What if David and Goliath worked together, instead of duelling?
More importantly, can they? This was the gist of a fascinating discussion at the NasscomET round-table discussion on the theme “Smart Enterprises and Startups A new Symbiotic Relationship in the making?“ on the sidelines of the Nasscom India Leadership forum ’16. The idea was to explore the possibilities if natural born rivals -large enterprises and startups -could collaborate. Moderated by ET’s TV Mahalingam, the panel featured Pankaj Patel (Chief Development Officer, Cisco), Ravi Gururaj (serial entrepreneur), Umesh Adhikary (President, Corporate Strategy & Business Development, Aditya Birla Group), R Chandrashekhar (President, Nasscom), Rajat Paharia (Founder, Bunchball). Excerpts:
What can startups and large firms expect from each other?
Umesh Adhikary As the group grew from $2 billion in 1995 to $41 billion in 2015, a question we found ourselves asking was -how do we as an organisation remain flexible, nimble and how do we encourage innovation within the group? In August, we launched the Aditya Birla Bizlabs programme across three sectors: telecom, financial services and retail. Around 1,200 startups had applied for the programme and after the 20-day programme, 20 startups were selected who are now scaling up with us. The main idea of Bizlabs was how do we collaborate with startups and grow together.Ravi Gururaj What do startups expect from large companies? Five Cs, primarily. One, Coaching -there is a lot of deep expertise within large companies.Startups end up using a lot of their early energy and passion and cash in doing wrong things sometimes. Two: a potential customer relationship. Third: Capital. Then there is Connects. Companies can connect startups to their customers. And that’s a powerful next step.Finally, creating cofounders. A lot of startups are formed because people are peeling away from big companies.Can large enterprises create intrapreneurs instead?
An recent study found that large enterprises and startups stand to miss a $1.5 trillion in growth opportunities when they don’t collaborate on digital. Is collaborating with startups an imperative for large enterprises?
Pankaj Patel It’s an imperative. Cisco has $2-billion venture arm which we invest in over 100 firms. We don’t acquire all of them. Of the 100, we acquired only 30. By investing, we get the front seat to see what’s going in some of the potentially disruptive technologies which can come to disrupt you. There is nothing that stops two people in an apartment in Bengaluru or two guys in a Palo Alto garage to disrupting things. Adhikary As a group, we have been very progressive about how we can engage and collaborate with the startup ecosystem. Today, a lot of our discussions are about disruptions that ecommerce guys are doing. Therefore, it doesn’t make sense to compete with them but makes sense to collaborate.
As a conglomerate, how do you approach a very complex and diverse startup ecosystem?
Adhikary When we surveyed the startup ecosystem, we found that telecom, financial services and retail comprised about 70-80% of startups. When we looked internally, we had leadership positions in telecom, retail and financial services. That became a huge value proposition for startups. So, we invited startups from these spaces to participate in the programme not just for funding but also for coaching. We also said that if you have an innovative solution, we will get you a pilot project.
How do you view partnerships with large enterprises?
Rajat Paharia It’s scary. You have all your critical, scarce resources….your time, your people and money… sucked out by dealing with a big company.That’s just because of the fundamental mismatch between the two entities.The big companies have different time lines. The startup has 50 people of which 30 are devoted to this relationship and if it goes bad, that’s it for the startup. As a small startup putting resources and investment, I have to know that I’ll get 5x when I come out. That’s not a problem for the big company. For the big company, if it fails, it fails. Given this, how can startups and large enterprises manage the cultural disconnect? Patel First and foremost, it’s about the culture. We’ve had to let go of several hot companies because the culture didn’t match. Second is location. Thirdly, talent. We want to keep talent as much as we can.
How important is it for Indian IT to collaborate with startups?
R Chandrasekhar Indian IT services’ evolution is well recognised. Having seen what Indian IT is capable of, customer expectations are also very high.The demands that they place, in terms of outcomes, cannot be done by just delivering IT services. Innovation is needed. To innovate, there are constraints for large companies based on culture you have had. Some of the innovation they will have to do in-house and some of it will have to be sourced externally.