The Role of Corporate Executives as Board Members and Advisors to Startups
A guest post by Ibrahim Gokcen, a San Francisco Bay Area-based board member at Maersk Tankers and ZeroNorth as well as several technology startups such as Sente portfolio company Stroma Vision. He is a member of the advisory board at Blume Global and has had transformational executive roles at Schneider Electric, A.P. Moller - Maersk and General Electric".
Almost every large corporation in the world has some strategy or mechanism to work with, invest in, or acquire startups. Corporations expect to be strategic investors, going beyond the financial gains and being part of industry disruption. They want to use their "rocket fuel" – their unique position in the industry plus their data assets to accelerate progress and amplify value.
The Role of the Corporate Executive in the Ecosystem of Large Corporations and Startups
Corporate executives often are leaders who hold roles in stable, large companies. They are usually exceptional operators, meeting the KPIs, helping grow their companies, and enhancing customer experience. They understand the industry, have many relationships, and identify the paths leading to success and paths that lead to failure.
Startups need this depth of knowledge and experience as well as corporate connections and introductions. However, corporate leaders have to be judicious when it comes to which problems to solve and how they can make the biggest impact.
If they spread themselves too thin, they cannot materially help any of the startups they support. On the flip side, if they devote themselves to just one startup, executives can find themselves pulled into the minutia where every decision seems a life or death one.
How to Be a Strong Board Member for a Startup
All of us have seen corporate executives taking on board or advisory roles in exchange for fee or equity in early-stage startups. To be candid, some do it to put the experience on a resume to land a board role in a larger company. And some startups bring these executives on board because their startup lacks the resources to succeed, and they will take any help they can get to establish a scalable business model.
Having served on multiple boards and advisory roles myself, it is imperative to understand the board member's primary responsibility.
A board member must profoundly understand the startup organization's business model and spend significant time helping the company succeed.
A successful board member makes a major impact on one or two companies with compelling stories to tell instead of working with many companies without moving them toward success at all. Board memberships are not just for personal marketing. These are important roles with responsibilities and people, depending on your knowledge and connections to grow.
How Startups Can Succeed in Corporate Partnerships
Just as corporate executives have a role to play in this partnership, so do startup entrepreneurs.
I have worked with many startups. The successful ones identify an industry problem, work to understand that problem and articulate how their startup is the answer to the problem. Leading with why only you know how to transform the target industry will not win an entrepreneur points with a potential corporate partner. Demonstrate a deep understanding of how the industry got to this point – what worked and what did not.
Startups with a method of targeting a market category or corporate partner have better long-term relationships. As they grow, this segmentation allows for clear focus and the ability to scale a market category instead of a startup spreading themselves too thin across multiple market categories.
And while a corporate-startup partnership can offer both parties rewards, sometimes the pairing does not work out. Sometimes a startup must take a difficult look at just what the corporate partnership is doing for the startup. Are they wasting time with a large company, or is the corporation really benefitting the startup? An early-stage startup has only a few bullets to spare, and insisting on the wrong directions will quickly cost them success.
For a corporate-startup partnership to be successful, both parties must be methodical, judicious, and focused on accomplishing mutually beneficial objectives. In a world where uncertainty is becoming the new norm, and disruption is constant, this mindset is more needed than ever.