One of the best decisions I've ever made was to muster up the courage to ask the late Professor C. K. Prahalad, a respected strategy professor at Michigan University, a question at the 2006 Academy of Management conference in Atlanta. I explained to him that I had begun researching how startups were partnering with large corporations; I was curious to know if he thought this was a promising phenomenon or just a passing fad. His response was unequivocal: “Startups must learn to dance with the large gorillas.”
Thus came the phrase “dancing with gorillas” into my life.
I kept following this phenomenon. Microsoft proved to be a particularly fascinating example, and I was fortunate to be able to study its startup partnering activities as an independent academic. I was able to make observations over an extended period of time – a decade and a half – and across several locations including China, India, Israel, Kenya, the UK, the United States, and South Africa, among others (see “About the Research”). Importantly, corporate-startup partnering was part of that company's organizational transformation.
There were several other companies that I studied, too. Initially, the cases I came across resulted from ad hoc activities and happy accidents. Eventually, spurred by the growing ubiquity of digitalization, more systematic and deliberate efforts were made, initially by technology companies and later by ones from traditional sectors like automotive, banking, and retail.
In the process, a new notion was added to my lexicon: “gorillas can dance.”
By observing the phenomenon of large corporations partnering with startups over time, I've been able to better understand that the capability to partner with a highly asymmetric organization takes time and effort. By taking a deliberately global perspective I've been privileged to gain insight into how partnering practices are adapted to, and adopted from, different contexts.
Corporate-startup partnering has become an integral part of corporate innovation, reflecting a greater openness in companies' efforts to innovate. And while there are other ways of engaging with corporate innovation – including intrapreneurship and corporate venture capital – the fundamentals of the partnering perspective that this book deals with offer a useful perspective that is relevant to be incorporated in those other efforts.
This book shares some of the lessons I observed in the corporations that partner effectively with startups. It is written for the gorillas – the large corporations seeking to make their partnering efforts more effective. A key lesson for managers is that partnering with startups is great on paper, but not easy to do.
An important insight that I got as I studied many companies is what I call the “paradox of asymmetry”; that is, corporates and startups seemed to be attracted to each because they were hugely different and had things that the other wanted. Yet these very differences – or asymmetries – were what got in the way of effective partnering. This helped me better understand what distinguished corporates that were more effective than others in partnering with startups; they make deliberate efforts at overcoming the downsides of asymmetry while tapping the upside. Thus partnering with startups sounds like a great idea on paper for large corporations; making it work, however, is not so simple.
The book opens with an account of Microsoft and culminates with an outline of the book's six chapters, with two each in three parts: Why, How, and Where. Each part highlights an important mindset: entrepreneurial, collaborative, and global, respectively. An Epilogue at the end briefly highlights the importance of all three mindsets, which represent an important takeaway that transcends this book's specific focus on corporate-startup partnering.
Thinking about these mindsets, as I have been completing this manuscript, has prompted a fair bit of reflection about the intersection of globalization and entrepreneurship, which in essence is what partnering between large multinationals and entrepreneurial startups represents.
Such reflection has been greatly influenced by the Covid-19 pandemic.
While this book has been well over a decade in the making, the home stretch of the writing effort to complete the manuscript took place against the unprecedented backdrop of the havoc wreaked, including on my travel plans to China, by the Covid-19 pandemic. As a result, I unexpectedly found myself progressing this book in my hometown of Vellore, in southern India. This meant that, after many years, I was back in the house I'd grown up in as a child.
That building was built over 250 years ago by the East India Company as an indigo factory. The East India Company was a “born global” – the epitome of globalization and entrepreneurship of its era. Many years later, the building was sold to the Reformed Church of America, where the Scudder family – a prominent medical missionary family – lived at the turn of the nineteenth century. In 1900, Ida S. Scudder, a third-generation medical missionary, started a one-bed dispensary in that building – quite literally, a startup – that eventually became the Christian Medical College (CMC) Hospital. Today, with more than 2,500 beds and a fine medical college, it is one of India's top teaching hospitals and a non-profit organization that assiduously seeks to serve the poor. Later, the building came to house the offices and director's residence for an organization founded in 1970, the Christian Counselling Centre (CCC), which has continued the tradition of non-profit service.
Arguably, this building offers diametrically opposing illustrations of how global and entrepreneurial mindsets can intersect. At one extreme, scholars such as Jeffrey Sachs suggest that, at least from the perspective of the country that is included in its name, the East India Company represented exploitative globalization. By contrast, organizations like these non-profits in Vellore that came into existence in this very building were also arguably conceived and built on the basis of global and entrepreneurial mindsets, but with an ethos of service that is very different.
Of course, for most for-profit organizations today, the optimal balance will lie somewhere in between these extremes. But in a post-Covid world, there may be merit in leaning more toward the Vellore non-profits' mindset than that of the East India Company, an erstwhile vehicle of imperialism. And it is collaboration – between dissimilar actors – that may be the lynchpin that helps to harness the benefits of entrepreneurship and globalization.
This is why I am particularly gratified to observe corporations like Microsoft, Unilever, and others explicitly incorporate a focus on the United Nations' Sustainable Development Goals (SDGs) in some of their startup partnering activities. Corporate-startup partnering thus holds promise for social impact. This prospect – and the accompanying urgency – has only increased with the debilitating social and economic effects of the Covid-19 pandemic. I truly believe that as corporations and startups partner together more effectively for mutual benefit, there can be outcomes – economic and social – that enhance well-being, productivity, and meaningfulness in life. But this is easier said than done, and it is my hope that the lessons in this book will help a little to make that a reality.
Shameen Prashantham
PROLOGUE MICROSOFT'S STARTUP PARTNERING JOURNEY
Microsoft's one of the few companies we were able to partner with that actually worked for both companies … Bill [Gates] and Microsoft were really good at it because they didn't make the whole thing in the early days and they learned how to partner with people really well.
– Steve Jobs 1
MICROSOFT: A CASE STUDY IN STARTUP PARTNERING
In October 2010, Microsoft organized an event, billed as the One Summit, at its
