Succeeding with Corporate Accelerator needs you to change one thing — say no to Ideas! Phoenix vs Unicorn.
Summary. This article is a summary of my experience, towards what makes corporate acceleration programs successful and what destroys the value, hidden in this programs. The conclusion at the end may sound too simple, but like always, complex things we create on our own, to hide the things, we cannot explain or do not understand.
Preface. I was always asking myself a question, what makes a successful startups? One can find many different books related to this topic, opinions and experiences, the summary is: team, time and business model. These are the three components of success. Then why is it so complicated to create startups? One can argue, that these three variables are rarely optimal in one team. That is why companies, which do not want to miss the business model disruption or digital trends, created corporate acceleration programs, to validate these three variables of a successful startup equation. Again there are tons of books, about the corporate acceleration programs. And again and again, if one talks to a big corporation, there is still a lot of space for improvement. This accelerators are rarely paying off even for their existence, even more rare earn desired risk adjusted return to their shareholders. And again the question is why? These startups, they do have access to company problems, data, capital — everything which may be required to succeed and we gain and again do not observe the result. For some time I was agree with those who say, that corporate incentivisation model does not work for startups and vice-worse. E.g. long decision making cycles, risk vs premium is out of proportion etc. Corporates even created special flight zones, like Moonshot (good example) and millions of others — bad examples. And still corporates are trying to find these 1%ters, to ask them to build companies out of a corporate world.
The question is: Why the investments into the corporate startups do not pay off in the most of the cases? So this is not about the fact that we do not know something about the startup success variables and the tolerance levels for these variables and not because we do not understand the incentivisation structures required to succeed or the type of people (team) which needs to be a part of it or the parameters of the business models which it needs to have to be successful (e..g SaaS, HaaS etc.).
The answer is: The simple answer I have found out is because we are mixing up two different types of startups, I call them Startups Inside — Out (IO) and Startips Outside-In (OI).
Some definitions before we can proceed.
- Startup IO can be a type of activity, where Idea appears first. First Idea — then Business.
- Startup OI can be a type of activity, where the desire to have a sustainable new business appears before the Problem this business needs to solve appears.
- Startups OI & IO are two totally different substances, often exposed to a similar definition — Startup / New business.
Let’s consider these two a bit more in details below.
IO Startup nature. Unicorn.
Startup IO is a type of organisation, which starts from the Idea of the Founder and his ability to raise resources.
The Founder of a Startup IO gets an Idea of the product, looking for Co-founders to create “fast and dirty” PoC/MVP of this product and starts the journey towards a unicorn. He or she is normally driven by a desire to conquer the world with the fascinating product in the future. They can be a part of accelerators, where they learn about the things one would read at https://www.strategyzer.com/canvas and how to use them. But the most important thing, which startups get in the accelerator, to my mind, is — Network. This Network allows startup to go and validate the value proposition. The best way to validate this — have the MVP and by asking potential customers to use it — validate the features, value proposition, pricing etc. This can be more or less structured, but such teams normally need a coach / tracker and rarely a program itself. The acceleration program typically says today we do this (e.g. validate value proposition) and tomorrow that (validate pricing). SO the motivation of the accelerators is to reduce risks of the three variables we discussed above (Time to enter the market, Business model and the Team). While the Startup motivation and desire to move forward is with people solving problems and not achieving acceleration KPIs.
OI Startups nature. Phoenix.
OI Startups, is a type of an organisation, which starts from the idea of the potential founder, that one wants to try to create a new business, potentially disruptive, but so far he or she does not have an idea of the business. The success of this type of organisations is driven by the ability of the Founder to find the problem and validate the business behind the problem.
In OI startup one can have a domain of interest, e.g. Industry, or even may have a clear function in mind, e.g. HR in Gold Mining, but the rest remains unclear. For this type of organisations, one needs a very structured process, how to identify the problem you will solve (starting from Value proposition canvas, Right to Left), then answering the questions about the Business Model, Market potential etc. This exercise goes until the hypotheses on needs to validate are clear, mainly around the Customer segments, Customers must haves / Nice to haves, Buying process etc. In this case one can have a very celar KPIs, e.g. customer interviews, percentage of validate hypotheses etc.
Conclusion
Coming to the conclusion (after being a tracker for more than 30 Startups), I did not find a good and efficient way of validating the hypotheses about the value proposition, business model, market potential and so on dealing with IO Startups, these all templates simply do not fit. Value proposition canvas does not work Left to Right, Business model is already partially defined, since product exists in most of the cases, Validation of “Must haves” looks like a proof for the necessity of the existing features, rather than an exploration and still Startups manage to exist, find investors, reach the targets. Some may exist due to luck, some due to better adoption rate, but this adoption happens in real life, real time and on the way. Tracker of such a startup applies only corrective actions on the way, structured approach fails most of the cases, entrepreneurs do not see much value, they feel stopped from doing real stuff. This makes Startups High Potential, High Risk type of activity and did not see many programs which would fit them, most cases it is a Network, what they need to succeed or fail.
Another story is with OI Startups. This type of organisations is perfectly fitting into the tracking programs. People are doing all the templates and things in the right order. They come without the idea. They explore the customer, find their jobs, pains and gains, identify which can be solved, formulate features and the product. Then they validate many hypotheses related to the business model, find best mathich team. This is engineering, nothing to do with entrepreneurship or excitement. Hard daily work to engineer a solution for a customer. This makes this type of activity controllable, structured and low risk compared to a startup, with similar value opportunity.
And now comes the most essential finding of the article. Corporates, in their acceleration programs are looking for OI Startups (low risk, high potential). And what they are asking for to join this programs? In 99% of the cases — an idea of the product is a prerequisite for these 1%ters to join the program. Which immediately turns them from a OI Startup into the IO Startup, which corporates most probably do not know how to manage.
The moment you asked your employees about the Idea for the potential business, you created a IO Startup, which you will not be able to manage…
If you need to create new businesses, try to find people, who want to try their own business, but do not have ideas!
This may sound naive, how can one start something with people, which do not have ideas? That is exactly the mistake I observe again and again in a corporate accelerators. They are looking for ideas, but need to start looking for people, with no ideas, but the desire to try their own business. OI Startups, not IO Startups! The moment you ask your employees to find an idea and offer them a program, you already designed for failure, because an Idea — is a much more solid thing, than one can foresee.
Idea — is a belief to change the world, a commitment which brain of a Founder makes, the moment the idea appears. The more you believe in your idea — the stronger the commitment. Thus, validating your own beliefs is a much tougher process which goes hand at hand with biases and blind commitments Startupers do, from outside this can sometimes look like craziness or foolish behavior. That is why companies are fighting the windmills, accelerating and convincing Startup Founders, that their idea is not good enough.
Instead, companies need to switch to OI Startups — people with no ideas, but ready to explore the world around them and find working solutions — Engineers, not Founders.
P.S. My personal experiment with couple of acceleration programs and OI Startups shows that switch from IO Startup mindset to a OI Startup mindset may be a turning point for many corporates in succeeding with their acceleration programs, reaching desired financial results. The more I will experiment the more data I will have to support these statements, but so far seems to be the breakeven.
The end.
