Dancing with Gorillas ...

Spotlight on Author, Dr. Shameen Prashantham! 


Globally renowned author, lecturer, professor, and advisor to White Bull, Dr. Shameen Prashantham specializes in the internationalization of smaller firms, or SMEs, specifically as it relates to their interaction with large multinational corporations. He calls this Dancing with Gorillas.

I was lucky enough to catch up with him recently. Here's the scoop!
 

Elizabeth Perry/White Bull:
How did it all start? How did you end up in the academic world?

Dr Shameen Prashantham:
A decade ago I was working for an Internet start-up in Scotland having acquired a Master’s degree in international business and previously worked in advertising. While being part of the “real” business world was stimulating and rewarding I found myself increasingly drawn to spending more time on conceptualizing ideas than was practicable or appropriate in my day job. I decided to return to grad school as a full-time doctoral student. I enrolled at Strathclyde International Business Unit (SIBU), one of Europe’s top research centres for international business. At that point in time several SIBU scholars were looking at how smaller, young firms internationalized, in contrast to the traditional focus of research on large multinational corporations (MNCs), and that’s what I focused on too. My specific interest was in how network relationships of these companies aided their international expansion. I took the view that not all networks are good for all things – and that some networks aid certain facets of internationalization more than others. To explore these ideas, I studied a bunch of young Indian software firms and discovered that what their coethnic ties overseas (fellow Indians living abroad) could do for them tended to be different than what their non-ethnic ties did. The former were great for going deeper into a market by, for example, setting up an alliance that gave the start-up local “presence”. The latter were much more potent in actually driving up international revenues. Of course you can have exceptions to this but this was the broad pattern I observed. And it strengthened my view that the characteristics of partners matter – different relationships tend to have different things to offer and the better this is understood the more effective can one’s networking be.

WB:
How did you come up with this idea "Dancing With Gorillas"?

SP:
I was done with my doctoral work by 2005 and had started my first academic job. I was looking for my next project. While doing my doctoral research I had noticed that both academics (myself included, I guess!) and entrepreneurs tended to look overseas for relationships to aid internationalization. That’s of course perfectly reasonable. But I had begun to pick up “weak signals” – that is, occasional examples or anecdotes – of young firms leveraging a local relationship that fed into their international expansion. And more often than not the relationship in question involved the local subsidiary of a large multinational. Thus, it was conceivable for a start-up called HMD Clinical in Edinburgh to form links with a local unit of an American company to co-develop a product for international markets. Similarly I learned of a start-up called Skelta in Bangalore that had developed a valuable relationship with Microsoft India which had then grown arms and legs that ultimately resulted in a close working partnership in the US market. I found this intriguing. When I talked about this to colleagues I got the impression that I was onto something that might be interesting and hadn’t been examined a great deal. The final affirmation came at a conference in the US. The late CK Prahalad, a distinguished professor and thought leader, had been recognized with an award and gave a talk. In the subsequent Q&A I asked him whether it was reasonable for young firms to look at partnering with large multinationals. His response was: “Many of them don’t really have a choice…they need to learn to dance with the big gorilla”. From then on, for over half-a-decade now, I have invested a lot of time and energy into studying how young firms “dance with gorillas”!

WB:
What does it mean?

SP:
“Dancing with gorillas”
is about start-ups developing meaningful engagement with a large multinational corporation. Given that a lot of my research is outside the US, this often – but not always – involves Asian and European start-ups partnering with a large US company (e.g. Microsoft) and leveraging the relationship in a range of geographies. 

 

The baseline insight that has come out from my early research is that there is a big difference between dancing with gorillas and a small company partnering with another small company or a multinational partnering with another multinational. The sheer differences in size, scale, ambition, structure and so on between start-ups and large multinationals mean that these relationships are vastly asymmetric. Whether you are looking at forming these relationships, consolidating them or extending them, at every stage these asymmetries show up and you can’t do business as usual -- this is business as unusual. On balance, the small companies need the big company more than the other way round, and it often tends to be an uphill struggle. The onus is on the small company to be proactive and make this happen.

 

But on a more positive note, large MNCs are recognizing more than ever before the need to develop an ecosystem that offers access to resources and knowledge to their SME partners (including start-ups). Consider the example of the British start-up mediasift (evolved from fav.or.it > tweetmeme > datasift) which I learned about from Stewart Townsend who used to head up Sun Microsystem’s partner program called Start-up Essentials in Europe.

 

Stewart tells me that this start-up was able to gain valuable publicity and technical support by engaging with Sun. He had first met the start-up’s founder and CEO Nick Halstead at an industry event. The following year, when he launched this partner initiative in Europe, Stewart reached out to Nick to explore ways in which he could add value to the start-up, and Nick was quick to spot a massive opportunity. Technical support was a key part of this: things like loaner and discounted hardware. But also business-related activities including introductions to investors and potential customers through sales teams. All of this meant that the start-up could keep going in a bootstrapped manner. Stewart also observes that “the fact Nick could state he was partnering with Sun and we were helping him would give extra kudos and respect when approaching third parties for support, funding, or more PR/marketing.” Key to this is the MNC partner’s credibility that opens hard-to-open doors.

Of course, Stewart does recognize that start-ups can experience frustrations in dealing with a “gorilla”. For instance, timelines can be long because multiple actors – often including the legal department – need to approve certain actions. This is completely at odds with the flexible and speedy manner in which start-ups try to operate. But then, the payoff is potentially significant: in this particular case, the founder even got to meet Scott McNealy, Sun's founder, and did a video interview and customer story that was carried on Sun.com, a website that received 1 million hits a day – not bad in terms of publicity that cost the start-up nothing apart from time! Stewart also presented Nick with numerous opportunities to present at large scale events which allowed him to gain visibility with an audience that he wouldn't be able to readily reach due to cost restraints.

 

The bottom-line is that it isn’t easy to accomplish – and of course it takes two to tango – but dancing with gorillas can be an important ingredient of a start-up’s success.

WB:
What are your top 10 tips for the SME as they prepare to approach the MNC?


SP:
#1 Be specific and clear in your mind about what you want to achieve.* 

 

#2 Create links with local allies and initiatives to help broker ties with gorillas.

 

#3 Build commitment early on to an (initial) engagement plan in black and white.

 

#4 Draw upon available past experiences that give you insight into how the gorilla operates.

 

#5 Capitalize on your strengths that align with and complement the gorilla’s own.

 

#6 Be prepared for any unexpected “twist in the tale”; it tends not to be a linear path.

 

#7 Modularize activities and knowledge transfer into discrete milestone-based outcomes.

 

#8 Build links to individual managers who can help broaden the scope and scale of activities.

 

#9 Expect things to be ambiguous and not always clear if and when the relationship expands.

 

#10 A happy ending is not inevitable – don’t count on it.

 

*Here’s a great quote from Stewart Townsend on the importance of having clear objectives: “Know what you want out of the partnership. Key is to define that first and be up front. Gorillas don’t have time to dance too much and appreciate a quick tango not a long waltz. So, in terms of communicating what you require, don’t mince words; for example, state: I require a sales pipeline, can you give it to me? etc.” I think that’s great advice.

WB:
At White Bull, we talk about the Pathways to Exit. When should a firm begin to prepare ... or should they focus on business at hand until the opportunity arises?

SP:
That’s a great question! I don’t think there’s an easy answer. Most of the entrepreneurs that I’ve studied are interested in figuring out how to make a successful exit. Although a few entrepreneurs I’ve interviewed (actually more so in Europe than Asia or North America) have expressed diffidence about being taken over, many see dancing with gorillas as potentially contributing to a lucrative acquisition. In one case that I came across, the start-up got a great valuation for some of its intellectual property by a gorilla it was engaging with. The gorilla went on to make an acquisition resulting in a great exit. But in another case a start-up hoped very much that the gorilla it was working closely with would acquire it. Its hopes were dashed, however, when the gorilla extended its own product line so that it was now competing more and more with the start-up – and the increasing overlap meant that an acquisition didn’t happen. At this point the entrepreneur shifted to Plan B. He positioned the start-up for acquisition by other gorillas that operated in adjacent ecosystems. This worked. And it did help that the start-up had a track record of successfully partnering with the original gorilla. I reckon start-ups will almost inevitably have one eye on a bigger prize, such as a successful exit. As one entrepreneur I know puts it: “We’re one of the best-looking girls at the dance but we want someone to take us home”. In the meanwhile, though, start-ups like that one need to make sure that it is making the most of the ongoing dance.