THE LANDSCAPE
Innovation has changed throughout history
Nowadays, almost all industries have been challenged by startups
JUST A FEW DECADES AGO…
Corporations dominated the business landscape
Big companies evolved at their own pace with no need to innovate
Changes were generational and companies had enough leeway to adapt to technological changes
Young professionals aspired to have a long and stable corporate career
BUT THE STORY IS BEING REWRITTEN
And now startups are shaking up the scene
Disruption does not only pose a threat to tech companies anymore…
Most industries have been challenged by startups as they have and continue to be far more efficient in generating disruptive innovation
However, due to limited resources and a lack of proper market validation, 90% of startups fail
THE PROBLEM
Disruptive innovation is not getting there
So let’s understand what is blocking them…
Corporations’ challenges to innovate
Corporations are usually efficiency-driven, process focused, and structurally rigid.
01_
Focus
The core-business always comes first. With a pressure to deliver short-term results, and a focus on extracting value from the activities the company already excels at, corporations leave little to no room for any kind of breakthrough.
02_
Process
Efficiency demands structure and rules. With a long, convoluted bureaucratic process the communication and decision-making process is extremely slow. So much so that when the new product is ready to launch, the market has already changed and all the resources invested are practically lost – it’s a harsh reality, and we’ve been there.
03_
Politics
If you’ve ever worked on a corporation, we are sure you’ve heard the expression ”we just need to align it with the other department”. It might seem harmless, but combined with the other barriers and internal politics it can kill or severely hamper innovation, affecting employees’ morale in the race for a breakthrough.
04_
Talent
This whole scenario – combined with high profile success cases from young entrepreneurs – has put corporations at a disadvantage to attract and retain high-potential, innovative talents, who are increasingly interested in joining a startup or launching their own venture, regardless of the risks involved.
Startups’ roadblocks to succeed
Startups usually have very limited resources, high customer acquisition costs and lack sector know-how and data.
01_
Clients
Client acquisition is the number one priority for every new business. A great value proposition isn’t enough. Startups struggle to create brand awareness and gain market access, making it more difficult to identify their early-adopters and establish the right product-market fit.
02_
Funding
Great talent doesn’t come cheap, either does brand awareness or clients. There is no magic, a startup needs funding (and creative bootstrapping solutions). With limited resources, cash flow management can be harder than climbing the Everest… blindfolded.
03_
Know-how
The startup might have a dream team, but they most likely lack the specialization and seemingly endless access to data that corporations have. Even the best CTO might have trouble teaching an airline company how to build an airplane…
04_
Know-who
More than brand awareness, it’s important to build brand credibility. Initially, the startup will lack recognition, making market access to suppliers, partners, and stakeholders almost impossible.
THE MAGIC
A new model of innovation and collaboration is arising
Welcome to the corporate venture building revolution
Walls between corporations and startups will come down, combining their best attributes: a startup’s agility, culture and flexibility with a corporation’s reach, experience and resources.
Together they will create a new breed of startups, which will be far more competitive than their predecessors, and will be able to grow faster, dramatically improving survival rates and generating truly disruptive innovation while addressing market’s medium and long-term opportunities.
This is how corporations and startups mutually benefit one another:
Corporations
Market access
The sheer muscle behind large companies distributive models makes them the ideal platform to develop disruptive go to market strategies needed to accelerate growth and properly serve any type of customer.
Funding
61,7% of unicorns “the billionaire startup club” have been funded by corporations at some point. Both corporations and startups have realized that channeling resources throught a startup’s model pays off.
Branding
Building a brand is a long process. By building a new brand together, the startup grows its awareness and reputation faster, while the corporation enhance a fresh and innovative image.
Credibility
Corporate validation of the startup’s business model brings an additional layer of safety to the table, building a far greater rapport with prospective investors and potential partners.
Startups
Speed
Lean and agile techniques are more than a methodology, they are a MINDSET. A desicion making process based in market validation and testing makes for a more effective and quick entry into the market.
Culture
“Move fast and break things” represents the culture at many startups. With a high motivation and willingness to risk, failure is seen as an opportunity to rapidly evolve and improve the business, which is vital to boost innovation.
Talent attractiveness
Top talent increasingly interested in joing a startup or launching their own venture. By actively engaging with startups, corporations can refresh their brand image makeing it more attractive for this audience.
Fresh vision
More than having an original idea, startups also innovate by challenging current business models with a fresh and audacious vision. i.e: AirBnb’s business model.