From Startups to Superpowers: 6 Keys to Successful Auto-Tech Partnerships
Successful collaboration between startups and big corporates in the automotive industry requires careful consideration of several key factors. Let's explore some of the most critical success factors in more detail:
Identify the right partners: Startups should carefully research and identify the right partners to collaborate with. In 2014, electric vehicle manufacturer Tesla, still in its early days, started collaborating with Panasonic to develop and produce batteries for their electric cars. Tesla identified Panasonic as a partner with significant experience in battery production and was able to leverage that expertise to improve their battery technology. This partnership is still considered a cornerstone in sustainable energy and innovation. It required a strong vision of an electric future of mobility by both partners and trust in each other’s capabilities. Know the market, do your homework, and due diligence. You’ll always find someone that listens so separate the real deals from the noise.
Offer unique value proposition: Startups need to offer a unique value proposition that can help the corporates solve specific pain points or add value to their existing products or services. In 2018, cybersecurity startup Upstream Security partnered with Renault to enhance the security of its connected cars. Upstream's cloud-based platform enables Renault to monitor and protect its vehicles from cyber threats and potential hacks. The partnership worked particularly well because Upstream was able to offer a unique value proposition that addressed a specific pain point for Renault based on increasingly connected and software-defined vehicles. A unique value proposition comes in qualitative and quantitative terms - get your numbers and USPs right to convince.
Have a clear understanding of expectations: Both parties need to have a clear understanding of what is expected from the collaboration. For example, in 2019, software company Red Hat collaborated with Volkswagen to develop an open-source software platform for autonomous vehicles. Red Hat's expertise in open-source software enabled Volkswagen to create a scalable, flexible, and secure platform for its self-driving vehicles. The collaboration worked particularly well because both parties had a clear understanding of what was expected from the collaboration. Red Hat's expertise enabled Volkswagen to secure crucial components for Volkswagen's autonomous driving goals. Managing premises and expectations early on in the process of collaborating is absolutely essential.
Be patient and persistent: The collaboration process can be complex and time-consuming. Both startups and corporates must be patient and persistent to overcome challenges and make progress. For example, Cruise, now a subsidiary of General Motors, has been working on developing self-driving car technology since its founding in 2013. GM acquired Cruise in 2016 and has since invested heavily in the startup. Their patience and persistence paid off in 2020 when they secured additional funding to launch a commercial self-driving taxi service. Patience and persistence are certainly difficult to inject into any organization. However, effective leaders convey a strong vision and unite teams on a joint mission.
Protect interests and manage risks: Both startups and corporates must protect their interests and manage risks during the collaboration. For example, in 2020, electric vehicle startup Rivian Automotive partnered with Amazon to develop and produce electric delivery vans for the e-commerce giant. Rivian was able to leverage Amazon's extensive logistics and delivery network to scale their electric vehicle production, while Amazon was able to reduce its carbon footprint. Both parties were able to protect their interests and manage risks during the collaboration - with Rivian launching their own all-electric pickup truck first. Effective management of interests and risks requires strong communication and program execution, which can be installed with the right structure and tools in place.
Create buy-in of internal champions: Creating buy-in and internal champions is critical to any successful partnership. When leaders from both organizations are aligned and committed to the collaboration, it can help drive progress and overcome internal resistance. One strong example of this is the collaboration between ride-hailing giant Uber and electric vehicle charging network provider EVgo. Cathy Zoi, CEO of EVgo, and Dara Khosrowshahi, CEO of Uber, have both been vocal advocates for electric vehicle adoption and sustainability. This shared vision and passion for the industry helped drive the collaboration forward and create buy-in from both companies' internal stakeholders. Now, you might not always be as lucky as getting C-level or even the CEO’s attention but there are ways to close in by mapping out power maps and working on multiple access points across hierarchies.
As an entrepreneur, I believe in going deeper and really understanding the nuances of each success factor.
For example, identifying the right partners is critical, but how do you actually go about doing that? How do you assess a potential partner's capabilities and determine if they are a good fit for your company? And what happens if you make the wrong choice?
Similarly, having a clear understanding of expectations is important, but how do you ensure that everyone is on the same page? How do you manage expectations and avoid misunderstandings that could derail the collaboration?
And what about managing risks? How do you assess the risks involved in a collaboration and mitigate them effectively? And what happens if things go wrong despite your best efforts?
How do you build up “internal champions” and keep track of relevant relationships in a multi-stakeholder environment?
These are just a few examples of aspects that we’ll explore in more detail. I challenge you to join me in diving deeper into each of these success factors and exploring how they can be applied successfully in your organization. Over here, we keep pushing ourselves to really understand what it takes to make these collaborations work and drive innovation in the industry.
