In the intricate world of corporate-startup collaborations, unlocking the full potential of startup technology within established corporations is both an art and a science. At Spyre, we've distilled this process into three key principles, demonstrated through a real-world case study of an Israeli startup and a European corporation. While respecting the confidentiality of our clients, this article sheds light on our approach, rooted in real-world experiences and outcomes.
Three Pillars of Successful Deployment
When evaluating a startup technology for deployment within an established organization one has to address three key topics:
1. Value proposition - What value can the startup technology potential offer the organization?
2. Adoption - What are the roadblocks to possible adoption of the technology assuming that it delivers its promised value?
3. Momentum - Can we engage enough key stakeholders so that even when the original drivers of the project are no longer there or not in a room where a decision is being made, this project will still receive priority and executive support? Momentum is analogous to a spacecraft being launched and having to escape Earth’s gravity being brought to a high enough speed. Once the initial excitement dies down, have we created enough speed so that the project of deploying the technology will be able to escape the gravitational pull of existing practices, detractors, and daily routine?
Case Study: A Success Story
In our case study, an Israeli startup that has the technology to identify fraud within financial institutions was identified by a European corporation as a means of identifying potentially fraudulent business transactions of a certain type by scanning large amounts of data. This is what we call a raw opportunity which now requires that we apply the three key elements to it.
Value proposition - The first thing we do is analyze the value proposition using tools that come from the world of startup and entrepreneurship. We basically consider the deployment of the startup technology within the corporation as if it were an entrepreneurial venture in itself.
Identify the specific type of business transaction that causes the largest financial losses due to fraud and focus on it.
How much losses does it generate annually? The answer was a substantial sum.
Is there a good enough solution today to this problem? The answer was that a team of humans was scanning those transactions manually and identifying potential cases of fraud.
Why would the technology be a MUST and not a nice-to-have replacing the good manual option? Usually, the answer here is that a manual approach is inefficient but Spyre’s approach is that inefficiencies are everywhere and except for extreme cases do not constitute a MUST to solve. In this case, however, the answer was that the manual option is too slow, and thus, by the time a fraudulent transaction is identified the money has already been paid and cannot be recuperated.
Adoption - Once a strong value proposition is identified, we look for elements in the organization that might prevent the technology from being deployed even if it works. We therefore instruct the innovation leader who is driving this project to get out of the office and interview the relevant personnel.
In terms of usage, the team that was performing the manual analysis had other higher value tasks it could perform with any time that would be freed by the technology and so as long as there would be trust in the technology’s accuracy, the team would cooperate.
IT department objected to bringing the startup technology inside the firewall. This is something that could be resolved for a long-term deployment but prevented a quick technology demonstration. We thought about taking a snapshot of the data and bringing it to the startup for analysis but then
The Data privacy team objected to taking the required data outside the firewall.
Eventually, we decided to take a snapshot of historical data, eliminate private data that was not required for the analysis purposes, and allow the startup to perform that analysis on their servers. The goal for them was to identify all of the transactions that were deemed to be fraudulent by the human team and as a bonus to identify a few more that the human team didn’t identify.
Momentum - The momentum is achieved initially by having a strong value proposition that translates into strategic KPIs such as revenues and profits which executives deeply care about. In addition, handling any potential adoption issues upfront eliminates possible slowdowns due to internal resistance or passive behavior. That is good project management practice. What we add to the mix is a few elements that increase the chances that such a project doesn’t get lost in the daily routine.
Even before encountering the startup, we defined with the key decision-making executives that operational cost savings were the challenge that startup technology was expected to resolve. That way, we ensure that when they see the above startup-related opportunity, it will be interesting to them and aligned with their business goals. We want innovation to be a means to an executive-defined end and not an end in itself.
We worked in short cycles between executive decisions. The technology test described above was scheduled to take not more than three months. This is an important constraint because three months is enough time to execute something meaningful and at the same time it is short enough so that the purpose of the project and its contribution will still be remembered within the numerous things that decision-making executives have to deal with.
The results of completed experiments (we call them SMART pilots) are presented in a broad executive forum. When an experiment is presented as a success after it was originally approved by the relevant decision maker and its success criteria agreed upon, the psychological level of commitment to follow through is higher. Humans do not wish to be perceived as inconsistent. That is why we create the settings that make an executive’s commitment to introduce a startup-related venture into the work plans intending to deploy it, much higher as it is public and often communicated to the organization as well.
In the case of this pairing of the Israeli startup and the European corporation, the outcome was a positive one as a decision was made to begin deployment as part of the official work plans.
Having worked with hundreds of corporate-startup pairings, SMART pilots and deployments we have been able to demonstrate that when the three key principles of value proposition, adoption, and momentum are properly applied, success conversion rates increase in multiples compared to where those principles are not applied. We are fortunate to be located at the heart of the Israeli ecosystem and to be able to represent brilliant Israeli startup technologies to European corporations of various types and industries. While a few of the actions taken in order to apply these three principles were described above, there are many more that we regularly implement with numerous clients around the world.
If you’re looking to harness the power of startup innovation within your corporation, schedule a 1:1 discovery meeting with us. Let’s explore how our tailored approach can drive success in your organization.