“If you’re not innovating, you’re de-innovating!”
Startups have this cracked. They are inherently innovative or quickly drop out of the game, but regardless of their funding status, startups are notoriously short on budgets, know-how and processes to get their innovation off the ground.
Most enterprises are too heavy and cumbersome to keep up with market trends, let alone innovate. The equation is seemingly simple: enterprises are inherently complicated and riddled with problems which need solutions, while startups develop solutions to solve those very issues. But this equation is complicated by restrictions on time, money, logistics, security and effective communication. For large corporations, internal bureaucracy adds an extra hurdle, and for industries such as banking or healthcare that rely on sensitive user data, legal regulations and informational security protocols can limit the possibility of trial runs with potential partners.
That said, a startup will allow itself to fail many times before the first success, where large companies are more risk-averse. As with every other paradigm, there are exceptions on both sides of startup < — > enterprise scale. Giants such as Google, Facebook, Uber and Tesla break innovation boundaries on a seemingly daily basis, but they are far from being representative.
Bridging the gap between the two camps has been a long time in the making. Whatever you want to call the first couple of decades of the current century — the twenty-tens, the zeros, the ohs, the double ohs, the aughts (U.S.), the noughties (U.K.) — this is shaping up to be the era where startups and enterprises appreciate their shortfalls and starte collaborating and joining forces for mutual benefit. New technologies, flexibility in processes and lot of marketing love are make it possible.
1. Acquisition for innovation: CA and Blazemeter
On a failed startup acquisition that shall remain anonymous: “It was like expecting a speed boat race team to merge forces with the crew of the Titanic.”
Once a not so long ago, a young, budding and energetic startup with a vibrant community would get purchased by a large multinational enterprise and at best become a “division” of the larger company, if it wasn’t completely absorbed. At that point, the innovation is hijacked to some degree of success but all supporting ecosystem and marketing elements disappear, including the crack team of founders. Somewhere along the road, and many billions of dollars later, the buying party would realize that stripping a company, as young as it may be, of everything BUT its innovation, wasn’t such a great idea.
If it ain’t broken don’t fix it. Build on it.
CA, in contrast, is built out of acquisitions. BlazeMeter is its latest acquisition, from 2016, with Xceedium, IdMlogic and Rally Software representing 2015 investments. Surprisingly, unlike the typical enterprise where honeypot employees grow within the company for years (not to mention decades), CA prides itself on the fact that almost all employees are from a company that was acquired in recent years.
CA sticks to the guiding principle that a change in enterprise mentality is required and that its ability to innovate is inherent to the capabilities of the companies it acquires. Enabling them to run as self-functioning independent entities is a critical element of that. What this means for a company like BlazeMeter is that everything stays the same, only bigger. More aggressive goals, more resources, more levers. The brand is maintained, the products, the offices, the people and the culture remain — at least for the foreseeable future.
So the plan seems pretty straightforward. Success would be derived by harvesting the good of both worlds: The brand, the credibility and the relationships of the large company, and the brand, the culture and the execution of the startup.
2. Collaboration for innovation: Open-market PoCs
When enterprises aren’t able to develop the innovative solutions they’re looking for internally, they turn to collaboration and partnership as a means to solve their problems and survive. This is certainly nothing new. What is new is the ease with which advanced marketplaces offer for the “partners” to engage and collaborate. Ask any marketing and business development manger about collaboration and they will tell tales of long journeys which are labor- and time-intensive and legally arduous. This is inefficient, tedious and without a guarantee that you’ll find the right fit.
For example, startups such as Reachify help retail enterprises identify relevant software solutions, while others like prooV take it even further — providing an end-to-end PoC ecosystem that matches enterprises with software vendors and startups and generates cloud-based secure testing environments. These two alone significantly reduce the amount of time spent finding, testing and implementing new software solutions. Time that will be far better spent elsewhere.
3. Incubators and innovation labs
For corporations today, taking charge of their own innovative processes often means the creation of in-house incubators. From cutting-edge companies like Amazon, IBM, Google and Microsoft to competitive traditional brick-and-mortar businesses like Volkswagen and Target, creating an in-house experiment zone provides enterprises with the tools to take full control over the implementation of their business direction.
By being so integrated in the growth of a startup, the enterprise has a much easier time plugging the solution into its system, testing it and integrating it when it’s ready. Corporations can also offer much-needed mentorship and resources to relevant startups, with the symbiotic advantage of attracting outside ideas. Incubator programs hosted by giants such as IBM and Microsoft help enterprises keep their fingers on the pulse of trend trajectories across unrelated sectors.
While not every method will work for every company, innovation labs and accelerators are indeed gaining traction, but they’re limited by factors like geography, the relationships founders are able to build, and the incubator’s finite connections and reach. They also require significant financial resources to maintain in terms of working space, infrastructure, people, investors, marketing dollars etc.
At the close of 2016, there were an estimated 200 accelerators and incubators in the U.S. alone. The ecosystem, which was kicked off in 2005 by Y-Combinator, has become a playing ground that every multinational has considered investing in at some stage or another. The jury is still out on the long-term feasibility of so many incubators, but there is no question of their role in fueling the innovation industry.
4. Co-working spaces for innovation
Co-working spaces like WeWork are now part and parcel of the new business world, but some companies are evolving these concepts forward to produce the physical environment in which innovation can take place between rising startups and the world’s largest and most influential corporations.
Sosa is a prime example of a company creating this new atmosphere, enabling an enhanced dynamic for innovation. The co-working space is focused on fostering innovation by connecting major international corporations with Israeli startups. As enterprises look for their next partner, investment or acquisition, Sosa enables them to “meet” players in the Israeli ecosystem, providing them with all the services they need to make an effective entry into the market.
It’s the water cooler effect! Behind every great acquisition and partnership is a personal connection, and creating the space for these relationships to be built and for the supply and demand of the ecosystem to collaborate is a major part of the innovation exchange. Tapping into an innovation pipeline is a huge opportunity and having a physical guide on the ground to make this happen can be a game-changer.
Collaboration between startups and enterprises will continue to grow through improved and more accessible PoC tools. The taking on of nascent companies offering promising solutions will become commonplace, as more corporations invest time and money into finding solutions that will not only fast-track their products, but also enable them to stay strategically close to the startup culture itself. Similarly, specialized acquisitions will continue changing the face of the innovative product map.
All this represents a strong emerging new era in the tech world, where symbiotic collaboration is replacing the old lone-wolf startup model — and that’s good news for enterprises, tech companies and consumers alike.
This article is published as part of the IDG Contributor Network. Want to Join?