Ep. 282 - Shameen Prashantham, Author of Gorillas Can Dance on Challenges Corporates and Startups Face Partnering
On this week's episode of Inside Outside Innovation, we sit down with Dr. Shameen Prashantham, Author of Gorillas Can Dance. We talk about the benefits, opportunities, and challenges, corporates and startups face when trying to partner, grow, and innovate together. Let's get started.
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Interview Transcript with Dr. Shameen Prashantham, Author of Gorillas Can Dance
Brian Ardinger: Welcome to another episode of Inside Outside Innovation. I'm your host, Brian Ardinger. And as always, we have another amazing guest. Today, we have Dr. Shameen Prashantham. He's the author of a new book called Gorillas Can Dance: Lessons from Microsoft and other Corporations on Partnering with Startups. Welcome to the show.
Shameen Prashantham: Thanks so much, Brian. Great to be on your show.
Brian Ardinger: I'm excited to have you on the show for a lot of different reasons. One is your book of course. But also, you've been doing a lot of research into the area of startup corporate collaboration as your role as a professor of international business and strategy and Associate Dean at the China Europe International Business School in Shanghai. So, I wanted to start off the conversation with what got you interested in researching this intersection between startups and corporates and innovation.
Shameen Prashantham: You know, Brian, I decided to go down the path of academia when I was in my late twenties. And then I did a PhD in Scotland. About how startups went international. And this was a topic that was gaining traction at the time. But I did my research in an international business unit that had made its names by studying large companies. Particularly large us multinationals that had established a presence in Scotland.
It appeared to me as I was completing my doctoral work, that we were making an artificial distinction between these two sets of companies. Certainly, they occupied very different worlds in a way and had very different realities, but I was beginning to see some weak signals of the prospect of collaboration.
And so, by about 2005, which is when I graduated with my PhD. I began to ask why are we studying these different companies separately. And in Scotland, there was a recognition by policy makers even, that for example, IBM, which had been around for a few decades or Sun Microsystems, they too were trying to actually do more innovation in their far-flung subsidiaries.
And one way to do that would be to connect with local innovative startup, that we're quite keen to gain some access to the commercial muscle of these large companies. And so that was when I began to observe this possibility, this potential. And I found it fascinating and just sort of stuck with it.
Brian Ardinger: One of the core premises of your book and your research is how do large companies stay innovative? And you're saying that more and more companies are looking at startups as a way to inject innovation into their core. Talk more about what you've learned through your research.
Shameen Prashantham: Initially when I started looking for examples. I think they were really happy accidents. You know, you had unusually entrepreneurial manager in a subsidiary of a multinational thinking, gosh, we've surely gotta be able to do more than we can in terms of innovation, but there's a chicken and egg problem.
Headquarters isn't going to give us the mandate to do more innovation unless we have the capabilities. But we are not going to be able to build the capabilities unless we have a mandate. Some of these guys were saying, well, let's just fly under the radar a little bit and try and dabble with some innovation by our collaboration with local startups.
And they were able to do that, fairly inexpensively. The local startups were interested to do this. And I published an article called Dancing with Gorillas in 2008. Mainly from the point of view of the startups. But from that point onwards, what I began to notice, interestingly was the big company is gradually started saying, well, actually, why don't we do this more systematically?
And the company that I have studied the longest is Microsoft. So coincidentally, 2008 was the year they introduced BizSpark which was their first major programmatic initiative for startups. Partly driven by a concern that the open software movement was going to cause problems. Give startups and alternative in terms of software tools. So, they were giving away software tools for free.
But I think that became an important start. This was managed out of Silicon Valley under the leadership of Dan'l Lewin who was a Silicon Valley insider brought into Microsoft to engage with startups. And then what I observed over time is companies like Microsoft, which were, I think pioneers in this area, had a combination of top-down initiatives run by people like Dan'l out of Silicon Valley and bottom-up initiatives championed, for example, by managers in Israel who felt they really ought to tap into the fantastic potential for entrepreneurship in their region.
And then things developed. And then I came across SAP doing something for startups out of Silicon Valley and so on. But the other thing that became interesting more in the last sort of five to seven years is that companies in traditional industries, automotive, banking, fast moving consumer goods.
Especially around 2015, I began to notice startup programs, being initiated by them too. Partly as a response to the digital disruption. And they too felt, you know, they recognize the need to be much more innovative, agile, and entrepreneurial while they were introducing intrapreneurship programs. There was no reason not to also tap into the entrepreneurial energy in startups on the outside.
Brian Ardinger: Well, you definitely seem to have this change, this rise of startups, and the rise of startup ecosystems I think helped bring this to the forefront of companies as well, where you saw more and more companies getting up and going faster than ever before. And the ability to start things, create things, build things, I think put a spotlight on startups in a way that hasn't been in the past.
You mentioned it started, you know, a lot with the technology companies looking at startups as a core opportunity and that. Now it's been moving on to other realms. Other industries and that. What are you seeing when it comes to what's working and what's not working when it comes to partnering with startups?
Shameen Prashantham: Great question. And just to briefly comment on what you said. I think I absolutely, right. My comments earlier, maybe emphasize more the demand side of things. You know, the big companies recognizing the need to be more entrepreneurial. But on the supply side, definitely we've seen more startups coming to the floor.
And I think cloud computing is one of the game changers, and I think that's how Microsoft became more and more interested as well. And you know, the fact that Satya Nadella ran the cloud business, when it wasn't a thing in Microsoft, and then later became CEO also made this much more central to what they were doing.
But in terms of what works and what doesn't work, I think in companies like Microsoft, but the other ones as well, BMW, Unilever, Walmart. So whole bunch of industries. I think what I've noticed is this. There is a Paradox of Asymmetry. That these big companies that have encountered at one point or another.
And the Paradox of Asymmetry is that the very differences that make it attractive to work together. For example, the startups of agility and the large companies of scale, those very differences actually make it difficult, or at least not straightforward for these very different types of entities to work together. For this to work companies have to overcome these asymmetries. And so, what works. It's basically the efforts to overcome the symmetries.
And I've identified three. An Asymmetry of Goals. These different companies want different things. And importantly, at different timescales. There's an Asymmetry of Structure. Is very difficult to find role counterparts. And what I call an Asymmetry of Attention, which is the big companies, the notion of startups out there. They aren't sure which ones are worthy of their managerial attention.
The startups have a different problem, which is how do I get the attention of the people who matter within the company? And so, the companies that have clarified the synergy, the so-called, win-win very clearly. The companies that have put in place partner interfaces, so that startups know who the first port of call is.
And the companies that have very deliberately intentionally cultivated success stories. Exemplars fairly early on. Are the ones I think that have met with more success. Because the synergy helps to address the Asymmetry of Goals. The interface helps to address the Asymmetry of Structure and having these exemplars, showing what success can look like to both parties help to address the Asymmetry of Attention.
Brian Ardinger: I think that's so important. When I work with startups oftentimes earlier on, I would say, don't even think about working with a corporation until you understand who you should be talking to. And because it can very easily take you off track. The timelines of how a startup executes versus a timeline of a multinational corporation are significantly different and can take a startup in the wrong direction if they're not prepared for that.
You mentioned that the companies that you saw that were doing the best work, had identified someone in the corporation or a group within the corporation to help be that Sherpa for a startup to help navigate that. Is that being driven by the locality of the locations? Is it being driven by business units? Is it being driven by the top down saying here's how we want to interface? Or talk a little bit about how companies have actually structured that Sherpa role.
Shameen Prashantham: I love that metaphor. I've seen both. For example, a BMW. It was sort of top-down because an initiative driven out of Munich in Germany. Where it was very interesting in terms of the people who are driving this. And there was a pair. So, there's this guy called Gregor Gimmy, who was really the public face of the initiative.
A BMW Startup Garage was created in 2015. In fact, I just sent an email, I think, to info@BMWStartupGarage and said I'm doing a lot of work on this. I've notice that you've started this. Can we talk? And Gregor replied immediately. And I would see him on the videos.
But only when I got to Munich and met him in person, did I realize there was this other guy in the background, Mathias Mayer. And they were such different personalities, but I think you needed both. Gregor had worked for IDEO in Silicon Valley. He was very gregarious. He was the guy that startups could identify with.
Mathias on the other hand, Dr Mathias Mayer. As you know, many German managers have PhDs. He was the BMW insider. I think who was the Sherpa for the interface in the company. To navigate the internal politics and so on. And I think that's why it works in that case.
So, that's an example of top down. But there's also been bottom up. I mentioned Israel in the case of Microsoft, but also here in China, Walmart came up with an interesting program called Omega Eight. To deal with Chinese startups to help improve the customer experience in the stores, for example.
But one of the things they were very clear was we have to do things differently in China. Speed, for example, is of the essence. And so they would put in place practices, like we will work with startups who can do only one pilot for us at a given point in time. And need to do it in 60 days. And that was actually very reassuring for the startups who were always worried that these big multinationals would be soon moving.
And I think the last visit that Doug McMillan, the Walmart CEO made to China pre pandemic, was in 2019. And they showcase some of the startups working with Walmart. And so really, I think both are possible. But I think the key is having people who can on the one hand show empathy and connect with the startups on the outside. But also have the ability to deal with the internal piece and the politics and the communication and getting buy-in from people.
Brian Ardinger: Yeah, it's interesting that you're seeing different examples having success, but, but taking a slightly different take on it. For example, like, you know, the BMW Garage, my understanding with that program is when they came out, it was unlike your traditional corporate accelerator or corporate venture, where they would invest in a startup.
They would look for companies and then would help them become partners and basically get through the red tape of becoming a preferred vendor, for example. And helping that particular part of it versus just capital thrown at the startup.
And then you have other examples, like you said Microsoft, that are offering tools and services at a discount to start that communication and start that partnership with startups. What role are you seeing corporate venture playing in this?
Shameen Prashantham: It's a great question. And the honest truth is the vast majority of my work has been on non-equity partnering. So, offering that doesn't involve equity. And the distinction between what Microsoft is doing and BMW is doing can be thought of as a distinction between cohorts and.
And the way I explained this to my classes, a cohort is like an MBA class. You know, getting in is difficult, but once you get in, it's a time bound program where the curriculum, pretty much everybody who starts the program ends the program and peer interaction is a key part of this. And I think that's the way Microsoft went about their accelerators, for example.
But BMW's is more like a funnel, which is like the job search process. After an MBA, many fewer complete the process than begin. You get screened out along the way, and you may not know who else is part of the process. And each has its advantages and disadvantages. I think with the cohort type program, you're more likely to have serendipity. So, you may have two startups that didn't know each other from before forming a three-way partnership in the course of the accelerator program.
But I think with the funnel, you have more predictability and I think that's what BMW went for. And you're absolutely right. They pioneered this idea of being a venture client. And so one of the key things they were doing was connecting startups with business units or innovation teams within BMW, who actually would be interested to work with them, but also made sure that they got a supplier number. Which most startups would not be able to do.
Corporate Venture Capital traditionally has tended to come into play at a slightly later stage. BMW had i ventures, even before BMW Startup Garage, but the impression I got was the BMW Startup Garage were talking to people, startups with say a series A round of funding. i Ventures was coming in at B or later. That being said, particularly over the past year. I've seen corporate venturing now growing around the world.
And I'm seeing the non-equity partnering guys working with more and more mature startups and some of these corporate venture capital guys working with younger startups than before. And so perhaps going forward, we'll see a little bit of a blurring of distinctions, but just one last comment on this.
I asked a guy at Silicon Valley Bank who knows a lot about corporate venture capital at one point, what do you think about the role of CBC? And should I be involving that much more in my work? And his answer to me was you can partner without investing, but you can't invest without partnering. And so that's the important thing to focus on. And so, I guess whether you're investing or not, the key is to have this collaborative mindset when engaging with startups.
Brian Ardinger: When I talk to a lot of companies, they are interested in trying to figure out, like, how do we start this process? They know that they should be looking outside their own organization to start maybe partnering with startups and that. Or, or even just to keep their own workforce more in line with the entrepreneurial mindset and that. What are some of the early things that a company can be doing to start the process of becoming more adept at navigating the startup landscape?
Shameen Prashantham: I think it's a little bit like what Simon Sinek says. You know, think big, start small, but start. One of the things to do, whether it's bottom up or top down is to, especially for people who are relatively new to this scheme, which has now been going on for a while, is to look for shortcuts.
So back when Walmart decided to engage with startups in China, they took a little bit of a shortcut to get going. They made tracks to the Microsoft Accelerator and said, do you guys have startups in your portfolio who might be relevant to us? And of course, from Microsoft's point of view, this was great. Because they want their startups to use more Azure and things like that and do work for big other big companies.
So, they identified eight startups from their alumni who did retail tech. And brought them together with Walmart for the weekend. They call it a Hackathon. But I mean, it's basically interaction so that the Walmart people got to know these startups and vice versa. And then from that pool, they identified three startups that would work on a pilot within 60 days.
And so, within the span of a quarter, there was something pretty tangible that had been achieved to make a stop. And I think that's the sort of approach that helps to overcome the inertia to go beyond talk and start doing things. Because then you can assess what's working. What doesn't? Does this make sense going forward?
And you don't even need the blessing from above to be able to do this in the case of Walmart, this was a subsidiary level initiative. So, either way, I think it makes sense to start small to start specifically. But then if there is genuine intent to do this on a systematic large scale, then it becomes important to get buy-in from the organization as well.
Otherwise, these things just stay small and that's where getting buy-in from top managers, as well as other business unit managers, who can provide the meaningful opportunities and even building awareness more generally within the organization. Because you can get mentors into these programs from other departments just to help startups get a better feel for the company. And so I think it's a combination of making sure you make a stop, but then be if you're really serious about it, then building on it to replicate this and even do this in other parts of the company.
Brian Ardinger: You're based in Shanghai. And my question is what have you seen coming from different markets? Are the tactics or the strategies different in a newer startup ecosystem that a company is in versus a more established startup ecosystem, like the Valley or other places around the world? What are you seeing from the ecosystem perspective?
Shameen Prashantham: Both Thailand and India have actually been very interesting. Ecosystems with a lot of energy over the past decade. Yes, you're quite right. That these newer ecosystems have a slightly different vibe. I say this in a positive way. There's less maturity in the sense that you're more likely to find first time entrepreneurs here than say in Silicon Valley or Israel.
But on the other hand, they're also trying new things that populations have leapfrogged the PCE route in many respects. And so sometimes, with payments. For example, you find both in India, some innovations that are interesting and which Western companies find very interesting to be able to address.
However, because the ecosystem has the great appetite, but it's still evolving then to some extent there may be a little bit more handholding involved because the startups have less familiarity with working with the corporate. Also, and this is true of China, then most of the places. There might be some distinct local ecosystem players, like in the case of China, Baidu, Alibaba, TenCent.
And so, making sure that that is factored in, which is generally not a problem, it's just about recognizing that you have to take that into account. The other thing of course, is that in emerging markets, the rule of non-market players can be very important too. And I mean, by that particularly government and policy makers. And the other thing to note is that distinction between the national policymakers as well, and top policy makers at the local level and the latter are also very important.
And so, what that can mean is opportunities that you wouldn't necessarily think would be possible yet are off the beaten track. So, the equivalent of Silicon Valley in China used to be Zhongguancun in Beijing, the soft, well it probably, when you were in Asia, was referred to as the Silicon Valley of China.
And now Shenzhen, also claims to this move with a hardware focus. But in a place like Ningbo which is in Zhejiang Province, the same province that has Hanjo the city where Alibaba is headquartered. Ningbo been known for entrepreneurship for a long time for centuries, but it's never been a tech entrepreneurship hub. Yet even there I've seen IBM partner with startups because local policymakers are so entrepreneurial. They leveraged their smart city program and brought these actors together. And that creates opportunities you don't necessarily see in other parts of the world.
And so, by being aligned to the differences, but also the novelty in these markets, both in terms of the technologies they're working with, but also the different parts of the region that has talent, I think companies with the global mindset, can actually tap into a lot of these emerging ecosystems. And Africa, I think is another very interesting story as well. And we are going to see more and more interesting examples from there too.
Brian Ardinger: You've been spending a lot of time in this space. What are some of the trends that you're looking to see in the coming years?
Shameen Prashantham: So, I think digitalization was the big driver of corporate startup partnering in this past decade. I think in the 2020s, sustainability might have a similar effect. And, you know, just before the pandemic hit, the United Nations said the 2020s is the decade of action. We need to accelerate. our efforts to achieve the sustainable development goals and then boom, the pandemic hit, which has made it a more challenging yet more important and urgent in a way.
And you know, in November, there was the climate change conference in Glasgow. Which is a reminder that whatever the geopolitical tensions and differences that exists on certain matters, like climate change, it'll be important to set aside differences and work together.
And I think climate tech startups working with large companies is going to be very important. A steel company had reached out to me and said, you know, we're desperately trying to engage with startups. Point us to any that you know. So to me, this is going to be actually the key driver and which is why regions all over the world, you know, the Valley, mature ecosystem like that. Or emerging ecosystems in Africa. And everything in between. And I think that's going to come into play and be very important.
For More Information
Brian Ardinger: The book Gorillas Can Dance is a fascinating book. Its got some great examples, great tactics. I encourage people to pick that up. If people want to find out more about yourself or about the book, what's the best way to do that?
Shameen Prashantham: www.gorillascandance.com and I'm also on LinkedIn.
Brian Ardinger: Fantastic, Dr. Prashantham, thank you very much for coming on Inside Outside Innovation. Looking forward to continuing the conversation in the years to come and appreciate all your time today.
Shameen Prashantham: Thanks so much, Brian. I thoroughly enjoy it.
Brian Ardinger: That's it for another episode of Inside Outside Innovation. If you want to learn more about our team, our content, our services, check out InsideOutside.io or follow us on Twitter @theIOpodcast or @Ardinger. Until next time, go out and innovate.
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