The French Recipe : Ingredients to work with French Corporates by T VERHAEGHE
After two years of working full-time with our startups to help them collaborate with large groups, I would like to draw up a first summary of my experience, and share it with entrepreneurs.
I do not write this article to teach you something you already know, and I do not mean to take corporates down either. Some of them actually make consistent innovation efforts to remain competitive. My goal is to give you some keys to understand these companies so that next time you deal with them, you can get the most of it.
As you go through the article, you will discover the four main ingredients of the recipe. Do not miss out on the Chef’s special tip at the end of it!
1. A bitter assessment
These last few months have been all about it: the startup-corporate relationship.
Several article have been written about the way they work together.
Many players have positioned themselves in this field: accelerators, consulting firms, investment funds and large companies’ incubators… Many events have thrown…
The French Tech actually released at the end of last year a Barometer of Startup-Corporate Collaborations in France. Its key figure speaks for itself:
667,500 €/year
This is the median total procurement amount corporate spend on startup solutions and services. This means that corporates spend 0.1% of their global procurement on startups instead of traditional suppliers.
Needless to say, there is still a long way to go before these collaboration practices become standard. ‘These players are still worlds apart’, as CDISCOUNT CDO Jerôme Fauquembergue rightly replied to the LinkedIn post in which I deplored our corporates’ inability to communicate within their organization when it comes to deploying an internal innovation project.
This collaboration is central to our acceleration strategy: we systematically introduce our startups to leading corporates of our ecosystem in order to accelerate their commercial relationship. We will go through a few concrete examples at the end of this article.
2. Why are we struggling that much ?
· A difference in mindsets
Many of those who are in charge of transformation and innovation projects within large companies are isolated from the company’s decision makers because they are attached to the strategy department or to a completely separate entity. Besides, they do not yet benefit from the startup experience that is required to understand how to best collaborate with them.
The corporate-startup collaboration maker must be an engaged professional, who works in the best interest of both parties, and who has already worked both for a startup and for a corporate before.
· Different organization designs
As BCG Retail Director Philippe NOBILE told me recently, ‘Corporates and startups do not understand each other’.
The main hindrance to corporates’ efficiency in this sense lies in their organizational structure rather than their size. Changing the practices of corporates often turns out to be both very complicated and time-consuming, and this is especially true when many stakeholders are involved.
As they are blocked by a hierarchical glass ceiling and/or the resistance of operational collaborators — from the purchase, legal and IT departments in particular — innovation departments suffer from a lack of credit and support from those who should be their greatest allies in the race towards competitiveness. In such a context, it seems very complicated for them to go right through the logic that motivates their startups sourcing work and integrate disruptive solutions within their companies.
· Divergent interests
On the one hand, closing a deal with a corporate is a real booster for any startup. But on the other hand, advocating the use of a startup’s solution within a large company is usually perceived as a risky and bold move than can be grounds for pushing away or firing the internal instigator.
· Space-time differences
A startup’s minute is worth a corporate’s week. While you spend 24 hours going around your team and emailing contract proposals, corporates need several weeks to gather a few key interlocutors in the same room. When you start worrying about an answer you have been expecting from a corporate for several weeks, on the corporate side, operational teams have only just approved the related subject and it still has to go through IT, purchase, and legal departments.
Critizr, one of our portfolio companies that we introduced to a prospect on February 17th 2017, just announced to us that after a year of protracted discussions, they had finally closed a deal, twenty-three weeks after winning their client’s tender and reaching an agreement in principle. All in all, it took 6 months for Critizr to be identified and to win the tender, plus 6 months to go through the corporate’s internal processes.
3. Ingredients for a successful collaboration
a. Target corporates that have efficient & defined processes to work with startups
Based on the figures released in the French Tech Barometre, in 2016, 50% of corporates launched between 0 and 5 PoCs only. Let’s not forget that the study also revealed that 36.7% of PoCs had been industrialized, which means that in 2016, 50% of corporates industrialized only one PoC with a startup.
This basically means that you will save time by avoiding 50% of corporates, even if they are part of your target prospects. Focus on the 12% corporates who launched more than 50 PoCs, for they designed their organizations in a way that increases the probability of your PoC being industrialized.
CDISCOUNT just shared the results of its PoC Factory. It turns out that the company launched 52 PoCs this year, 65% of which have been industrialized!
This is a brilliant example of a company that organized itself to collaborate with startups. The results are clear; the cdiscount webshop generated the strongest traffic on “Black Friday”.
Emmanuel Grenier understood well that by working closely with the innovation ecosystem, he would attract the best startups, thus creating new synergies that would impact the growth of his company. He also understood that he had to bring more than one PoC to startups, and that he should build a relationship that fulfills both parties’ need to get technically and intellectually better.
(Cf “The WareHouse”)
The ETAM group, for its part, launched “Scrambled”, an innovation firm which is piloted by Jean-Bernard Dellachiesa whose goal is to test solutions that are interesting for the group’s brands, make sure that these solutions fulfil their promises, and then industrialize them.
You can also find online rankings that list the most innovative companies, such as the one the BCG releases every year. To me though, you cannot find a better benchmark than that of your network’s experience feedback concerning their collaboration with these players.
Once you are over this whole work of mapping the big players, you need to find the right persons to talk to within these companies.
b. Identifying the ‘ Pain Point ‘ of your key interlocutor
As you have probably understood already, these large companies’ structures are pretty complex, and you often need to meet a dozen interlocutors to move a project forward. The most innovative corporates have understood well that they needed fewer managers and more strategy-makers and entrepreneurs to spur innovation within their companies.
It is important to target those who understand entrepreneurs, who talk about usage rather than technology, insofar as they will be the real driving force in your collaboration.
Operational managers must be the ones who launch your PoC, they are the long-term clients, which is not the case of an innovation cell which often works separately from the rest of the company.
The first step consists in analyzing the company’s need and its emergency level in order to respond to it. What are the internal pain points? What is the client’s roadmap? Does you interlocutor see your solution like a “nice to have” or a “must have” ? You must remain very objective concerning the latter, as you might lose a lot and time and money if your interlocutor’s need is not mature enough yet.
Once you have made all that clear, then starts a story of men and money: who are the decision makers? Who manages the budget? These are often the same people as in the above paragraph, and they are the ones you need to convince. In order to do so, you need to find within the operational team who will become your sponsor. Work closely with your interlocutor for him to understand new business reading grids. Give him/her the right tools to be able to defend your solution internally and talk other decision makers into using it.
“Hooray, they finally launched the PoC!!!”
c. Do not sell yourself off
You will find on the Internet several rules to run a successful PoC. The most important of them is by far the following one: free PoCs are strictly forbidden! How are we supposed to make relationships between corporates and startups evolve if entrepreneurs accept working for free?
I understand that corporates can sometimes launch a PoC with a very early-stage startup that does not have any reference customers yet, but ideally, corporates should collaborate in a more automatic way, and skip the PoC step with those whose product is fine-tuned and has already been approved by a few clients.
When you buy a product in a supermarket, you do not open it to taste it before buying in, do you? If the product is in store, it means it sells; you thus have to take the risk of buying it and consuming it. Unfortunately, once people are used to tasting before buying, it is very hard to go back to a buy-then-taste system.
Take the right amount of time to determine your price, the one that will be low enough to fit in the corporate budget and high enough to catch the attention of your interlocutor. Would you park a Rolls Royce in the same way as you would park your old car? Whether we want it or not, we attach more value to what cost us a lot of money. Your price also serves a cleaver for you to check that the addressed need is painful enough for the corporate to allot it a significant budget.
Once you have nailed down the right price for your PoC, you need to show them that you are a Rolls Royce, and that then cannot live without you anymore. Nevertheless, if you want to avoid as many hurdles as possible, make sure you define the success and industrialization KPIs at the very beginning of the PoC is on order to make it an engaging experience. Why would you launch a PoC that does not involve industrialization once the KPIs have been reached?
Despite all of this, many of our startups that managed to generate a significant ROI during their PoCs were confronted with new difficulties to deploy their solutions afterwards.
Here are some of the many reasons for that :
- A lack of dedicated human resources in the client company
- The replacement of the project manager
- A protracted process with the purchase department
- A bandwidth problem on the IT team side
- A new tender offer
- A lack of budget
- A decision that has been taken in higher hierarchical spheres of the company
- A difference in opinion and/or an internal power struggle
- …
There are many other reasons to cite. I actually think of this big CAC 40 corporate which headquarters funds all countries’ PoCs on a maximum one-year period. In theory, this is a great opportunity for a French startup to internationalize, but in real life, what happens when after a year, the group stops paying and the country needs to fund industrialization? Did the related country really have a point? Is it ready to industrialize and allocate resources to it? Or will it prefer launching a different PoC with a competitor solution? These are questions that you will need to answer before you commit yourself to working with the corporate, even if the countries have the means to do it, it is always better when it is free!
Now, I do not want to go through a list of bad-PoC stories, I prefer telling you how to make sure that yours does not end up badly. Some of the potential issues can be tackled before or during the PoC, others will be solved thanks to your capacity to surround yourself with the right allies.
d. Surrounding yourself with the right people : a rule that our startups have understood well
Before you address corporates, ask for experience feedbacks from those of your network’s contacts who have already dealt with them. They will tell you about your prospect’s capacity to work with a startup and they will provide you with the names of the best interlocutors to collaborate with.
We organize working sessions during which our entrepreneurs share their business contacts. Today 30% of our startups’ clients are common to at least three of them.
To maximize your chances of working with these corporates, you should consider using other levers on a short-term. For instance if you think that could help you, surround yourself with integration partners for whom you represent a competitive advantage, and who will endorse the solidity of your solution. In this sense, indirect sale is a great way of accelerating your sales cycle with corporates.
Saagie, a company that just raised 5 million euros, forged partnerships with Cap Gemini, IBM and KPMG in order to fuel its access to large French corporates and accelerate the signature of contracts.
There are other ways of surrounding yourself with the right people, such as the French Founders Network, which enables you to reach the general managers of the biggest French companies across the world, or the Young Professional Administration community for instance.
Finally, once this is not up to you anymore and that decisions are taken at the highest hierarchical level in the company, get your limited partners onboard so that they can leverage their own networks to help you.
This is what we do at CapHorn Invest by accompanying our entrepreneurs in their business acceleration, as we leverage the expertise of our partners and of our 270 investors who come from the largest French companies.
In 2017, we triggered more than 100 business meetings between corporate decision makers and our startups, and 20% of these initiatives resulted in the signature of business contracts.
Amongst other accomplishments, we enabled Finalcad, who announced the signature of a framework contract with Eiffage a few months ago, to meet the decision makers of the 10 biggest building companies in France.
If your limited partners are not involved enough, turn them into real contributors to your projects, or come meet us! Our team can offer you a quality support.
To conclude with, here is the Chef’s tip:
‘Beware of pretty logos!’. Adding a beautiful, credit-granting logo to your trophy cabinet can be very alluring. Yet you should keep cool heads — very often the power of the logo is an increasing function of the complexity of its company.
Ask for references, and contact them. Ask for examples of PoCs that have been launched and industrialized. Check out the PoC’s potential and context. The beautiful logo hunt might lead you to get carried away from your product roadmap, create new functionalities that are specific to your client and that are not necessarily scalable, loose time and money… which will jeopardize the survival of your company.
Among the corporates you met, which of them can you tell us about? I would be very happy to talk to you to map the most active French players!
Source : https://blog.caphorninvest.com/the-french-recipe-ingredients-to-work-with-french-corporates-c57f6c484314