In the second of our Open Innovation series, CWT’s Brandon Balcom, senior director of Open Innovation, shares his top tips on successfully working with startups. While a travel management company (TMC) and a startup may seem an unlikely cultural fit, Brandon focuses on what each brings to the table, while sidestepping stereotypical traps. As CWT’s top scout for promising entrepreneurs, Brandon knows a thing or two about what makes for a symbiotic relationship between seemingly improbable partners that ultimately, benefits the customers.
Step 1: Know thyself
The ancient Greek aphorism continues to find relevance, including for today’s TMCs in various stages of transforming into fully digital enterprises—and looking to startups for that innovative shot in the arm. Before partnering with any budding entrepreneur, ask yourself: what is your current strategy, and where are you going with it? Then the questions become: how fast can you get there and how do you leverage the innovation of startups to get there faster?
Step 2: Go the revenue-sharing route
At CWT, we’re more focused on finding startups we can partner with to rapidly deploy the kind of products and services that fit our current strategy. We don’t operate as a venture capital fund that places a massive bet on a startup upfront and takes an equivalent stake in its future earnings whenever they may come.
Instead, we offer up our sales channel and a sales force already trained in the complex business travel terrain. Our large customer base allows us to deploy any products or services right away and immediately share revenues with our partners. For our part, our cost basis will be that revenue.
Step 3: Move fast and slow
In his best-selling book, Thinking, Fast and Slow, Nobel Prize laureate Daniel Kahneman distinguishes between thinking fast, instinctive and emotional, and thinking slower, more deliberative and more logical. In TMC and startup parlance, we translate that to moving both fast and slow.
As TMCs, we operate in a complex, often bureaucratic environment that includes satisfying customers’ sensitive data privacy and security requirements, which preclude us from moving as fast as startups would like.
By breaking up projects into component parts and strategically focusing on areas that we need to speed up, while doing due diligence in others, we are able to move the needle quickly, bit by bit, while keeping an eye out for evolving trends and threats, ready to adjust course as needed.
Step 4: A trade-off that pays off
While the total process may take longer than a startup DIY-ing it all, the time to get to market and gain the expertise to different business traveler profiles will eat up all the time they’ve saved—and more. Spending all their resources developing for one signed client that they may not be able to scale across different accounts is another potential time-waster.
By partnering with a TMC like CWT, startups gain instant access to a $26 billion business travel market—and a map to boot.
Step 5: Bring customers in for a test drive
We believe in bringing customers early into the process. That initial feedback is invaluable. Finding out at the end that you didn’t have the right indicators or necessary requirements to make it work for your client means that you’ll likely end up with a product with a low adoption rate and negligible revenue stream.
It does carry risks of overinflating expectations, so we recommend modeling against the hype cycle to avoid the so-called ‘trough of disillusionment’. While we transparently show them everything and share all the concepts, we are also upfront that not all of it will come to life. Which is why their input is critical so that what does come to fruition is something that they can use and we can scale.
Step 6: Protect your reputation
Evaluating upwards of 300 startups annually and keeping tabs of what might work for our current strategy and what may be promising in the future are just two of the balls we’re juggling. Just as we are upfront with clients, so are we with the startups we’re assessing. We respect the energy and ideas they bring to the table and their need to find the right partners and resources to bring their vision forward.
We are careful not to overhype potential opportunities. Even if we’re excited by an idea, if we are not in a position to move on it right away, we inform them as soon as possible and never string them along. The business travel and Silicon Valley communities are both tight-knit, and we know that a solid reputation can go a long way in closing a deal—when you need to.
Stay tuned for our next post in this series as we show you the CWT-startup partnership in action.