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- Herausgeber: John Wiley & Sons
- Kategorie: Fachliteratur
- Sprache: Englisch
Achieve exceptional results with your organization's next partnership for corporate innovation In Gorillas Can Dance, distinguished international business strategy professor and expert Dr. Shameen Prashantham delivers a proven roadmap for large corporations collaborating with startups. Drawing on over a decade of international research, Dr. Prashantham explains the "why," "how," and "where" of corporate-startup partnering. In this book, you'll learn: * How to focus on the three pillars of synergy, interface, and exemplar to achieve outstanding results in your partnership * Why the very thing that attracts large corporations to startups--their significant differences--also makes it difficult to work together * Where in the world to find your ideal startup partnerships and how to use them as a force for good Perfect for C-suite executives, managers, business unit heads, and corporate innovation managers, Gorillas Can Dance is a must-have resource for business leaders seeking strategic guidance on partnering and collaborating with startups.
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Seitenzahl: 403
Veröffentlichungsjahr: 2021
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Table of Contents
COVER
TITLE PAGE
COPYRIGHT
DEDICATION
FOREWORD
PREFACE
PROLOGUE MICROSOFT'S STARTUP PARTNERING JOURNEY
MICROSOFT: A CASE STUDY IN STARTUP PARTNERING
PHASE 1 GETTING STARTUP PARTNERING OFF THE GROUND
PHASE 2 EXTENDING AND DEEPENING STARTUP ENGAGEMENT
PHASE 3 MAINSTREAMING STARTUP PARTNERING INTO THE CORE STRATEGY
LESSONS FROM THE MICROSOFT STORY
WHAT THIS BOOK IS ABOUT
NOTES
PART ONE: WHY
CHAPTER ONE: WHY ENTREPRENEURSHIP MATTERS FOR LARGE CORPORATIONS
WHY PARTNER WITH STARTUPS
MANAGERS VERSUS ENTREPRENEURS: THE CHALLENGE OF DISRUPTION
MANAGERS AS ENTREPRENEURS: RESPONDING TO DISRUPTION
MANAGERS WITH ENTREPRENEURS: PARTNERING WITH EXTERNAL STARTUPS
SCOPE FOR WIN-WIN COLLABORATION
NOTES
CHAPTER TWO: WHY PARTNERING WITH STARTUPS ISN'T EASY
SCOPE FOR WIN-WIN …BUT ASYMMETRIES TO OVERCOME
GOAL ASYMMETRY
STRUCTURE ASYMMETRY
ATTENTION ASYMMETRY
THE PARADOX OF ASYMMETRIC PARTNERING
NOTES
PART TWO: HOW
CHAPTER THREE: HOW TO PARTNER WITH STARTUPS SYSTEMATICALLY
A THREEFOLD STRATEGY TO OVERCOME ASYMMETRIES
CLARIFYING SYNERGIES
CREATING INTERFACES
CULTIVATING EXEMPLARS
UNDERSTANDING THE STARTUP'S PERSPECTIVE
NOTES
CHAPTER FOUR: BUILDING THE CAPABILITY TO PARTNER WITH STARTUPS
LEARNING TO PARTNER WITH STARTUPS
INITIATION
EXPANSION
SYSTEMATIZATION
LEARNING FROM EXTERNAL SPECIALISTS
NOTES
PART THREE: WHERE
CHAPTER FIVE: PARTNERING WITH STARTUPS AROUND THE WORLD
LEARNING FROM THE WORLD
THINK GLOBAL, ACT LOCAL: ADAPTING PRACTICES
THINK LOCAL, ACT GLOBAL: ADOPTING PRACTICES
THINK GLOBAL, ACT GLOBAL: ALIGNING PRACTICES
LOOKING TO NEW FRONTIERS
NOTES
CHAPTER SIX: PARTNERING WITH STARTUPS AS A FORCE FOR GOOD
DANCING WITH GORILLAS FOR THE SUSTAINABLE DEVELOPMENT GOALS
SOCIETAL SYNERGY
INCLUSIVE INTERFACE
HYBRID EXEMPLAR
BUILDING SDG COALITIONS
NOTES
EPILOGUE THREE MINDSETS FOR THE SDG DECADE OF ACTION
CONTRIBUTING TO THE SDG DECADE OF ACTION IN A POST-COVID WORLD
ENTREPRENEURIAL, COLLABORATIVE AND GLOBAL MINDSETS
HARNESSING ENTREPRENEURSHIP AND GLOBALIZATION VIA COLLABORATION
NOTES
ACKNOWLEDGMENTS
ABOUT THE RESEARCH
ABOUT THE AUTHOR
INDEX
END USER LICENSE AGREEMENT
List of Illustrations
Prologue
Figure P.1 Three Phases of Microsoft's Startup Partnering Journey
Figure P.2 Overview of
Gorillas Can Dance
Figure P.3
Gorillas Can Dance
Chapter Outline
Chapter 1
Figure 1.1 Managers and Entrepreneurs
Chapter 3
Figure 3.1 The Synergy-Interface-Exemplar Framework of Corporate-Startup Partn...
Chapter 4
Figure 4.2 Cooperation Among Corporations in Startup Partnering
Figure 4.3 Internal Boundary-Spanning to Galvanize Support for Corporate-Start...
Chapter 5
Figure 5.1 Partnering with Startups in Emerging Markets: Opportunities and Cha...
Figure 5.2 Tapping Hotspots for Corporate-Startup Partnering
Figure 5.3 Partnering with Startups Globally: Strategies Across Locations
Chapter 6
Figure 6.1 Corporate-Startup Partnering for the SDGs: Adapting the Synergy-Int...
Epilogue
Figure 7.2 Three Enduring Mindsets
Guide
Cover Page
Title Page
Copyright
Dedication
Foreword
Preface
Prologue Microsoft's Startup Partnering Journey
Table of Contents
Begin Reading
Epilogue Three Mindsets For The Sdg Decade Of Action
Acknowledgments
About The Research
About The Author
Index
WILEY END USER LICENSE AGREEMENT
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Praise for Gorillas Can Dance
“Gorillas Can Dance comes at a vital moment in corporate history. With the lifespan of Fortune 100 companies decreasing rapidly, there's never been a more important time for large organizations to embrace the agile approach of their entrepreneurial disruptors. The great thing is that entrepreneurship is contagious and Professor Prashantham's insights allow corporates to get close to their startup counterparts.”
—Jeremy Basset, founder, Unilever Foundry, and CEO, Co-Cubed
“Shameen Prashantham picked up on the corporate-startup collaboration trend very early, and he has tracked its evolution across industries and across continents for more than a decade. Combining thoughtful analysis with practical application, his insights into the why, how, and where of corporate-startup partnering will be valuable to companies that wish to be more agile and resilient in the digital era.”
—Julian Birkinshaw, Deputy Dean, London Business School
“With DeepTech quickly becoming the third wave of innovation and startups increasingly attacking fundamental topics beyond what we are used to expecting, Shameen Prashantham's insights and practical examples are becoming more critical than ever for both corporations and startups. When everything blurs, cooperation is the best solution for the survival and prosperity of the species.”
—François Candelon, Global Director, BCG Henderson Institute, and Senior Partner Managing Director, Boston Consulting Group
“Gorillas Can Dance is a fascinating overview of collaborations between big corporates and startups. Based on more than a decade of research and observation, Shameen Prashantham's insider view from an outsider's perspective is filled with helpful examples and practical advice. An enlightening and engaging book that helps to lift the ‘mist’ around this space.”
—Celina Chew, former President–Greater China, Bayer
“Professor Prashantham has studied Microsoft's pioneering partnerships with startups for many years in advanced and emerging markets. His thought leadership in Gorillas Can Dance provides actionable insights on corporate-startup collaboration for companies that want to be entrepreneurial and innovative.”
—James Chou, CEO, Microsoft for Startups–North Asia
“I am a passionate believer in the benefits startups and social entrepreneurs bring to the global economy and to society. Through my own work with Microsoft's Global Social Entrepreneurship Program, and as founder of Live for Good, I know that this value can only be realized through close partnership, enduring mindsets, and effective collaboration with a broad ecosystem of organizations. Shameen's framework reinforces that, when we connect startups with investors, enterprises, governments, and communities, amazing things can happen.”
—Jean-Philippe Courtois, EVP and President, Microsoft Global Sales, Marketing, and Operations
“We have been featuring Shameen Prashantham's work at Thinkers50 for a number of years. The relationship between large corporations and entrepreneurial upstarts has always been fascinating and a vital part of economic growth. Shameen's insights and research shed vital new light on this.”
—Stuart Crainer, cofounder, Thinkers50
“For over five years, I have been more than a close observer of how Professor Prashantham has transformed his skills and global perspective into a fruitful outcome in both research and teaching. I am also a witness of how he, as a typical CEIBS professor, has made a deep dive in China as an Indian British national to become a top-notch expert in Chinese enterprises management practices and theories. Therefore, on top of academic management knowledge, this book is also a must-read on the perspective of MNCs and startups in China that is solution-based and forward-thinking.”
—Yuan Ding, Dean, CEIBS
“I've spent much of my career in roles focused on helping startups and corporations prosper together. Shameen Prashantham has collected a massive breadth of experience and has boiled it down into this entertaining read. Save yourself years' worth of grief and read this book.”
—Dave Drach, Vice President–Innovation Sales, Techstars
“Great to see Professor Prashantham's focus on two of my passion areas – corporate innovation and social impact. The holy grail for any startup is to ultimately sell to an enterprise. Sounds simple, but it's a journey. The beauty is to do matchmaking that is a win-win. Given the situation we are in with COVID-19, there has never been a better time to be a social entrepreneur, especially for SDG goals for Agenda 2030. Professor Prashantham has hit the nail on these two very important topics relevant in the startup ecosystem. Gorillas can dance indeed!”
—Shaloo Garg, Global Lead, Microsoft Global Social Entrepreneurship Program
“Startups are a severely underutilized competitive resource for corporations. Shameen Prashantham's book is a most needed contribution to filling this gap.”
—Gregor Gimmy, founder, BMW Startup Garage, and CEO, 27pilots
“Gorillas Can Dance is the essential playbook for entrepreneurs located in the office of a large corporation and for those hustling to make their big idea a reality from a small office. Through extensive interviews and research across several contexts, Shameen Prashantham is able to comprehensively lay out the unique set of opportunities and challenges for large corporations seeking to innovate through partnerships. More importantly, in many instances, including with Walmart, Shameen was there seeing it happen. This book is an absolute must-read for entrepreneurs at either end of the table.”
—Ben Hassing, Chief Executive, Ecommerce, Coles Group
“Shameen Prashantham, through his research over the years, has gained expertise on the topic of corporate-startup partnering. He has developed a global research program covering not only the United States, Europe, and Israel, but also Asia – particularly China and India – and, more recently, Africa. His insights in this book, based on knowledge-sharing with executives at CEIBS and public speeches, provide guidelines for corporations interested in partnering with startups. I wholeheartedly recommend this book to anyone interested in having a deeper understanding of corporate innovation and entrepreneurship.”
—Dipak Jain, President, CEIBS, and former Dean, Kellogg School of Management
“Be it matured corporate players or newbies in the innovation ecosystem, looking to benchmark or understand its intricacies, the book provides the perfect prescription for everyone. Backed by years of research, including the most recent developments, this is a must-have reference guide for any innovation practitioner.”
—Sruthi Kannan, Head, Cisco LaunchPad
“There are so many things that lead to cultural and institutional change in large multinational organizations. Only a thorough longitudinal study can shed light on the effort required. This book does just that.”
—Dan'l Lewin, CEO, Computer History Museum, and former Corporate VP, Microsoft
“While most large organizations know that collaborating with startups should be a critical part of their innovation strategy, many will also admit that doing so effectively and on a global basis is a very different story. Shameen Prashantham's book helps bridge this ‘knowing-doing’ gap by providing fresh insights on how and where today's gorillas can dance with faster and more agile partners. A must-read for corporate innovators and entrepreneurs alike.”
—Felipe Monteiro, Senior Affiliate Professor of Strategy, INSEAD
“Shameen Prashantham has scoured the world, seeking the experiences of an impressive network of thought leaders across the entrepreneurial ecosystem. There is no set formula for how successful startup-corporate collaboration works; all we can do is keep learning from each other. This book provides both corporate innovators and game-changing startups the platform to do this.”
—Sheelpa Patel, founder and Managing Director, Mavens & Mavericks
“The major global challenges are simply too big for any company alone to address. It is imperative for the larger organizations to partner effectively with the more nimble startups to help create a better world for all. This book has some great insights on the how.”
—Paul Polman, former CEO, Unilever, and cofounder and Chair, IMAGINE
“A general pattern of organizational life seems to involve being nimble but inefficient in their youth, and lumbering but efficient as they age. How to keep the best attributes of both life stages has become a sort of holy grail for academics and consultants. Prashantham does a terrific job laying out what he has observed of partnerships between established and entrepreneurial firms as a mechanism that aims to hit this bliss-spot. Combining smooth prose with insightful observations, this book will be a great read for those who design and manage organizations as well as those who study them.”
—Phanish Puranam, Roland Berger Chaired Professor of Strategy and Organisation Design, INSEAD
“Having spent most of my career trying to dance with gorillas, and now as a gorilla learning to dance, I can safely say that Gorillas Can Dance is an important addition to the strategic partnership canon and should be required reading for entrepreneurs on both sides of the table.”
—Martin Suter, Global VP Digital Commerce, Anheuser-Busch InBev
“With ecosystem approaches to innovation gaining traction, ‘gorillas’ and startups now recognize that they need to work with, rather than against, each other. It's not always going to be easy, but through a decade of keen observation, Professor Prashantham has uncovered the most important insights for both budding entrepreneurs and seasoned corporate executives.”
—Wern-Yuen Tan, CEO, Pepsico APAC
“Corporate innovation as we know it is dead. Current corporate innovation is delivered through skunkworks and through learning new dance moves with startups. In his book, Professor Shameen Prashantham has captured the fine details of dancing with gorillas and how to redesign modern large corporations to survive and thrive in this new world.”
—Tzahi (Zack) Weisfeld, Vice President and GM Ignite: Intel for Startups
“Based on over 15 years of international research, Shameen Prashantham's insightful work on partnering between established corporations and startups breaks new ground in identifying the why and how of effective alliance building. Rich in examples and practical advice, this work will be recommended reading for any corporate manager or startup executive looking to build scale and deliver innovation through partnerships.”
—Jonathan R. Woetzel, Director, McKinsey Global Institute
“Shameen Prashantham is one of those rare academics who can combine theoretical rigor with in-depth company examples to yield highly practical insights and frameworks. Gorillas Can Dance is a great example of this combination and is essential reading for both large companies and their startup partners.”
—George S. Yip, Emeritus Professor of Marketing and Strategy, Imperial College Business School, and member of the Thinkers50 Hall of Fame
SHAMEEN PRASHANTHAM
GORILLAS CAN DANCE
LESSONS FROM MICROSOFT AND OTHER CORPORATIONS ON PARTNERING WITH STARTUPS
Copyright © 2022 by Shameen Prashantham. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.
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Library of Congress Cataloging-in-Publication Data
Names: Prashantham, Shameen, author.
Title: Gorillas can dance : lessons from Microsoft and other corporations on partnering with startups / Shameen Prashantham.
Description: Hoboken, New Jersey : Wiley, [2022] | Includes index.
Identifiers: LCCN 2021021545 (print) | LCCN 2021021546 (ebook) | ISBN 9781119823582 (hardback) | ISBN 9781119823605 (adobe pdf) | ISBN 9781119823599 (epub)
Subjects: LCSH: New business enterprises. | Partnership. | Success in business.
Classification: LCC HD62.5 .P646 2021 (print) | LCC HD62.5 (ebook) | DDC 658.1/142—dc23
LC record available at https://lccn.loc.gov/2021021545
LC ebook record available at https://lccn.loc.gov/2021021546
COVER ART & DESIGN: PAUL MCCARTHY
To my children, Diya and Aditya.
I hope the ideas in this book play a small role in contributing to a more innovative and sustainable world for your generation, and the ones to follow.
FOREWORD
I have been an entrepreneur for my entire life. After a few successes and a failure, I started to invest in early-stage startups. We became frustrated with the investment process, which we felt was especially detrimental to entrepreneurs. Out of that frustration we founded Techstars in 2006 and we created a better business model for entrepreneurs, investors, corporations, and communities.
In the Techstars model we take a cohort of 10 startup entrepreneurs who come together under one roof for three months to develop their concept, receive guidance and mentorship from experienced entrepreneurs, and refine their product and business model to pitch to investors. We coined the term “accelerator” and today Techstars has replicated that first accelerator in Boulder, Colorado, to nearly 50 geographic locations, across multiple verticals, and in partnership with some of the largest corporations in the world.
I provide this short history of Techstars not as a tribute to what we've accomplished but as a point in the timeline of Shameen's inspiring book that you now hold in your hands. Professor Prashantham began his journey documenting corporate-startup partnering in 2003 when Microsoft was first understanding disruption to its business model. Technology companies like Microsoft and others were vulnerable to “two people in a garage somewhere” inventing a technology that would make them irrelevant.
Companies outside of technology – manufacturers, distributors, or retailers, for example – would appear (in 2003) to be immune from business model disruption from startups but as Shameen clearly demonstrates, all global corporations face an imperative to innovate. As retired CEO of Ford, Mark Fields said, “When I first joined the company, a long time ago, we were a manufacturing company. As we go forward, I want us to be known as a manufacturing, a technology, and an information company.… That's where we're heading.”
Today, while it's largely understood that every corporation must somehow become innovative and entrepreneurial, there's not as much understanding about how to do that. Part of the difficulty in partnering between startups and corporations is figuring out what to do: Do you buy a technology? Create an accelerator within your company? Develop a presence in entrepreneurial hotspots like Silicon Valley? Or deploy scouting teams in other entrepreneurial hotspots throughout the world? All of these tactics have been tried, but what will work for your company and how can you make it happen? More importantly, how can you get your leadership team to be on the same page? Gorillas Can Dance provides an excellent overview, with relevant case studies and examples, that will help gain alignment from leadership and management on corporate-startup partnering.
But part of the problem in partnering stems from very real obstacles in mindset, operating procedures, and resources that corporations and startups have within their DNA. A result of these obstacles is that corporations often view startups as risky – will the startup deliver on their commitment or will they just be a distraction? And for the startups, the questions about working with corporations are equally vexing – Can they trust the corporation to not take advantage of them?
Fortunately, for both startups and corporations, Shameen has spent the better part of the past two decades interviewing managers in a wide range of companies in China, India, Israel, Kenya, South Africa, United Kingdom, the United States, and other locations to provide more than imperatives and obstacles. The game-changer in creating corporate-startup partnerships that matters, that makes an impact, is the mindset of participants: entrepreneurial, collaborative, and global.
Professor Prashantham has effectively articulated what we experience and have understood at Techstars: it's not enough to understand that corporations and startups can partner to accelerate innovation, nor is it enough to understand the challenges and obstacles that make partnering difficult. The key is the mindset of the individual. Are you open to new ideas from diverse people, from diverse cultures? Are you willing to make sacrifices in personal or corporate gain to achieve a greater vision? Do you see the world as a blank canvas waiting for your creativity and potential to expressed? The mindset is about choosing authentic engagement with others in a way that provides hope for the future.
I believe we are in the very early stages of harnessing the ways in which entrepreneurship can be applied to global problems. It requires partnering between corporations, startups, communities, governments, nonprofits, universities, and a multitude of organizations. With the insights of Gorillas Can Dance, we now have a roadmap to help. As Shameen concludes, “Who knows? Perhaps working together may become so commonplace that a time will come when not many will need to be reminded of its potential, or even schooled in the nuances of the process.”
David Cohen
Co-founder and Chairman, Techstars
PREFACE
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
PROLOGUEMICROSOFT'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 Jobs1
MICROSOFT: A CASE STUDY IN STARTUP PARTNERING
In October 2010, Microsoft organized an event, billed as the One Summit, at its Silicon Valley campus in Mountain View, California. While Microsoft was well known for its partner-related events and activities, this summit for startups was a first for the company. The event marked the soft launch of a program called BizSpark One, a partnering initiative through which Microsoft partnered with 100 of the most innovative startups that used its technologies, selected from over thousands that had signed up to its BizSpark program launched in 2008. The majority of the startups in that room were from North America and Western Europe.
Fast-forward to April 2019. Walmart CEO Doug McMillon was in Shanghai, China, and one of the local initiatives that he spent time learning about was Omega 8, a partnering program through which that retail giant could work with local startups to solve their pain points. A few startups that had gotten to work with Walmart in China through this program demonstrated their solutions. Apart from the apparent prowess of those startups, the win-win outcomes for them and Walmart, and the high-level executive attention the program had attracted, there was something else that was striking: most of those Chinese startups were alumni of the Microsoft Accelerator program.
I was fortunate to be present at both those meetings as an academic researcher. For well over a decade, as part of my ongoing research program I have studied how Microsoft (and many other corporations discussed in this book) partnered with startups. For me, Microsoft's journey of partnering with startups across time and locations is an excellent case study for three reasons.
First, Microsoft took startup partnering seriously, yet had to work hard to figure things out – therefore there was plenty for me to study, over time and across space. Partnering has been in Microsoft's DNA, as acknowledged by Steve Jobs. Yet, even Microsoft has had to work hard at startup partnering. A key point of the story is that Microsoft's current status as a partner of choice for many digital startups didn't happen overnight; it has been effortful, not effortless.
Second, I was fortunate to gain access to relevant Microsoft managers across several regions, over a considerable period of time – therefore I could observe an unfolding journey. My exposure to Microsoft began in June 2003 during a fortuitous visit to its headquarters in Redmond, Washington. Since then, many Microsoft managers, startup partners, and other ecosystem members have been generous with their time and stories with me over the years, as I embarked on a study of corporate-startup partnering. Spanning over a decade and a half, my research on Microsoft covers multiple geographies including China, India, Israel, Kenya, South Africa, the UK, and the United States, among others. On occasion, I have even found myself telling Microsoft managers stories about the past that they weren't aware of!
Third, it is a story about a learning journey – and thus offers lessons for all companies that are committed to partnering with startups, even traditional ones. Today, startup partnering is relevant to corporations in all industries. As seen, traditional companies like Walmart could partner with startups alongside a technology company like Microsoft. Moreover, in this era of digitalization, all companies are becoming software companies, as Microsoft CEO Satya Nadella often says. Everyone can learn from the Microsoft story.
Before getting into my narrative, I wish to make it clear that I am a neutral observer; despite the warm professional relationship I have had with many current and former Microsoft managers, I deliberately declined taking on any commercial or consulting role while my research was ongoing, a stance that has been graciously accepted by all my informants. (This holds for all the other companies I've studied for this book, as well.)
In presenting my account of Microsoft's startup journey, I describe three broad phases (see Figure P.1). The first culminates with the launch in 2008 of BizSpark, Microsoft's large-scale programmatic initiative to engage with young startups; that was also the year Bill Gates exited day-to-day operations at Microsoft, leaving Steve Ballmer fully in charge. The second phase covers subsequent startup partnering initiatives that had a global footprint, including an accelerator program originating in Israel, and were brought under a single umbrella, Microsoft Ventures, in 2013. The third begins around 2014, when Satya Nadella became CEO, when startup partnering had become increasingly “mainstreamed” into Microsoft's corporate strategy.2
Figure P.1 Three Phases of Microsoft's Startup Partnering Journey
PHASE 1 GETTING STARTUP PARTNERING OFF THE GROUND
Recognizing the Imperative to Partner with Startups
Following my first contact with Microsoft in 2003, the year it became the most valuable company in the world,3 I had the opportunity to talk to Microsoft managers who were reaching out to the software developer community. Their goal was to co-opt independent software vendors (ISVs) as Microsoft partners. If these companies built their software products on top of Microsoft tools, then there was a win-win situation every time that company sold its offerings, since Microsoft technology would, in effect, be bundled with it. A prominent name that kept coming up in my interactions with these managers was that of Dan'l Lewin.
Back then, Lewin was a relative newcomer to Microsoft – a Silicon Valley insider who'd been around for a couple of years in a company that many viewed as a Silicon Valley outsider. Lewin's professional background made him better suited than most to connect Microsoft with the Valley. Lewin had worked at Apple as a member of the original team that designed, built, and marketed the Macintosh, an initiative that Steve Jobs described as intrapreneurship, and was hand-picked by Jobs when he left Apple to set up NeXT Inc.4 In the years that followed, Lewin got involved in entrepreneurial ventures of his own, and had credibility in the Silicon Valley startup community. Later, in late December of 2000, he contacted Steve Ballmer and offered to help Microsoft build bridges with Silicon Valley, based on Ballmer's speech committing Microsoft to web standards, which he believed were going to be critical to realize the company's goal of becoming a software enterprise powerhouse; he says: “I sent Steve Ballmer an email, and I said, ‘If you're serious about … want[ing] to engage the start-up and venture capital community, I'd be interested in talking.’”5
Ballmer acted swiftly. In January 2001, Lewin was hired as an officer of the company and, as a corporate vice president, had executive and site responsibility for the company's operations in Silicon Valley and the mandate to change how the company engaged the venture capital community and entrepreneurs and to resolve technical and business conflicts with the industry. In the aftermath of the dot-com boom and the lingering US Department of Justice (DOJ) anti-trust settlement, this was an important hire for Microsoft.
To better understand why Lewin's arrival at Microsoft in 2001 was significant, it is useful to take a step back and look at what Microsoft had been dealing with in the runup to Lewin joining the company. I am not a business historian, but looking back, developments at Microsoft in the late 1990s suggest that certain seeds were sown then that had a long-term impact.
The second half of the 1990s had been a complex period for Microsoft in at least three ways. First, the Internet had produced a “tidal wave”6 that Microsoft was late to catch, but eventually did. Second, there was turbulence as the company had to deal with an anti-trust lawsuit brought by the US DOJ.7 Third, as noted in a memo known as the “Halloween papers,”8 Microsoft faced the threat of being disrupted by the open source software movement. The last-mentioned was particularly crucial given the emergent platform strategy that culminated in the 2002 release of .NET, as Microsoft sought to transform itself into an enterprise software company in the post-dot-com era. The platform “evangelists” were seeking to get B2B independent software vendors (ISVs) to work on Microsoft platform technology and create enterprise solutions. Startups constituted a potentially important set of platform adopters, but there was a sense of disconnectedness between Microsoft and startups, notably in Silicon Valley, before Lewin arrived on the scene.
Operating out of Microsoft's Silicon Valley campus in Mountain View, California, Lewin went about establishing Microsoft's worldwide venture capital and startup community engagement efforts.9 Lewin and his team began the groundwork for a partner program that would become BizSpark (discussed later) and related Microsoft Innovation Centers10 across six continents in over 150 locations. This was going to be a marathon, not a sprint. Lewin had a formidable network in Silicon Valley, and in the early days of my research, Silicon Valley entrepreneurs took Lewin seriously but were still reserving judgment about Microsoft. Microsoft's power, because of its user base, was undeniably considerable; it couldn't be ignored. But the company was not perceived as being “cool.” At a Microsoft event in California, one Silicon Valley entrepreneur quipped to me during the lunch break: “That was like watching my dad dance …” Microsoft may have been grudgingly respected, but it certainly wasn't loved in Silicon Valley.
But further afield, Microsoft managers were getting the message that attracting great startups onto their platform was important. Essentially, this was a period of learning for Microsoft as it figured out how to partner with startups. In the mid-2000s this was happening within the generic framework infrastructure of partnering with ISVs, since a partner program customized for startups – which would appear as BizSpark – was still in the future.
Beginning to Partner with Startups (within a Generic Partner Framework)
Microsoft's partnership with a startup called Skelta was one of the early striking examples that I came across of a mutually beneficial partnership that took place even before there was a startup-friendly partnering program – with the emphasis on being more of a partner than a vendor.
In 2004, an early decision made by the founders' of Bangalore-based Skelta was to build its business process management (BPM) software products on Microsoft's .NET platform technology. They were thus betting on Microsoft's user base among enterprise customers that also constituted Skelta's target market. Having attracted a returnee with extensive experience in software product companies, Sanjay Shah, to be the CEO of the new venture, Skelta aggressively pursued a close working relationship with Microsoft's subsidiary in Bangalore.
During 2005, Microsoft India was highly supportive because it felt that Skelta had proved to be a valuable and loyal partner. Skelta was given significant exposure to thought leaders within Microsoft and enhanced Skelta's visibility in Microsoft beyond its India operations. Shah knew that Microsoft managers in India were pleased to have, in Skelta, a good example for internal and external audiences of its efforts to partner with Indian companies. As noted by Rajiv Sodhi, COO of Microsoft India, who was then the Microsoft manager who had been instrumental in fostering the relationship with Skelta under the auspices of the ISV program,
Skelta fostered a very strong link with Microsoft India on multiple levels. They quickly recognized that Microsoft is a big company and will have its own agenda. And so smart people like them very quickly align themselves to this [agenda] because then, they have the whole subsidiary standing behind them. What happens as a result is that it's not a very distant point in time when they start getting elevated to global levels.11
In 2006, Skelta received an award from Microsoft recognizing it as an ISV “making waves.”12 This reflected Skelta's progress, with support from Sodhi and other Microsoft managers, including one who had moved from the India subsidiary to global headquarters, in building bridges with actors in other parts of the Microsoft ecosystem, including at the corporation's global headquarters. This enabled Skelta to gain go-to-market support from Microsoft in the United States and also led to Skelta's building a partner network comprising other fellow Microsoft partners to act as their resellers in international markets around the world, including in Europe. In all, 80% of Skelta's revenues accrued through international business, with the bulk of this resulting from Skelta's engagement with the Microsoft global ecosystem.
In 2007, a Microsoft conference in Beijing showcased an example of good practice in reaching out to young firms by tailoring the existing ISV apparatus to local conditions. The person behind this, Vaqar Khamisani, was an entrepreneurial Microsoft manager in Pakistan, who had found that promising small enterprises needed rather more structured guidance than the ISV partnering program allowed for. He therefore proactively modified that program into a “journey” of sequenced activities through which small firms could develop technical and market capabilities that would ultimately make them far more effective in leveraging the Microsoft partnership.13
What is perhaps most impressive about the Skelta-Microsoft partnership, and the work of managers like Khamisani, is that these occurred prior to the commencement of more systematic partnering efforts that were specifically targeted at startups. When a more structured partner program for startups did emerge, many more Microsoft managers were galvanized into partnering with startups. That initiative was BizSpark, launched in 2008.
Establishing a Customized Startup-Friendly Partner Program
The 2008 launch of the BizSpark program was a major milestone in Microsoft's journey of partnering with startups. The program's stated goals were to “develop and support a global ecosystem of startups, learn how best to provide value to these partners in the rapidly changing technology industry, and foster innovation, opportunity and economic growth around the world.”14 It was the crystallization of a programmatic way to partner with startups on a large scale, and entice them onto Microsoft's technology platform by providing software, along with support and visibility, virtually for free to privately held startups that were less than three years in existence and made less than $1 million annual revenue.15
Pulling off the BizSpark launch called for two key sets of actions. First, Lewin made robust efforts to persuade Ballmer of the importance of BizSpark, got his boss to underwrite the program, and navigated the challenges of introducing a complex program like this in the middle of the company's financial year. Second, to understand their perspective, Lewin created a team to engage with the entrepreneurial community and promote platform technologies such as the .NET platform to startups.
Dave Drach, who was part of that early Microsoft team, described to me the interactions they had with Techstars, a startup accelerator in Boulder, Colorado. Through his relationship with Brad Feld, Lewin and a small team met with the very first Techstars cohort, and talked to startups for feedback as to why they were using open source rather than Microsoft technology. They were told that startups couldn't deploy Windows server software because it was not available with the appropriate license rights to run web-based software. Feedback from startups at other accelerators was consistent. The bottom line was that even if they wanted to, startups could not license Microsoft software without a special service provider's license agreement (SPLA), which was only available to the telecom industry though a dedicated sales force. Then the team worked on figuring out how to address this issue and came up with a scheme to limit the use rights via a click-through license from a special website and to limit the market focus through partner (e.g. VCs) nominations of private companies less than three years old with less than $1 million in revenue.
Within less than a year of BizSpark's launch, more than 15,000 startups had signed on.16 The following year, this number was over 35,000,17 and five years from the launch of that program, the number stood at more than 85,000.18 BizSpark was strategically important to Microsoft because it had simultaneously achieved two things. First, it paved the way for harnessing the potential of getting startups onto Microsoft's platform technologies. Second, the provision of free software tools helped stave off the threat from the open source software movement. (Since then Microsoft has become much more of a supporter of open source,19 a shift that Lewin and his team advocated.)
While BizSpark was a breadth program, depth engagement was still going to be needed, and the early success of the BizSpark program created a large pool of startups that had chosen to adopt Microsoft platform technology. As one entrepreneur said to me, “We are taking a big bet on Microsoft … we are betting the farm on their technology.” From this pool, Microsoft now had the opportunity to partner more closely with a select group of promising startups. And this was exactly what Microsoft sought to achieve through the BizSpark One program.
