Startups Are Key to Bringing the Virtual Enterprise to Reality

By David J. Blumberg

In a world transformed by COVID-19, enterprises and government agencies increasingly need and are adopting digital and virtual solutions. Startups are the vanguards of digital and virtual technologies. The new reality requires and promotes collaboration between virtual startups, governments and enterprises, now more than ever before, especially when almost everyone is working remote. The traditional view was that working with startups was too risky. Now, it’s too risky to not work with them. Technology and solutions from startups are proving more powerful, user friendly and efficient.

In conversations with dozens of Fortune 500 companies and large government agencies in recent months, it is clear that most are seeking partnerships more aggressively than ever. The task can be overwhelming because of the sheer number of startups created every year, therefore Fortune 500 innovation officers are collaborating with venture capital firms, incubators and accelerators to identify promising new technologies early, as design partners, customers, partners and investors.

Following is a list of recommendations distilled from conversations with corporate innovation leaders.

Advice for Enterprises & Government Agencies:

  • Startups help larger organizations increase productivity of existing operations and bring new products and services to market more quickly. While startups have traditionally been called upon for best-of-breed point solutions, today startups leverage APIs and cloud technology to work more seamlessly with platforms and legacy applications that often integrate simply by adding one line of code.
  • Evidence shows that new code is more reliable than old code. It is easier to find and repair bugs. Startups are often first to offer the latest technology.
  • Startups have also learned to deliver solutions that are additive rather than requiring customers to rip and replace.
  • Most startups solutions are based on agile code and built for an agile workforce with an agile personnel policy whether hiring on premise or remote. Managers can allocate resources based on fewer mundane, repetitive tasks and instead focus on more creative and productive work for distributed teams.
  • Legacy code is treated as a fixed cost, but in reality, it also requires spending on maintenance and limits flexibility for new, needed customer requirements.
  • Most startups have improved their customer support in recent years. Startups are often willing to customize support solutions to meet the needs of strategic customers on the traditional three tier model. A great way for large enterprises to engage with startups is to join customer advisory boards.

Advice for Startups:

  • Startups should listen first and have a conversation. Corporate and government leaders have an existing architectural framework and priority list of applications to update and problems to solve. Startups should show how solutions fit within the customer’s existing framework and how it streamlines the move forward and reduces risk, cost and perhaps timeline.
  • Startups should also leverage marketplaces, platforms and APIs so that enterprises and government agencies can say “yes.” These services minimize the common problem of “too many vendors” and instead offer exposure to new partners, allies and customers that can improved productivity.
  • It is good practice to maintain a list of references – those willing to be mentioned publicly and those available for private reference calls. Many Fortune 500 companies and government agencies have restriction on using their brand name publicly, but most satisfied customers want to be helpful and will speak off the record.
  • Build long term relationships and create a customer advisory board. These groups are mutually beneficial and can provide long lasting stability and value beyond the expected including referrals, product insights and access to trends and data.
  • While focusing sales efforts on other startups can shorten the sale-cycle and lower the cost of customer acquisition, new technology has also empowered startups to deliver SaaS model offerings to large enterprises by the seat or departmental level.

Venture capital firms, accelerators and incubators are well positioned to facilitate mutually beneficial explorations, introductions and partnerships to bring the virtual enterprise to a reality faster than we would have imagined. This step change is the silver lining that has been catalyzed by COVID-19.