Big companies and small companies traditionally don’t mix. Entrenched health care players face fierce competition from startups that threaten to replace established products or services with a completely new way of doing things. And entrepreneurs worry about the ability to survive and gain scale and market share without significant access to capital, channels to market, and potential acquisition.
But the traditional David and Goliath relationship doesn’t have to persist — perhaps there is a better way.
Companies that can identify and foster mutually beneficial relationships with their would-be competitors stand to succeed in a big way.
Here are four ways to make nontraditional partnerships part of your growth strategy:
1. Know your local ecosystem.
Start by taking an inventory of your local ecosystems to identify all the startup and established companies in the market or in the areas in which you want to innovate. Make a list of the three or four things you need or want to learn. The inventory and the list must be thoughtful, focused and prioritized. Without doing that first, an established company will be reactive. It may reach out to a number of startups but not the right ones — or vice versa — that just won’t be helpful. Or, if either simply waits for the right partner to walk in the door, it will likely end up talking to a number of prospective ill-fitting partners — and that just wastes time. That’s frustrating for both sides. It’s better to have a targeted approach, reach out to the right people with the right questions and have a good idea of what the right answers should be.
2. Get to know each other.
Once you’ve identified a company you’d potentially like to work with, you need to ask three important questions at the first meeting:
1. Is there alignment on what we’re trying to accomplish together?
2. Is the startup’s solution mature or would it benefit from further development with assistance from the larger company?
3. Where is the startup on its road map in penetrating its targeted market for that solution?
The answers to those three questions will help determine the type of mutually beneficial business arrangement that both sides should pursue.
3. Support each other.
Large and small companies can take a number of effective steps that could lead to something bigger down the road. One way is for the established company to make a small equity investment in the startup in exchange for a position on the board of directors or the advisory board. That will give the large company a hand in the direction and operation of the smaller company to ensure that it’s tracking with established objectives. Another way is to establish a close working relationship between the internal management or operational teams at both companies. That will foster the sharing of ideas, expertise and feedback, and create a cultural bond between the two. Yet another way to build relationships is to sponsor some kind of innovation prize that recognizes and rewards ideas that align with the larger company’s job to be done and provides financial support to the smaller company’s young business.
4. Set expectations together.
After the two companies agree to work together, they must also agree to a clear measurable scorecard, a set of milestones that are jointly defined around the job to be done. The metrics need to cover financial progress, operational progress, customer development progress and technological or developmental progress. Are these moving in the right direction to fulfill the job to be done? The metrics can’t be carved in stone. They need to be flexible and actively managed based on changes in the market and the changing expectations of both companies.
By taking the four steps I’ve outlined above, large companies and small companies can transcend the traditional David and Goliath relationship and build something new in health care that improves the health of patients and improves the business health of both companies involved. That’s the real slingshot for better health we’re all looking for.
Watch a video interview with Zubiller on an easy-to-use technology solution by HealthEdge that’s transforming how health insurance claims are handled among patients, providers and payers. He explains the lessons that would-be health care innovators can learn from HealthEdge’s approach.