In the past, a good idea was enough to be successful for years, but in the age of digitalization and globalization, the pressure to innovate is many times greater. Innovation cycles are becoming shorter, disruptions more profound and framework conditions more volatile. One answer is the Collaborative Company Building.
For established companies, the challenges are immense: on the one hand, they have to create room for innovation and, on the other, they have to ensure stability and efficiency in their core business. In many places, there is not a lack of knowledge, but simply a lack of vision for implementation.
The truism "The fast fish eats the slow fish" has reached the carpet floors of corporations and medium-sized companies and for years test balloons with start-ups, spin-offs and the like have been launched in order to gain speed and innovation. Many projects fail and the successful examples present the leadership series with the challenge of how the ignited innovation rocket with its agile culture and start-up mentality should now enrich the initiating company and donor. In other words, how innovation and culture are to be returned to the mother ship. Where innovation departments in corporate groups often suffer from the fact that they have transferred barely countable goods into the real business world, companies that pursue a more detached start-up approach try to draw the successful investments closer to themselves. And they often kill said innovation and culture with their bureaucracy.
A joint venture led by partners
One approach that is currently receiving a lot of approval, especially in Germany, is that of collaborative company building. A corporation or medium-sized company establishes an independent company together with a digital agency or a consulting firm, which should unite the advantages of both worlds. Solid, if not exaggerated, financing as well as digital know-how and the resources of the service provider side. As many companies were able to learn in reality, culture is the decisive factor in winning over the above-averagely good minds with the right attitude. The monetary aspect heals the wounds of the employees only for a short time. Those who "want to change the world" will sooner or later not be able to comfort themselves with their salary statement about the bureaucratic hurdles and corporate policy.
A joint venture based on partnership offers valuable access to the right employees with the right skills at the right time. Very rarely are the employees who successfully create a digital product the same ones who operate it for years and develop it further in mini-steps. Just as start-ups need a different type of CEO than established large companies, so do various other skill sets that are currently in short supply on the market.
Incentives for both sides
The collaborative company-building approach respects this fact and allows the newly founded companies exactly this access to know-how. For a certain period (e.g. three to five years) seconded coworkers of the digital service partner are responsible for the conception and development of the digital products and services after modern standards. Customer employees contribute their industry know-how and are responsible for transferring the new solution into regular operation. Both parties have a financial interest in the company and participate in the profit and loss of the company. Digital service providers have the opportunity to sell their shares in the company back to the business partner after a fixed period of time and after fulfilling certain conditions. Thus, in addition to the incentive for digital agencies to provide personnel for a fixed period of time and to invoice daily rates, the possibility arises for them to achieve a lucrative "monetary upside" by selling the shares if the model is successfully expanded. In return, customers limit their risk of loss by only having to pay for the repurchase of shares if the project is successful. Accordingly, there are incentives for both sides to enter into such a deal.
If two companies opt for collaborative company building, a common understanding and suitable framework conditions are required first. It is possible to start on a greenfield site and develop a joint business idea. In the same way, one of the two parties can contribute an initial idea and/or a prototype on which to build. Both sides must be aware that a speedboat must take its own independent path to living up to its name. The focus should therefore rather be on the unity of the distant destination and the way of communication as the speedboat picks up speed. The art is to sensitize the crew to the different cultures and to select the interface persons accordingly. They play a decisive role in the long-term success of the project. Central roles here are held by the managers. They must lead teams composed of people from different cultural and professional backgrounds. For example, employees who are more likely to be shaped by a hierarchically oriented corporate culture meet those who are used to working with agile methods in network structures. Different organizational forms and working methods require a two-handed understanding of leadership (ambiguity). This means managing stability and efficiency on the one hand and uncertainty and innovation on the other.
Crossing the Chasm
Not only the first years, which are very similar to a normal start-up apart from the secured financing but also the transfer of the company or the developed products and services into the "adult years" must be addressed from the very beginning. "Crossing the Chasm" is what Geoffrey Moore called the challenge of bringing disruptive products and services into the mainstream. At the latest here other abilities are demanded than still in the first months and years of a start-up. Skills that could be better suited to the customer-side founding partner than to the digital service provider. In order to be successful with the mainstream end customers, support services must be offered within the shortest possible time, which are easy for the customer parent company with the existing infrastructure and many years of experience. The art is to recognize this point in time and to carry out the transfer in a structured way. This is where it becomes clear whether the two founding parties have done their homework and set the right framework conditions at the beginning of the venture.
Far-reaching change processes can only succeed if the people involved are taken along right from the start. With company building, companies and managers must, therefore, establish structures and processes that enable a regular exchange between the parent company and the start-up. With his 8-Step Process for Leading Change, the American change management mastermind John Kotter provides valuable approaches on how to implement a "dual operating system", the juxtaposition of stability and agility, hierarchies and networks in an organization.
It is not without reason that many start-ups fail, neither due to a lack of innovative products nor committed employees, but because growth is not pursued in a professional manner.
As an example, there are various players in the German automotive industry who work together with digital agencies to tackle the mobility challenges of the future with increasing speed and increased seriousness. VW, for example, acquired a 49 percent stake in the digital company Diconium in order to exploit the advantages of such a joint venture. Whether the initiatives that have been launched will bear fruit in the long term is a matter of the stars. It goes without saying, however, that the previous approaches will not lead to success either through further capital increases or through corporate policy. Anyone who has paid close attention in the past year also knows that there is no time to wait for the results. The danger is too great to be overtaken from all sides by speedboats and to be eaten in small bites at the end.
The original article was posted on netzwoche