Mike Prefling, VP of Insights and Innovation, Ryan Companies
It starts with the best intentions and ever so subtly. You are at a conference and you see a compelling presentation showcasing an impressive solution that your competitor is using. Or as you are walking through the exhibit hall a vendor booth catches your eye. Buzz word, perfectly stated value prop, shiny things. So you go find out what this product or solution is all about. The people at the booth are really impressive. They are passionate, cool, intelligent, better looking than any of your friends, and they have really cool shoes. You couldn’t pull off those shoes, but they certainly do. Their solution hits on that same issue you were talking to your colleagues about the other day. The user interface seems easy, they make it look so easy, and the product itself is looks pretty sweet. It doesn’t quite do exactly what you need, but they said that’s why they are looking to partner with industry leaders such as yourself. That sounds exciting. You could be part of this product’s development. You’ve always thought that you were just as smart as those millionaires in Silicon Valley if you simply had a shot. The cost of this new shiny thing isn’t that bad either. You can buy a few licenses and turn it off whenever you want. It seems pretty easy to get started, and they have a beta program that is only for select customers. They are saying that you and your company fit what they are looking for and want you to be one of their early adopters to change the industry. And those shoes, seriously, where did they even get those shoes. So you agree to signup and pay for their intro offer or beta program or buy a few licenses or units.
“You have to make sure that this tech startup is actually trying to make things better and not simply trying to get to some revenue threshold to get another round of funding”
What does being an early adopter of a tech startup’s solution really get you? On the surface, it seems as if you are able to influence and shape this new product’s development. You can be the one to craft it into something that is exactly right for your company’s needs. Keep in mind that the issues you are trying to solve are probably the same or quite like what your competitors are also struggling with. If you provide this tech startup your invaluable insight and experiences and your company’s knowledge it will no doubt make their product better. Probably a lot better and more in line with what you need. However, now this special sauce that you’ve given them is being sold to all of your competitors. You are running the risk of commoditizing some of your business differentiators. The startup’s product gets better, and they get more rounds of venture funding, yet you have potentially weakened your competitive edge.
You should be extremely critical of a tech startup’s solution. Is it solving a problem that needs to be solved within your organization? Is it simplifying the day for your employees? Is it delivering an actual ROI for you? I have no doubt it is impressive and on their roadmap, it says it is going to do X, Y, and in Q4 of 2037 is going to do Z. That is exciting because item Z is what you really want and that’s when it will really be impactful.
I suggest that you arm yourself properly before walking through that exhibit hall, or taking that email request for a demo. What are your company’s differentiators? What are your business-critical processes? You should innovate at your differentiators and invest in process improvement at your business-critical items. What do you have to be good at as a company to keep the lights on? Those are your business-critical items.
What makes your customers choose you and nobody else? Those are your differentiators. Do you have to be good enough at cost and schedule but great at the customer experience? Do you have to be good at project management but faster than anyone else at execution?
Make sure you understand what the issues are you are trying to solve, why you are trying to solve them, and really understand what is good and right for your company. This sets your principals in place as you evaluate new solutions.
Now that you are properly armed let say you find something that is interesting. This shiny thing could potentially solve a business-critical problem, or would be an innovation of one of your differentiators. You’ve got to make sure that this tech startup has values and ethics that are in line with your company. You have to make sure that they are actually trying to make things better and not simply trying to get to some revenue threshold to get another round of funding. Can they guarantee in the offering an actual ROI? Can you negotiate an early adopter preferred rate or intellectual property that your competitors cannot utilize in perpetuity? Ask them outright what their company’s values are. What are their principals? Try not to get distracted at those sweet kicks they brought to the meeting today. If the answers you get hint at or even remotely sound like, “to make as much money as possible”, or to “dominate the market”. To summarize:
1. Watch The Wire.
2. Refresh your mindset on your company’s differentiators and business critical processes and services.
3. Identify the “why” on any solutions being evaluated. Is this actually an issue that needs to be solved for my company?
4. Ensure that the tech startup has aligning values and is committed to delivering an actual ROI.