The odd couple

First a boast: I have a privileged vantage point. I work with the world’s biggest brands and get to hear what ails them and what drives them. Warts and all.

I also share an office with a group of start-ups within a co-working space in London that includes some of the most exciting and innovative new companies in the mar-tech space.

That gives me an appreciation of two worlds that, in theory, couldn’t be further apart.

The reality, however, is that it is possible and understanding how to get the two parties to successfully collaborate has been a recent focus for WFA. As our friends at Unilever’s Foundry nicely framed the task; “it’s about understanding how to get an ocean-liner and a speedboat to co-exist”.

Our survey of 25 large multinational companies and a group of 10 start-ups agreed on many things: 60% of both parties felt that ‘big brands can adapt to working with start-ups’.

At the same time, the vast majority of our membership are at the very beginning of this journey. Eighty percent of both samples agreed that “most brands aren’t sure where, how and what their start-up engagement will look like”. It’s early days and both sides have much to learn.

Whilst there are distinct gaps in terms of perceptions of existing behaviour, we also discovered that they was, happily, agreement between the two parties on how to improve, based around three key Ps: Pitch, pilot & partnership.

1. Pitch

As one of our start-up respondents explained, it’s important to “Jump in and start kissing frogs”. Even a 10-minute phone call or a 30-minute coffee can really help gain an understanding the potential.

The most common approach for brands looking to connect with startups is via pitch days, with 62% of our client sample taking this approach.

There is a perception that many “brands who [enter into these programmes] with no objectives are wasting their money”. This was the most common theme in our study; that brands need to be crystal clear on what business need they are trying to address/ problems they are aiming to solve.

As a member of our CDOFORUM meeting at TomTom in Amsterdam explained; “brands should not be looking for presentation skills, they should want to clearly understand how a start-up can help their business”.

Another of the challenges that brands need to avoid is asking an agency to pitch to several layers within their company without any guarantee of a pilot at the end. Start-ups often don’t have the resource to cope with this. The client’s approach needs to be “light-touch but meaningful”.

2. Pilot

When it comes to a pilot, one of the most critical areas for half our large multinationals is to understand the potential for scalability across brands and markets. Yet only 10% of our start-ups identified this as a potential barrier to a successful tie-up. This is understandable given most start-ups’ existing footprints, but it’s certainly a consideration to keep in mind when demonstrating the potential future opportunity of a partnership.

And whilst it may be uncomfortable for many large multinationals; the clients who are successful in this space are willing to expose themselves to some risk. Those brands are willing to pre-agree a guaranteed budget whatever the outcome of the pilot.

When you bring together entrepreneurs and marketers, it may not come as a huge shock to learn that process is not a forté. This means that keeping projects on track is perceived as a barrier by both parties (see left).

This offers a potential opportunity for procurement to shine. Surprisingly, perhaps, many of our startups were fairly positive about working with marketing sourcing in many areas, although not it has to be said when it came to extended payment terms...

3. Partnership

As one of our CDO FORUM members in Hong Kong told us: “The irony is that the established brands want to behave more like start-ups and the start-ups want to become more like the established brands”.

This, of course, is where the best opportunity for mutual gain lies. One of the most effective means of developing a partnership with start-ups is through mentoring. Your start-up partner may lack skills to develop their business. By giving them access to colleagues you can expand their skill sets and, at the same time, personally benefit by exposing themselves to exciting innovations and entrepreneurs.

Ultimately, any effective partnership is as much about what you can do for them, as they can do for you. As our friends at Unilever’s Foundry say: the only way to work effectively with startups is “when brands act with complete integrity”.

In my time at the WFA I’ve witnessed fads come and go. Our President David Wheldon, recently told WFA members; not to be “the dog who barks at every passing car”.

The question every brand needs to ask is whether working with start-ups is simply the latest shiny new thing to catch marketers’ attention, or whether, with care and thought it can become a genuinely effective approach to help large multinationals solve business problems through innovation.

The answer depends on how ready you are. Jumping too soon risks wasting time and money and, ultimately, can irrevocably damage the start-ups you seek to partner with. With the right preparation, resource and attitude, however, it can provide a genuine competitive advantage for both parties.

WFA members who want to access the full research can do so via our Global Knowledge Base. For others who want to know more about WFA and our work in this area, contact Robert Dreblow.