Cooperation provides benefits for both parties
In the modern world there are many examples of cooperation between start-ups and big companies, which can bring benefits to both parties through careful preparation. “Deloitte Latvia” is also involved in cooperation with startups - in the area of accounting services outsourcing “Deloitte Latvia” is successfully working with the startup “CakeHR”, which has developed efficient HR management software.
According to Roberts Slegelmilhs, Manager of Business Process Solutions at “Deloitte Latvia”: “The rapidly changing market, as well as products and services, offered by startups, make big players wonder about their business model, which has been well established practice over the decades, so it's not easy to take on something new and face risks. Big companies prefer the calculated risk and their working pace is relatively slow. Nowadays global startups are taking the lead in almost every industry. Due to rapid prototyping and risk-taking, they are able to create innovative solutions. Startups have smaller teams and a single-level hierarchy, they are ready to change their current business model, and can better respond to market demands. This is also the main reason why cooperation between big companies and startups has become a necessity”. In his view, the aim of cooperation between both parties is to create a productive environment providing shorter innovation implementation term and more efficient use of technology. Due to cooperation active market players will be able to enter new markets, and new businesses/startups will develop the products.
Cooperation between “CakeHR” and “Deloitte” began more than a year ago when “Deloitte Latvia” launched a new line of business services - outsourcing of accounting services providing innovative solutions. It happened at a time when innovative solutions were being sought to automate accounting and client internal processes. One of such solutions was to find a partner in the personnel management area, which might be able to provide self-service function to the employees of the company. “Deloitte” evaluated several HRM software solutions and selected the “CakeHR” product as the most appropriate. “Some people might think that startups and big companies are competitors, but in fact they need each other to a great extent. Startups are flexible in their thinking and decision-making, while larger players boast considerable experience and knowledge, that helped them to grow into big, successful businesses,” reveals R. Slegelmilhs.
“CakeHR” Business Development Manager Janis Dubinskis claims that cooperation with “Deloitte” has opened the doors to other potential customers. He suggests that the big companies should not be afraid to cooperate with startups, as the benefits can well outweigh the expected results. “If you really want, you can always find a common denominator and a solution to make everyone happy at the end,” he adds. Both Mr. Slegelmilhs and Mr. Dubinskis believe that cooperation between big companies and startups is a challenge for both parties, which requires getting out of their usual way of thinking. Big companies are used to follow standard procedures, and creativity of startups is a great challenge for them. “Many startups have set up their own companies to demolish borders, and they are challenged by the idea of working together with the ones they would like to knock off the pedestal,” adds R. Slegelmilhs. In his view, due to cooperation with startups big companies get access to the latest technologies and business models, avoiding the usual stalling experienced by big market players while trying to introduce new processes. Thus companies can win a better market position and offer an innovative product. In exchange for its ideas and creativity a startup gets support and resources from the big market player, as well as market recognition or funding.
R. Slegelmilhs emphasizes that common strategic goals, shared by the management of both companies, are vital for efficient cooperation. “It may be useful to have a partnership even with a potential business disruptor, for it is difficult to destroy a well-functioning business from inside,” he adds. Mr. Slegelmilhs also mentioned that the attitude of big companies in Europe is changing and today most businesses understand the importance of digitalization and networking with the startup community. More and more companies are making the decision to start such cooperation. Still, Mr. Slegelmilhs suggests that both parties should consider cooperation issues with due diligence. Cooperation with large and well-known companies is tempting, but startups should focus on meeting all requirements. Compliance might require large investments, which sometimes might deter startups from working with big market players. Big companies, on the other hand, might face such risks as the startup’s sustainability and reliability, but those risks might be offset by the startup’s flexibility, the ability to meet the customer's needs, and a greater willingness to concede to the other party, compared to the competitors, who are well-established in the market. Similarly, the startup’s pricing policies tend to be more flexible
Before launching cooperation, both parties have to answer a number of questions. A startup has to specify whether the company has a sufficient budget to ensure the sustainable, professional and efficient delivery of products and services, and be able to answer the following questions: who will sign the Contract and be empowered to protect the project against corporate environmental failures, who will be the person authorized by the other party to provide help while entering into a partnership, which are the key indicators of successful cooperation, will a startup be able to deliver in compliance with the other party’s expectations. It should also be specified - what exactly does a big company expect from a startup and why do they want to cooperate. While looking for cooperation partner a big company should be able to specify long-term benefits, be able to answer the following questions: in what way is this project different from the one being developed internally, why a startup is interested in cooperating, what cooperation model will be used and who will steer and manage the process.
“Successful cooperation can develop if there is a mutual interest. Cooperation with startups is a viable model for Latvian economy. We need each other. They have partnered with a brand name and a team of professionals who can “interpret” the client's needs and legal requirements, thus improving their own system. We have benefited from the “CakeHR” flexibility and skills we lack, they help us to sell our accounting services, providing interesting and innovative solutions,” says R. Slegelmilhs.