To share or not to share? This question is faced by many emerging digital and automation companies as they strive to bring to market transformative capabilities to improve safety, productivity and quality outcomes in the industrial and resources sector.

And a valid question too given statistics suggest over 90% of new start-ups fail in their early years – thereby forfeiting ALL of the dreamed Aladdin’s gold that so dominate thoughts and key decision making in the early start-up years. This leads emerging companies to a key decision point uncertainty – is a willingness to share the treasure chest with the right partner(s) a way to substantially enhance the probability of securing a spot in the enduring 10% of industry survivors? Following close behind is a key execution uncertainty – if so, who is the best partner and how best to interact?

Resource allocation, in a constrained environment, is an enduring challenge of any emerging technology company – does the incremental available dollar go into enhancing the core technology capability or into further ‘go-to-market’ infrastructure? Importantly, can leveraging a partner’s competitive advantage help the start-up’s constrained resources go further and increase the probability of business success?

Some sectors seem to get this right more than others!

Let’s take mineral exploration as an example. A risky venture under any criteria – but offering a big treasure chest to those who discover a resource and an even bigger one if converted into extractable reserves. The segment has matured to a point where some well worn, and broadly stable, pathways have evolved for emerging junior explorers.

There will always be those wishing to ‘go it alone’ – they are supported by mature private and public ‘secondary’ equity markets for the sourcing of funding to progress the dream. Some companies are successful.

Of more interest is the mature approach to partnering in the segment with implicit understandings of who brings what to the table to enhance the probability of resource discovery and development. They are partnerships founded on mutual respect – for the agility, innovation, entrepreneurial spirit, and focus of the junior explorer compared to the disciplined, highly skilled and capable development partner (usually mining companies) to extract the treasure once discovered. A development partner shares financial risk up-front through equity injections while being happy to support, but cede operational control, to their junior partner in exploration. The development partner is there ready to play its role as a go-to-market partner upon successful resource discovery. Importantly, how the partners will interact commercially and operationally post discovery is pre-determined upfront.

Clear advantages exist for both parties. The explorer gets access to capital, (potentially) incremental exploration intelligence, and greater assurance of its channel to market if/when successful. For incremental capital, the development partner can enhance their probability of success by holding a portfolio of exploration partners and holds greater certainty on how commercial and operational relationships will be managed if/when successful. Alignment of interests upfront encourages collaboration rather than competition.

So what are some lessons for the latest generation of emerging technology companies?

Firstly, while no-one sets out to be part of the 90% of companies that fail, this is an enduring reality. A more implicit recognition of this risk may lead to more open and expansive option thinking at key decision points in formative years. Secondly, engaging with a partner in a mindset of mutual respect can help manage the dilemma of constrained resource allocation and increase the probability of success. Thirdly, if partners can agree upfront (when risk and uncertainty is high) on how they will interact commercially and operationally post success (when risk and uncertainty is lower) then improved alignment of interests can enhance cooperation and support; thereby reinforcing the probability of success.

Equally, there are lessons for established industry participant in their interaction with emerging technology companies … but that is the focus of another day so keep your eyes peeled for my next article.