Posted by & filed under Accelerator, Corporations, Human Resources, innovating, Innovation, Marketing, Product development.

How to renew corporations with startups

A whitepaper by Nestholma

Corporations need to renew themselves, and one of the best ways to do that is by working with startups. But that’s easier said than done. Corporations need to understand what they want to get out of the collaboration. They need to understand what they’re getting into. And they need to understand what their options are.

At Nestholma we discuss with many people from corporations. And very often we end up in the same discussions. Those are great conversations: we get to understand the concerns that people have. We also get to see what gaps they have, when it comes to working with startups.

That’s why we decided to put together this whitepaper. In it

  • I dive into what makes working with startups worthwhile for corporations.
  • Take a look beyond the flashy surface: corporations can benefit in branding, innovation and learning.
  • I also explore different ways that corporations engage with startups.
  • I finally dwell into what makes some accelerators more successful, for a particular corporation.

The whitepaper is packed with insights. You can skim through it quickly, and discover new angles for your collaborations. Or you can peruse it. In that case, prepare for a lot of content. You’ll understand what makes some collaborations successful. You’ll also understand why others end up a mere stunt.

Download the Nestholma whitepaper

Corporations need to renew themselves. One of the best ways to do it is by working with startups. This white paper explores the benefits of branding, innovation and learning. It also reviews alternatives and best practices on collaboration.

Click here to download the whitepaper.

This text is born of many discussion. Many of them within Nestholma, and many with our customers and potential customers. But publishing a whitepaper is not the end of a discussion, but the beginning of many others. I would love to hear from you! Feel free to drop me a line at [email protected] and let’s talk!

 

Related post: 4 ways working with startups can make your organization more agile and innovative

Posted by & filed under Accelerator, Banking, Corporations, Fintech, Innovation, Startups.

Collaboration. Collaboration. And collaboration. Be it global warming, science, the economy, collaboration is the word that keeps popping up more and more, especially during the past couple of years. With globalization, we have become so connected that collaboration is pretty much part of our DNA. And the need for collaboration is only increasing. And so are the possibilities.

Companies don’t just see other companies as competitors or suppliers/customers anymore. They are sizing them up to see if they should work together instead of trying to beat each other. That’s even more so in fintech.

Over the past couple of years, the narrative in fintech has changed from fierce competition and trying to one-up everyone else to collaboration. It’s no longer the established players, banks, trying to smother the new entrants, startups, or the startups trying to throw the old masters out the game. Now it’s about the two working together to create something neither could do alone.

Why corporations should work with startups

For corporations, working with startups can give them access to whole new kind of innovation power. While corporations have resources, a huge amount of industry knowledge and plenty of smart people working for them, they are rarely called innovation powerhouses – words often associated with startups.

There are many reasons why corporations can’t be as agile and innovative as startups are. While corporations can learn from startups (and they should!), getting new innovations from startups makes a lot of sense. That way they can get innovations from many startups. And they can get it much faster than by doing it by themselves. Quantity and quality without using much of their own resources.

Collaborating makes sense especially in areas that the corporation doesn’t have knowledge of in-house, for example in AI. Instead of spending resources of acquiring the needed knowledge and then starting to think what could be done with it, they can access the best AI innovations straight from startups.

By working with startups corporation are also bound to learn from them. They will get exposed to the ways startups work, and why they can be so agile and innovative. And those learnings can lead to organization wide changes.

Also, when corporations work with startups it is inevitable that some of the ’startup coolness’ will rub on on them. That’s good for customers, attracting new talents and getting new innovative startups to approach the corporation. It’s a win, win, and win!

 

Collaborating can be beneficial for both startups and corporations

 

Why startups should work with corporations

One of the big differences between startups and corporations is that corporations have a known name, brand value, behind them. They are a known and trusted player in the market while startups are nobodies. No one knows what they do, what they can do, or even if the whole thing is just a scam. Especially in banking gaining the customers’ trust is a very important but difficult issue. After working with a big name in their industry, like a known bank in fintech, startups are immediately on a different level. If that well-trusted corporation trusts them, also the customers think they must be legit and be able to execute what they promise.

Fintech startups also face the problem that they need data, lots of it to be able to make their solution work in real life. And they need users, people to test their solution. And the more the merrier. In such trust-sensitive industry as banking, getting those is far from easy, impossible even.

For lots of startups working in just one market is a luxury they can’t afford. Unless they are in a very market-specific business or work in a huge market like China or the US, aiming to be global is a must. But going global isn’t always (if ever!) so easy. In a new market, everything is different. The competitive environment, laws and regulations, even the customers’ needs among many many other things. There might be amazingly potential new markets, but if there is no entry point, they are often just passed to the ’no’-pile. But with a local partner, preferably with one that already has a great presence in the market, they can get just the knowledge and access to the market they need.

 

Collaboration between startups and banks can make many impossible things possible.

 

One great example of such a partner for startups is YES BANK, one of our partners in the Global Fintech Accelerator.

India & YES BANK

For fintech startups right now India is a very interesting market. And by interesting, I mean hot; hotter than hot even! In India there is a huge need for new fintech solutions. And even more importantly: people are eager to use them. In fact, the fintech adoption rate is on top of the world with 52%, only second to China and growing. The environment in India for fintech startups is also very supportive: investments are booming and the government is being very proactive in supporting fintechs. In short, India is THE place to be for fintechs. But accessing that massive potential is another thing. Foreign startups need an entry point, a partner to help them gain access to the market, the right knowledge and the tools needed. One good example of such is the YES Fintech accelerator by our Global Fintech Accelerator partner YES BANK.

YES BANK is the fifth biggest private sector bank in India – you can say they know the Indian market. And in the YES BANK accelerator startups get access to that knowledge. Startups also get access to their 200+ APIs and their 2 million + retail and 15 000+ corporate customers – just what it is needed to test and validate the startups’ solution.

In their first cohort as well, YES Fintech had two international startups – soCash (Singapore) and Paykey (Israel). The overall cohort ended up with an offtake of 90% wherein 9 out of 10 solutions were taken up by YES BANK.

The accelerator program also provides access to the top 20 global fintech markets, offer mentoring and coaching and much more. Just the knowledge and tools needed to conquer the Indian fintech market and in general, get the startups on a whole new level. You can read more about the accelerator here.

The real winners = customers

While corporations and startups will benefit greatly from collaboration, the real winners will be the customers. No matter what happens and who ’wins’ or ’loses’, customers will get more options and better solutions. And as there are plenty of options, in fact, more and more of them as the world is moving increasingly towards supporting competition (e.g. PSD2 in Europe), the customers can just pick and choose. The winners of the future will be the providers who answer the needs of the customers the best. Needless to say, it has never been a better time to be a banking customer!

 

Read more about YES FINTECH accelerator  and more about our Global Fintech Accelerator.

 

Posted by & filed under Accelerator, Banking, Fintech.

Investments in fintech are breaking their own records over and over again. New solutions are coming left and right, and the consumers are switching to them faster and faster. Fintech is booming and there seems to be no end to it.

In the center of the boom is Asia, especially China and India. While China still leads in consumer adoption rate of fintech solutions and investments, India isn’t far off. And according to predictions India will soon go past China and become the leading country in fintech. It’s exciting times for fintech and for India, and even more exciting opportunity for startups. But why is India such a hot place in fintech? And why should startups all over the world put India to the top of their priority list?

 

Market size & fintech adoption rate

First of all, India is a huge market. Just the sheer size of the country itself is humongous with 1,3 billion people and counting. But what makes it interesting for fintech is that its population is the most underbanked or unbanked in the world. At least for now.

India’s smartphone user base is expected to grow rapidly from 150 million (in 2016) to 500 million users by 2020. With it the digital banking is also expected to have a rapid growth. (source).The un- and underbanked consumers will jump right past the old banking systems and go straight for the newest fintech innovations. And they are doing it fast.

The reluctance of trying new banking related solutions that many fintech markets struggle with is quite non-existing in India. In fact, their fintech adoption rate is on top of the world with 52%, only second to China and far ahead the rest of the world (source). And some predict it will soon grow to 80% and surpass China, and be far ahead of the global average (around 50%) (source).

Banking is one of the most trust-based industries. Getting people to change from their trusted bank to a new provider or to try a completely new service altogether is a huge struggle for fintechs. That is one of the key reasons fintech adoption rate is so low in many markets. The fact that Indian customer base is so welcoming is already a huge advantage for fintech startups that are active there.

Fintech adoption rate in the world. India is now second place, but predictions say it will rise to number 1 soon.

Figure: EY Fintech Adoption Index 2017

 

Fintech-minded government

In many, if not most markets, fintech startups struggle with innovation-stifling regulations and legacy systems. But the Indian government has decided to take a different approach.

The Indian government is actively pushing to support new fintech innovations and startups in many ways. For example, they have been discussing with the key players in fintech to understand the market better. Thus they are able to design a supportive and enabling regulatory environment.

As a result, India has many policy initiatives which provide a strong foundation for fintech in India. They are working hard to simplify the regulatory processes, do tax redemptions, patent reforms, and provide increased government funding. They have also created India Stack, a world-class technological framework and an amazing set of APIs, to help entrepreneurs and innovators to accelerate their solutions to a completely new level.

India’s government has also been a big part in making people so receptive of new fintech innovations. They have actively encouraged and educated the Indian consumers to use fintech solutions. Thah has been a huge help in getting new solutions the top of the mind of the Indian consumers. (Source)

India is clearly sending the message that fintech innovations are necessary and more than welcome.

 

Investments

In investors eyes, fintech is extremely hot now. And within fintech Asia, lead by India and China who attract the most investments, are the hottest of them all. Even when in 2016 fintech investments dropped globally 13%, in Asia fintech investments grew 12,5%. And that was led by India’s and China’s fintech investment success. (source) Fintech really is blooming in India.

Considering the market’s opportunity and the supportive environment for fintech innovations and the whole ecosystem, it is no wonder that investors find India attractive. More so as India offers the highest expected return on fintech investments. If investors are interested, startups should be too.

Fintech investments in India are going strong

 

Overall India ticks all the key boxes for startup success. India’s fintech scene is an investment magnet. India’s government is being very proactive in supporting the growth and adoption of new fintech innovations. And most importantly, the consumers are excited to use them. That’s check, check and check!

 

Getting access to the Indian fintech opportunity

While India has a huge potential for fintech startups, for startups far away, it might seem too distant. From understanding how the market works to the very basics of being a company in a foreign country can feel too big of a challenge.

An EY study found that one of the best business models to drive mass adoption of fintech solution is collaborating with businesses who already have an existing customer base in the market. Working together with a major player is a great way to get access to the market and get an understanding of the hows. For young startups, it can be especially fruitful to go to an accelerator organized by a major local player. Then they will get straight access to a big number of customers and the company’s great experience of the industry. And at the same time also get help accelerating their startup’s growth.

One good example of such is the YES Fintech accelerator by our Global Fintech Accelerator partner YES BANK.

YES BANK and YES FINTECH Accelerator

YES BANK is the fifth largest private sector bank in India with 2 million+ retail and 15 000+ corporate customers. They definitely know the Indian market by heart. And thus they can give startups just the knowledge they need to access to the huge Indian fintech opportunity. Through the YES Fintech accelerator startups will also get access to their huge customer base and their 200+ APIs. That means a straight route to the market, and getting an amazing set of tools to test and validate the startups’ solutions with real customer data.

The accelerator will also provide focused mentorship to accelerate the startups’ growth. And also give access to 1 million+ funding. Through the program and its ecosystem, partners, and cohort startups can also take their solutions to the top 20 global fintech markets.

Their previous program ended up with an offtake of 90% wherein 9 out of 10 solutions were taken up by YES BANK. That’s an incredible number! It speaks volumes of the startups and YES BANK’s startup-readiness. Overall, the YES Fintech accelerator is definitely a solid option for startups planning to conquer the Indian fintech market.

For fintech startups India gives huge opportunity. So big even that I’d like to call it the home of startup unicorns. While we still will have to see about that one, it has already become clear that for fintechs India is the place to be.

 

Read more and apply now to the YES FINTECH Accelerator. Applications will close on the 7th of October 2017.

Read more about what the Global Fintech Accelerator is about.

Posted by & filed under Corporations, Organizational learning, Startups.

Aiming to create an organization that is ready for constant change and learning? Or perhaps you are looking for ways to motivate your employees to think more creatively. Either way, startup collaboration is the best tool for creating an innovative corporate culture.

Why? Well, startups are famous for their agility and ability to execute ideas at a fast pace. These are the factors that big corporations often lack. By collaborating with startups and involving employees in the process, companies can start becoming more like startups; agile, innovative and great at executing those innovations.

But how exactly does collaborating with startups enhance cultural change and learning?

 

To transform your organization, you need to transform your employees first. Afterall, they are your organization. And they are also the ones executing the ideas and innovations. It does not matter how great your products and ideas are, only execution matters. And execution is nothing without the effort of your employees. Your employees are the key to becoming more agile and innovative. And for employees to learn and change, the key is to get them doing.

To actually get your employees to learn from the startup’s you should get your employees involved in the collaboration as much as possible. This way they learn by doing. And the more employees you involve the greater the learnings and changes will be. A couple of employees can’t make big changes in your organization. But the more the entire corporation is involved, the greater are the learnings and changes achieved.

Organizations are made of people. And thus also organizational changes start from the employees.

 

In this post, I will present the four cultural benefits that partnering with startups can bring with the example case of Ann.

 

So, let’s begin with Ann

Ann is an employee at a big global corporation. For five years she has been part of the human resource department. She really enjoys working for her company. Working at a global player gives you the opportunity to work in game-changing projects, which really excites her. At the same time, those projects take time to happen: new ideas need the approval of many people, and changes require many meetings. Ideas are sometimes also called off when other, more urgent tasks appear.

Ann’s company is getting more involved with startups, and she has been asked to mentor a startup. One of her tasks now is to make sure the corporation and the startup partner, so that her department becomes more efficient. She had been involved with startups a bit before when her company organized a hackathon, but she never saw a long-term difference after that.

Next, you will find what Ann experienced after working with the startup. This also includes the four benefits startup collaboration has on the company culture.

 

1.Openness to renewal

The first meeting with the startup was already an eye-opener. The startups came with a proposal already in mind, but after a quick discussion, it was clear that it would not work inside Ann’s corporation. Ann thought that this was the end of the partnership. To her surprise, one of the entrepreneurs came up with a brilliant idea. After a brief discussion, they decided that Ann would discuss with some colleagues and get back to the entrepreneurs. They proposed to meet the next week.

Ann was a bit skeptical of whether she would be able to get answers by next week. Ann was aware how slowly the execution of some ideas took place in the company. But she was even more skeptical that the entrepreneurs could do all the things they promised.

While consulting a few colleagues, Ann discovered that most people were quick to dismiss her and the collaboration. Many people offered to discuss with her only after a few weeks! In contrast, whenever she had a question for the entrepreneurs, she got a response in a matter of minutes, and with a different attitude. Instead of formal structures, startups were open to any sort of idea sharing. If she wanted to make this partnership work, she needed to make sure her colleagues were more responsive and open to change. And for that to happen, she needed to be open to renewal herself.

In order for innovation to happen, employees must be adaptable and open to discussion. Yet, corporations generally have rigid structures. As a result employees revert to default behavior and start rejecting big changes. Nobody sees the incentive to develop ideas if the implementation is restricted by the structure.

To solve this issue, some organizations have organized official channels for startup collaboration. This is also what Ann’s corporation did. Startup collaboration creates the impression of proactivity and openness. It encourages employees to adopt a similar mindset. This further fosters business renewal as well as innovation.

 

2.Navigating uncertainty

Three meetings and countless discussions later, Ann and the entrepreneurs had talked with most of the departments involved. They all understood that, if the collaboration worked, the corporation would benefit greatly. However, several of them had concerns over whether what the startup was proposing would really work.

On the next meeting, she decided to tell the startups what was delaying the collaboration so much. One or the entrepreneurs asked “What if we run a small pilot with some customers, to show how people really use the product? And if they don’t use it the way we expect, we will redesign it so that they do”. They identified all the risks that people had mentioned and designed a pilot that would give the more information about those risks.

Related: How corporations can benefit from working with startups.

Ann could not take the uncertainty out of innovation, but the startup showed her how to deal with it, by talking to customers, testing and learning.

Most people working in corporations tend to focus on tasks with high certainty. But as you might know, innovation is uncertain by definition. Fearing to take risks is the all time enemy of innovation. This is why developing new products is often seen as challenging.

Startups are the opposite of corporations. They are famous for the ability to develop and produce products under uncertainty. Startups favor experimentation over elaborate planning, customer feedback over intuition and iterative design over traditional development. By collaborating with startups corporation employees are encouraged to work in a similar manner. This allows them to become accustomed to working in uncertain environments.

By working together with startups the employees get new ideas to their work.

 

3.Understanding the need for quicker execution

Everything looked good after the meeting with the startups. It looked like her corporation would soon be collaborating with them, and both of them would have happy customers. That probably made the fall worse: once the project started looking real, it seemed like there were more and more decision-makers that had to be involved. In addition, several departments had to give clearance, which required more and more analysis.

When she told the entrepreneurs that the agreement could take a few more months, she could see that they were not happy with it. She didn’t even know if they would last that long, without a source of income.

Ann had also noticed how fast and well startups executed their new ideas. “How would you guys solve this, if this were your company?”, she asked. “Good question! We would probably look for something doable, something that we can get a shot at right now, and leave the rest of the complex stuff for later.”.

That was it! She could use this way of working too! Ann figured out that if she cut out some parts of the pilot, she would not need a clearance from the other departments since it would be an internal project with a relatively low budget. This would also make the bigger project later on much easier. Otherwise, the project might die at the idea stage. While ideas are good, but the execution is the only thing that matters.

As described, entrepreneurs are faster at executing than corporations. Speed is essential for startups. Why? Well, without speed there is inevitable failure. The fast eat the slow. When startups decide on a course of action they don’t wait. They don’t rethink or hesitate. They put the plan into action the moment the plan reaches consensus in a meeting.

In contrast, the strict structures and formal processes of corporations restrict this behavior. Decisions move slowly. Ideas go through a path of managers, board rooms, decision-makers, analysts, researchers, legals, marketing…

Success is no longer about being big or small. It’s about speed, pivoting and rapid scaling. When corporate employees are exposed to the faster pace of startups, they will learn to value the fast speed and further mimic this behavior. They will also be willing to make more agile plans that get results immediately.

 

4. Focus on risk optimization, not only minimization

With her new plan of having an early pilot first, everything seemed set. There was only one step left: the final approval by Sarah, the head of her department. Sarah had seemed confident with the collaboration so far, but now it seemed like she was less comfortable with the situation.

“Is there any problem?”, asked Anna. “Well”, Sarah answered, “I’m just thinking if this is the best for the department. At the end of the day, we’re the ones promoting this project, and if it goes wrong… well, it’s not good”. Anna realized that her department was taking a risk, and investing time in something that might not have any effect in their quarterly targets.

“But it could have a much bigger impact later on”, Anna pointed out. “It’s a controlled risk, and even if it fails, little failures can add up to big success”. Sarah nodded quietly for a few seconds. “You’re right Anna, and you’ve actually spelled out the risks and opportunities very clearly. We should take these opportunities much more often. For the next quarter, let’s make sure we include some metrics related to this project, and even give ourselves some room for innovation”.

Corporations typically focus on performance and KPIs, which encourages employees to become risk-averse. But if radical innovation is on your company agenda, you should give people the possibility of being flexible.

Instead, the focus should be on the acceptance and management of both risks and execution. Successful startups go quickly from failure to failure. They then continuously adapt and iterate what they have learned from customers. Similarly, employees working in startup environments are more willing to work with risks, as opposed to avoiding them.

Risk is an essential part of innovation. Instead of avoiding risk corporations should manage it.

In short:

As shown with the case of Ann, allowing employees to work in the startup environment improves innovation levels and standards. Working with startups makes employees more likely to identify potential improvements.

Working with startups creates a culture of constant change and learning.

Employees learn to become ready for the unknown future. They view the organization through new, different lenses and beyond the plans. They learn to become prepared for the unplanned success.

 

Read more about renewing organizations with the help of startups:

 

Download the Nestholma whitepaper

How corporations can benefit from working with startups. This white paper explores the benefits on branding, innovation and learning. It also reviews alternatives and best practices on collaboration.

Get the whitepaper here.