Discussion: The CIO’s Guide to Working With Startups

Recently Gartner posted The CIO’s Guide to Working With Startups. Here is the original Gartner report (pdf).

Gartner is a market research and technology analysis firm that serves large enterprises. That article represents Gartner’s best advice to enterprises about the risks and rewards of working with startups. Let’s analyze what the analysts had to say.

The Pros and Cons of Working with Startups

This table summarizes Gartner’s findings about those strange creatures called “startups”:

Gartner Guide to Working with Startups

Let’s start with the “Pros:”

  • “Ability to execute” and “Responsiveness”: Acknowledgment that startups may be better at executing than other resources available to the enterprise-specifically their own employees!
  • “Innovative technology” and “New intellectual property”: Mixed messages here: the startup’s intellectual property belongs to the startup! Yet more reason to get your IP protection in place.
  • “Access to smart people, new skills”: Too bad large enterprises can’t hire your great folks!

The “Cons” list is much more interesting:

  • “Uncertain long-term viability” and “Often unproven solutions”: these are at the heart of the credibility problem that enterprise customers have with startups. More discussion on this below.
  • “Cultural differences” and “Unpredictability”: Fear mongering at its finest. You are likely to find more cultural differences between far-flung divisions of a large enterprise than between an enterprise in pain and a startup with the solution.
  • “Potential misalignment of goals”: As mentioned above, solving a customer’s pain tends to align startups with their enterprise clients. This criticism and the last one are particularly galling given Pro #3: “High motivation to satisfy clients.”

How Enterprises View Startups

You should download and read the entire article to understand the enterprise perspective. Gartner is not inaccurate in any of its observations about startups. The picture painted is actually a rather dim view of the modern enterprise. “Access to smart people, new skills” indeed!

The article discusses how startups are continually hunting for funding. While true, it is also true that the CEO of most enterprises spends an inordinate amount of time doing the same thing. The article attempts to say that enterprises can derisk their dealings with startups by getting more involved in the startup ecosystem. While this would certainly lower the perceived risk of startups among enterprises, consider this excerpted list of “things to offer that can be of interest to a startup”

  • Legal backing
  • Sales channels
  • Core infrastructure
  • International presence
  • Political influence
  • Access to highly experienced people

While some of these enterprise partnership benefits may seem intriguing, many startup CEOs would argue that these are precisely the legacy baggage that their companies will disintermediate and reinvent.

Perhaps the most insightful comment in the analysis is this one:

Gartner Guide to Working with Startups

We can only hope that every time an enterprise engages with a startup, they appoint an empowered and informed liaison! As startups, we should do the same.

What Do You Think?

This article is sure to stimulate some interesting conversation. Please post your comments on this thread on the forum. See you there!