Innovation: The right partners can put you at the front of the curve
By ATB Financial 14 April 2020 4 min read
To flourish in a competitive marketplace, businesses need to innovate and scale, two strategies that some could do on their own. But in some spaces, such as fintech, finding the best partner aligning with a business’s vision could be an ideal way to stay ahead of the pack.
Being a leader through the next wave of disruption could require a partnership that promises tangible value in what each business supplies to each other. When a larger company decides to shake hands with a smaller more agile startup, the major player needs to see synergies that focus on a specific service or product. The startup should receive, in return, greater visibility and investment that will see it through its next phase of growth.
What to look for in a partner
If you’re a startup or SME on the prowl for a credible partner to elevate your company’s brand or infuse your growth strategy with funds, be sure to evaluate their own value-add. “What is a partner bringing to the table that aligns with your company goals?” notes Amey Kulkarni, senior product manager, payments, and customer experience, at ATB.
For a larger business interested in a lesser known startup, which may specialize in an area that few have dove into, “how does their technology integrate with your overall solution?” Kulkarni asks rhetorically.
It’s important for both parties to be focused on what the customers gets out of this union. As the Harvard Business Review writes, “To replicate the success of these types of partnerships, a company should first look through its customers’ lens to identify the problem that needs solving. If both partners agree on the need and work together to solve it, the relationship will likely succeed.”
Outlining what each company contributes is also integral before the signatures cement the paperwork. In a transparent manner, descriptions of each partner’s responsibilities and duties should be tabled so each partner knows what to expect from the other. Also, there should be predetermined consequences if one of the firms doesn’t complete their obligations.
Look to the top
When a legacy organization is flirting with the idea of acquiring or investing in an SME or startup, one area to lean towards is management. Looking to the top of the ladder can reveal important hints of the potential future of the business.
“If a startup’s founders have only known each other two months and the company is very young, that says something different than if the founders have been together for 10 years, and they went to college together before they started a business,” says Kulkarni.
Potential suitors may be wooed by executives who have a track record of working harmoniously with each other, as opposed to taking a chance on entrepreneurs embarking on their first venture together.
It takes due diligence on both parties’ ends to ensure they know as much as they can about the executives they’ll soon be hand-in-hand with for the coming years. Don’t take this step lightly; it’s better to be thorough in your research than to simply do a cursory LinkedIn checkup.
The example of fintech
Many areas within innovative markets are ripe for partnerships, but let’s look at fintech, which has exploded across Canada in recent years. Customer use of financial technology in Canada leapt to 50 per cent in 2019, up from 18 per cent in 2017.
As PriceWaterhouseCoopers reports, forward-thinking fintech businesses are often better equipped than their traditional counterparts to be focused on customer experience and prioritize the design of user interfaces that are easy to use. “Fintechs operate within an expansive digital ecosystem, leveraging available technology and data to simplify their path to deployment,” as PwC writes.
Recognizing the advantage of partnerships with big banks could power a fintech firm into the next stage of growth. By accessing a reputable brand shining with customer trust, they can deploy their digital products without busying themselves with the extra legwork of building a strong consumer base.
Imagine if a payments market leader partnered with a startup that developed better off-the-shelf solutions for, say, B2B payment software, Kulkarni says. Businesses don’t want to face any inefficiencies when it comes to payments and invoices, so instead of building a solution in-house, the major organization can invest in a technology that “speaks” to widely used accounting channels.
Also, other experts suggest partnerships within fintech are an asset when it comes to the most important resource: people. “Financial services is not exempt from the challenge of finding talented engineers, scientists, and other skilled employees to design, build and serve new digital platforms, products and offerings,” writes Viktoria Ruubel in Finance Digest. “It is therefore not surprising that many companies partner with specialized service providers to tap into world’s best expertise.”
Making it work
Since each business arrives at the conference table with their own unique brand, culture, and resources, it can be challenging to build a successful co-branding partnership. For every example of a fluid and profitable partnership between legacy player and nimble tech innovator, there’s another example of a floundering relationship.
But that shouldn’t scare off businesses seeking meaningful partnerships that could benefit both parties. As long as the joint effort is comprehensively planned out, and each business commits to a mutually agreed-upon amount of effort and talent, then they will both face an easier path to their common goal and expand productivity at the same time.