Ending "Pilot Purgatory" between Startups and Corporations

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Making Corporate piloting efficient

Round and round and round we go… Sometimes this is exactly what it feels like when corporations engage in new partnership or pilot discussions with startups. An unending cycle of questions, calls, and meetings that limit meaningful outcomes and often allow the window of opportunity to pass before a decision can be made. As an investor who works to bring startups and corporations together, I find myself in the middle of these situations often. But there is a growing solution that simplifies and streamlines this cycle.

Typically, the number of people involved in determining new pilots, the number of discussions that need to be had, and the varying opinions within corporations can be one of the biggest hindrances to innovation. Even for a small pilot, the number of decision makers at the table can be staggering. This situation worsens when you have an eager new startup at the other end of these conversations waiting for a decision that gets wrapped in an endless cycle of new diligence questions, new use case research, and varying customer and supplier calls. And the decision either never gets done, or worse, ends up taking upwards of a year and valuable time and money to get to a “pass.” For startups, time is everything. And unfortunately, most startups who have tried to partner with corporations have experienced this inertia in one sense or another.

There are obvious reasons that BigCos tend to take their time when considering startup partnerships:

  • optimizing budgets and time;

  • consulting various entities about the pain point being solved; and

  • ensuring the potential liabilities and risk factors have been addressed.

However, one of the most agonizing reasons for the “pilot purgatory” is the endless pursuit for the perfect solution to solve the challenge at hand. This strategy typically involves trying to find ONE single solution for a challenge that is multivariate. Suddenly, the chain of command goes from less than three key corporate users to over a dozen—many of whom may not be end users at all.

“One of the most agonizing reasons for “pilot purgatory” is the endless pursuit for the perfect solution to solve an internal challenge. This strategy typically involves trying to find ONE single solution for a challenge that is multivariate.”

We have found that when there are more than 3 people involved in decision making for pilots or new partnerships, the probability of getting to a signed contract drops by >50%, going from what was 3 per quarter to <1 per quarter. This not only creates heightened internal frustration among talented employees who see the potential these new partnerships bring, but it also drastically slows progress and momentum in delivering the next generation technology or product to the corporation.

Instead of trying to find a perfect single-point solution, corporations should take a page out of the VC Playbook to create a portfolio of pilots and partnerships to solve a given need and then compare data > opinion. Multiple technologies fit together to form a more complete solution and would allow for testing of several smaller, fractional pilots to create a portfolio of new capabilities.


“We have found that when there are more than 3 people involved in decision making for pilots or new partnerships, the probability of getting to a signed contract drops by >50%, going from what was 3 per quarter to <1 per quarter.”


Enter Sequoia’s scout program...

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Sequoia instituted a scout program that tapped their best and brightest founders and provided them with a small budget to invest in their network where they saw potential and promise. Through small $100,000 checks written by individual founders, Sequoia has partnered with many interesting companies very early in their lives, including Uber, Stripe, Faire, GenEdit, Guardant Health, Thumbtack, and Vector. With these early checks, Sequoia gets in on the ground floor and is able to gain early insights into these companies’ traction. This data helps them decide whether or not to participate in their next round and advance the relationship.

And therein lies the genius. By providing a small amount of money and trusting their stakeholders, Sequoia is able to use data > opinion to make smart investments at a more rapid pace.


NOW LET’S APPLY THIS SCOUTING STRATEGY TO CORPORATE PILOTING...

So, let's apply this concept to corporations around their new partnership development. To engage more startups at a more accelerated rate, corporations could assign high-potential employees the role of startup “scouts.” These scouts should be experts in their fields, show strong rational judgment, and have a growth mindset with an ability to take risks. Each scout should be given parameters around internal protocols (such as security verification, privacy, regulations), goals and objectives, and budget. As with Sequoia’s scout program, there may still be one point of oversight, but I would even argue that if the right scouts are chosen, these individuals should be given autonomy in selecting new partners. If these scouts are placed in a more autonomous structure, the data and insights they gain from their early partnerships can then be channeled into an appropriate decision-making body to understand the effectiveness of the new solution and how it fits into the overall portfolio being developed.

"The group think construct that most corporations employ often reward ideas that are already commonly accepted (i.e. less risky, less disruptive ideas) within existing lines of business, which of course reduces impact.”

This allows the corporation to benefit from unique perspectives that some of their most talented employees have that may not shine within the traditional, consensus-building approach typical of startup engagement within large corporations. Group think approaches like these often reward ideas that are already commonly accepted (i.e. less risky, less disruptive ideas) within the enterprise’s existing lines of business, which of course slows down the rate of change and innovation. By contrast, truly revolutionary innovation takes companies way beyond their business norms, such as the Disney Imagineers.


WHAT’S THAT? ITS MORE COMPLICATED THAN THIS?

Watch out! IT'S ALREADY BEING DONE

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While I realize it may not seem this simple or this straight forward when working from within a corporation, it is paramount to reduce the barriers and decision-makers involved to more rapidly uncover new innovation possibilities.

Zoom, Slack, Monday, Asana, Smartsheet, Trello, Evernote, Airtable. These are all enterprise software programs that are being used by individuals within an organization. From workplace productivity to social media to content creation and sales, internal talent is starting to make their own fast decisions to aid their own productivity and outcomes. As different software and technology invades enough unique users within an organization, the organization eventually uses data to determine if an enterprise-wide contract makes sense. This also allows internal talent to make autonomous decisions about how to optimize their own workflow and work product. This is largely in parallel with finding more efficient ways to make new partnership decisions internally and allow individual talent to uncover obscured value.

The success of the Sequoia Scout Program should motivate corporations to find more creative solutions to unlock new products, technologies, and capabilities without creating significant investment or risk for the corporation. By putting data > opinion, getting in smaller, earlier, and allowing the unique perspectives of individual talent to shine, corporations can set a new benchmark for their rate of growth and innovation.


Corporations can set a new benchmark for their rate of growth and innovation by:

  • getting in smaller & earlier,

  • allowing the unique perspectives of individual talent to shine, and

  • putting data > opinion.