people participate in a range of ways. This is the default mode for most startups, as the small nature of the founding team usually means that everyone has at least a couple of roles, and job descriptions are practically non-existent. The tight-knit team combined with the high-risk nature of entrepreneurship means that you can’t carry any passengers. Everyone has to contribute in order for the project to succeed.

Startup Quality #4 – Agile by default

Agile is one of the more commonly used buzzwords in business today. It’s a relatively new thing for big organizations, but it’s been the modus operandi for startups for pretty much ever. Their bread and butter is to bootstrap products together to test out assumptions and then adapt or pivot based on the feedback they receive from the market. The purpose and vision of many startups is so strong that setbacks and failure cannot stop them. Learning and adapting becomes their standard way of being.

Startup Quality #5 – Innovating to survive

Whereas some large organizations can survive for years by doing the same thing over and over, startups by their very nature have to be different. Without the ability to innovate, they will struggle to gain any kind of foothold in the market as they set out to solve what they perceive to be a burning problem for their customers, and quite often for society. This difference runs to the very heart of the innovator’s dilemma outlined by Clayton Christensen, which highlights how established companies can struggle to move on from proven processes to new ways of working.

Startup Quality #6 – Lack of cash is an advantage

In large organizations, a lack of cash can be a go-to excuse for a project not achieving the desired result. In a cash-rich world it can be tempting to keep tinkering in the search for perfection. For startups however, a lack of cash is pretty much a given and so founders have to bootstrap and improvise in order to progress. This results in a laser focus on what really matters, with all unnecessary bells and whistles stripped out.

Why enterprises need to understand how startups work

Many enterprises are attempting to foster some of these organizational characteristics, whether through internal projects or partnerships with startups.That’s a good thing, and there is a world of opportunity available for big companies that partner with startups tackling the problems their customers face in new and novel ways. By understanding what makes startups so unique, enterprises can be better equipped to maximize any innovation partnerships they enter into.

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