I am working with a start-up, now what?

Marc Kermisch, Chief Information, Technology and Quality Officer at CNH Industrial

content-image

Marc Kermisch, Chief Information, Technology and Quality Officer at CNH Industrial

In today’s rapidly moving markets, established companies like CNH Industrial are increasingly working with start-ups. There are a number of reasons why we turn to start-ups: technical innovation, talent, culture. Often it is to accelerate an internal strategy.

We launched CNH Industrial Ventures earlier in 2022 to focus specifically on leveraging our existing partnerships and scouting new innovations coming out of the start-up market. Our investment in Monarch Tractor, an electric tractor innovator based in California, is accelerating our electrification roadmap. We are advancing our ability to serve farmers through precision technologies with agtech start-up Augmenta. And solutions from the UK-based Bennamann will further help us reach our sustainability targets faster by giving our customers better access to alternative fuels.

Working with a start-up can take the shape of being an early customer, a direct investor, an advisor, or by investment/acquisition. It takes a different approach depending on how you structure your relationship with them, but there are a few common elements that should be taken into consideration.

Cultural Differences

Mature companies generally have a formalized culture with well established norms and some level of hierarchical definition. Start-ups on the other hand have very free flowing cultures, that change rapidly as they grow. They can feel chaotic to a mature company, disorientating employees who are tasked with working with them. This goes beyond seeing video games, ping-pong tables, casual clothes, and free snacks. It really is embodied by how work gets done and how decisions get made. Spend time understanding these two important aspects, including how problems get solved, and the flow of communication.

Process Maturity

Start-ups often approach their product development, customer engagement and sales in an unstructured manner. Meaning, they tend to swarm problems, focusing on the outcome and soliciting customer feedback vs. documentation, testing, and controlled rollouts.

Early customers tend to be more like partners, helping to build the product by giving real-time feedback and constantly testing new releases.

A great example from us was a recent session we held with our partner Monarch Tractor to gather feedback from our direct customers and commercial dealers. We invited 20 of them to test out our prototype and get their direct feedback to integrate into what we are developing.

And with start-ups, even sales can feel haphazard, as in their early stages, they are still learning how to sell the product based on what the market wants. When working on a joint project, we have found that it is often best to set-up daily stand-ups, use 1-pager scope statements, constantly demo the product, and provide feedback. Be willing to adjust your expectations on the value they can deliver.

Speed of Decision Making

Most start-ups have little bureaucracy and take decisions very quickly. From setting up a new supplier, to making a product feature decision, start-ups move at speed. This can be exciting to a mature company but can become a point of contention as the two start to work together. Often a mature company can’t accelerate their approval processes or simplify their internal bureaucracy, frustrating the start-up. To address this, planning in 30-, 60-, and 90-day increments around what key decisions need to be made is essential.

Benefits, expectations and considerations

Being an early customer is often the easiest way to take advantage of a start-up’s innovation. As a customer you are paying for specific services and have a vested interest in ensuring the product meets your needs. The start-up gains valuable insight to improve their product, while also generating some revenue.

Defining expectations on the value the product will deliver is important. That depends on how comprehensive the product and market definition are. Early-stage start-ups have the benefit of being more flexible, but that can sometimes compromise on speed and quality. As an early customer, going in with your eyes wide open is important so the right expectations can be set. Partnering closely with the start-up’s leadership, board and even venture capitalists is critical to making sure the start-up meets your needs.

Our work with Bennamann in natural gas reflects this. They are still learning the commercial applications for their technology. Our two worlds are converging to find a happy median with our more standardized multi-year processes becoming more flexible to their agile ways. Together we are validating customer need from the start. That said we need machines to last for years, while start-ups are happy if they get them to work at all, so we are constantly managing the balance between our design processes, virtualized testing to ensure durability, but in shorter time frames.

Evaluating the fit between cultures, level of process maturity, and understanding the impact of existing bureaucracy is critical when deciding how you will integrate the two companies


Often being an early customer can lead to investing in the start-up itself. And depending on your level of investment, this can be a way to assert influence over the start-up, ensure their financial viability, and potentially protect your long-term interests. Minority investments often help ensure the financial viability, give great transparency to the health of the start-up and its strategy, but fall short of exerting strong influence or control. Being a majority investor has different challenges, in that you have an obligation of fiduciary responsibility that can at times conflict with your company’s own interests. However, this can be offset through the level of influence you gain in such an arrangement.

All out acquisition should really be the focus of another article, but going back to the common considerations outlined earlier, they really move to the forefront. Evaluating the fit between cultures, level of process maturity, and understanding the impact of existing bureaucracy is critical when deciding how you will integrate the two companies.

Start-ups are a valuable source of creativity, innovation, and great talent. Just like when building a new company, these relationships will evolve quickly. There will be hiccups along the way. The ability to embrace disruption, react and pivot fast will be key to the success of working with a start-up.



Featured Vendors