Innovating In A Pandemic: Working With A Startup Can Help Large Corporations Pivot Faster

Innovating In A Pandemic: Working With A Startup Can Help Large Corporations Pivot Faster
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Innovating In A Pandemic: Working With A Startup Can Help Large Corporations Pivot Faster

It’s no secret that businesses of all sizes across the world have had the rug pulled out from under them as a result of the novel coronavirus (COVID-19) pandemic.

Companies from nearly every industry have been compelled to, in varying degrees, pivot their way of working overnight as the UAE and countries across the world imposed extreme movement restrictions to contain the outbreak. More significantly, however, they are now faced with the stark reality that their model might need rapid and permanent revision.

From an optimistic standpoint though, isn’t this moment what entrepreneurship is all about?

After all, solving problems and finding opportunities in places others may have overlooked is what founders thrive on.

“Some of the most creative and innovative ideas [in the world] come out of startups and small and medium enterprises (SMEs),” Natasha Hatherall-Shawe, founder of TishTash Marketing and Public Relations, tells Dubai Startup Hub.

Hatherall-Shawe, who launched The SME Rise Collective along with Chloe Ragg, founder of Fox & Hound Digital Communications in April – an initiative offering individuals and companies the opportunity to support local SMEs by sponsoring marketing packages – says the strain on the small businesses has been “massive” as they cope with paying staff salaries and other expenses as they face near stagnant revenues. Sponsorship can be from as little as Dh100. In turn, the campaign also helps smaller marketing and communication agencies and licensed freelancers by allowing them to join the Collective and offer their services.

But while the Collective has received positive response so far, already supporting two SMEs with their marketing for two months and covering salaries for two agencies in the process, it’s mostly been individuals and other SMEs who have supported the sponsorships, Hatherall-Shawe says.

“There’s people who have told me they’ve had a 50 percent pay cut but still want to contribute,” she shares, adding that the Collective wants to be “on the radar of the big guys” because many larger firms have Corporate Social Responsibility (CSR) budgets.

“It’s not just about monetary support,” she explains. “They can help by mentoring or collaborating or offering support in other ways.”

And collaborating can benefit the bigger companies too, Hatherall-Shawe insists.

Natasha Hatherall-Shawe, founder of TishTash Marketing and Public Relations

“Big companies are affected [by the pandemic] too,” she adds. “There’s the assumption that they’re faring much better but I’ve had several CEOs tell me of their cash flow concerns.”

However, she admits, it can be hard for big firms to connect with startups and many might not know where to begin or whom to deal with and how to go about a thorough vetting process.

Innovating for the future

“Big corporates can help startups through Corporate Venture Capital (CVC),” Rami Shaar, co-founder and CEO of Washmen, tells Dubai Startup Hub.

A CVC is an independent funding arm of a company that allows them to take a bet on a startup’s new idea or solution for their business, giving them access to innovative entrepreneurial talent. This, in turn, helps accelerate portfolio companies with revenue, market and customer insights, growing network and relationships, and technology development.

“I don’t know why they [corporates] don’t do this more regardless,” Shaar says.

While the urgency to innovate in response to negative impact from COVID-19 is significant, he insists that corporates also need to recognize that collaborations with startups to drive mutual growth are also an “investment in the future”.

“I don’t know why they [corporates] don’t do this more regardless,” he says, calling the COVID-19 outbreak a “drastic” situation that was impossible to plan for and has caused businesses  major upheaval worldwide.

Washmen founders Rami Shaar and Jad Halaoui

“Big companies don’t have the agility and flexibility of startups. Larger, older companies have to understand that even for something that’s a great business today, their model needs to keep iterating and pivot. They need to realize that if they don’t invest in innovating for the future, they face the risk of being disrupted.”

Working with a startup also allows a corporate not to have to “re-pivot an entire business” while their model is still working, Shaar says. “But this way they can still bet on that new opportunity. It’s like R&D for them that will give them new insights, and if it turns into something super interesting they might even invest or look at acquisition.”

Videoconferencing software company Zoom, which saw its daily users amid the lockdowns worldwide spike by nearly 380 percent in March 2020 when compared to the same time last year, is backed by Qualcomm Ventures, a CVC. Zoom is currently valued at more than the combined market capitalization of American Airlines, Expedia and Hilton.

Shaar’s Washmen has also received CVC backing from Henkel Ventures, the CVC arm of German chemical and consumer goods company Henkel. The company operates worldwide with leading brands and technologies in three business areas including laundry and home care.

“Henkel has seen both boom and bust cycles,” Shaar explains. “They invested in us because they recognize that traditional consumers are going towards services, experiences and solutions, and not just products. So their investment in us is a long-vision approach and a way to stay ahead of the curve.”

Tech startups are going to play a huge role in innovating for the quarantine economy, Shaar adds, especially in the hardest hit sectors like retail and food.

However, some corporates are still hesitant to collaborate with startups despite the benefits according to Sherif Zaki, founder and CEO of The Ambassador.

“A lot of the attitude is that if you-benefit-I-lose, rather than if we share we both win,” he explains. “They [corporates] also don’t want it to be seen as a sign of weakness or giving away business. So it’s more of a combative attitude rather than one of ‘we can work together with the same customers’.”

Sherif Zaki, founder and CEO of The Ambassador

Another challenge, he says, is that a lot of potential collaboration opportunities are handled by middle management “who may see the small startups as a threat to their jobs”.

But ultimately, Zaki adds, both corporates and startups need to realize that working collaboratively is not just in their interest. “If they work together, it’s the customers who can benefit from a superior experience. For example, if you look at groceries delivery right now, some large supermarket and grocery chains have had hiccups shifting to e-commerce and had too much to do given the volume of orders and deliveries as people have stayed in their homes as part of precautionary measures. Meanwhile, although local e-grocery startups have seen a surge in business because they already had the tech in place, it would have been nice to see them work together so customers could benefit from a better overall experience.”

Connecting corporates and startups

With the immense pandemic-driven pressure mounting on companies to look for immediate solutions outside their walls, Dubai Startup Hub’s Market Access program is playing a crucial role in helping large firms identify innovative startups that help overcome their business lifespan challenges.

Dubai Startup Hub’s Market Access programme is a unique platform that facilitates collaboration between innovative startups and successful corporations to address their key business challenges, create value and bring new possibilities for their businesses to thrive.

Market Access enables corporates to give young businesses the means and market access to launch their products and services, and in turn startups offer new ideas and solutions to solve key challenges faced by prominent companies in the emirate. The program offers a chance not only for startups to gain the leverage they need to succeed, but for corporations to drive innovative change at the core of the organization rather than merely on a surface level.

Jijo James, cofounder at InstaPract HealthTech IT Solutions, says Dubai Startup Hub’s Market Access network helped facilitate new introductions during the COVID-19 crisis that has resulted in the startup’s telehealth solutions being immediately adopted by a major hospital in the UAE.

For the partnership to be successful however, Natalia Sycheva, Manager – Entrepreneurship Strategy at Dubai Chamber, says both the corporate and the startup side need to do their homework to understand each other’s languages and working style.

“The need to have the right players around the table to do the translation job, which is where Market Access comes in to help,” she explains.

Currently in its fourth edition, the program has facilitated real business deals and innovation implementations between startups and major companies including Emirates NBD, one of the largest banking groups in the Middle East in terms of assets, global biopharmaceutical company Sanofi, and UAE-headquartered global conglomerate Nikai Group.

Launched in 2017, Market Access is a first-of-its-kind programme, which aims to enhance cooperation and facilitate deals between innovative startups and SMEs from around the world, and leading companies and government entities in Dubai.

To learn more and apply as a startup or corporate, click here.

By Megha Merani

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