Shaun Hon, Motion Ventures’ general partner, and Nakul Malhotra, Wilhelmsen’s vice president of open innovation, on new models of financing and an interesting tech startup perspective to modernising a legacy industry.
In the venture boom of the dotcom bubble, startups became synonymous with disruption. In the decades since, a tension has existed between startups and corporates. As startup innovation pushes against established norms – corporates have felt the pressure to catch up, or risk being left behind.
What is a corporate consortium?
A new model is emerging that transforms resistance into reward in a startup’s journey: corporate consortium. The goal here is to set corporates and startups up with the best chance to succeed by bringing a group of industry adopters together to form a consortium to connect with entrepreneurs early in the process and figure out how to build solutions with an industry context in mind.
To many, it’s a win-win opportunity. Startups access the wisdom of experts to refine their solutions and assist their scaling journey. Meanwhile, corporates can access new ways of thinking while shaping new products and technologies. In turn, this can drive more value into their own operations.
For Malaysian property developers, Gamuda Berhad, collaborating with startup Amtiss under Rainmaking’s supervision dramatically cut costs. Work order approvals took 50 per cent less time. Inspection time dropped by 80 per cent. Over $500,000 of energy efficiency savings were made in the pilot phase of the project alone.
Bringing a corporate consortium into the startup journey offers optimisation benefits particularly in the nuanced B2B world. So why haven’t more businesses tried it out?
The startup’s case for a corporate consortium
Corporates bring decades of operations knowledge that startups can leverage in an agile environment. Corporate partners have tried-and-tested best practices and operations. These enable newer businesses to work efficiently without having to reinvent the wheel. Established businesses also bring networks of experts and potential clients to provide feedback.
Lack of product-market fit is often cited as the number one reason startups fail. By bringing product-builders and market-leaders together, better solutions can be tried, iterated and improved. This saves startups the time and tragedy of getting it wrong – and provides users and clients with what they actually need – fast.
This also serves to alleviate a misconception around established businesses. Corporates don’t simply hold market leadership through luck – it’s imperative to let go and move on. Wilhelmsen has held a leadership position for 160 years by moving in reaction to changes in the landscape around it. There’s strategic power in bringing together domain expertise and new insights. Learning to leave the fear that new ideas make the old ways irrelevant has been a long journey and now it chooses a growth mindset that sees how experience provides value to fresh ways of thinking.
Asking for permission instead of forgiveness
A corporate is not dissimilar to a human body – a machine of many parts, working together to stay alive. Innovation can appear a threat; bringing ‘white blood cells’ out to defend perceived attackers. But with a collaborative approach, startups are instead offered as inoculation. A small dose of innovation to strengthen the wider corpus against change.
Undoubtedly, the Silicon Valley approach of moving fast and breaking things accelerated incredible development. But it also served to damage some of our underlying societal structures. A corporate consortium led by a clear end goal establishes a respectful working relationship while protecting the independence of both parties.
Corporate partners can take a step back, alleviating themselves from any risks that arise in the process of invention. But startups, ring-fenced and independent, are able to iterate quickly, make mistakes and change direction. All with the added benefit of feedback from corporates to guide their way.
It’s a delicate balance – too much corporate involvement can burden startups with legacy baggage and rein back innovation. But too little collaboration can leave startups as liable to making costly mistakes as with any new business. A carefully managed collaboration can pay off exponentially for both parties. What is stopping industries from adopting this approach?
The first-mover advantage
Startups that go through some kind of venture-building or ‘studio’ approach see 30 per cent better results than a startup that flies solo. Nevertheless, investing in startups is estimated to lead to losses of between 35 and 70 per cent. Startups do pose a risk – but ultimately, staying still is an even bigger risk.
By taking a portfolio approach with multiple startups, the downside to corporates is limited. Startups still gain an enriching experience of feedback and iteration. When considering venture opportunities, Wilhelmsen weighs three questions that make up part of its venture path tool kit: Is there value? Is there demand? Can we do it? So far, we haven’t found the technology as being an unsolvable problem. We focus on the value of solutions that our customers need, which provides startups with the freedom to focus on the technology. This partnership connecting domain expertise and technology capability is critical to the adoption pathway for B2B solutions.
This holistic approach builds alliances; between startups and the corporate’s own customers and partners. In turn, this offers benefits throughout the value chain. Since corporate consortiums remain untapped, there are huge gains to be made for early adopter corporations who forge forward on this future-focused path.
What corporate consortiums have done for us
Maritime is by no means a fast-moving industry; after all, it took six days to unblock the Suez Canal. But we have had the opportunity to watch how innovation has disrupted other transportation industries, such as aviation and automotive. We can learn lessons from B2C trends in search, social media and video streaming and apply those experiences to the B2B context.
When Motion Ventures launched, it was amazing how quickly the initial vision turned into a reality of collaboration across corporations and geographies. There is enormous appetite for a corporate consortium and its outputs from both industry and government. We’re looking for more first-movers to join us. Our mission is to accelerate technology adoption in the maritime value chain through radical innovation.
In an uncertain future, a long-term strategy generates more fear than foresight. It’s easy to see our industry peers as competition but this mindset only benefits corporate in siloes. Just as the ocean was once the frontier of discovering new continents, so too must we look beyond our immediate hurdles. The further we are willing to stretch our horizons, the more we need to rely on collaboration as the industry’s True North.