Should Big Business partner with startups and the entrepreneurial community?
At the LaunchLab we believe the answer to this questions is “yes” and that Big Business should not only partner with startups and the entrepreneurial community, but that they must.
While Big Business is good at implementing proven business models based on its core business and competencies; the speed of technological advancement has created a dilemma for Big Business because of the disruptive nature of such advancements.
Referring to the diagram below, this business model relates to known ideas and existing markets and how incremental innovations fit into core competencies and a business.
Incremental innovations are what enable a business to run more effectively, they are also useful in helping businesses to remain relevant in the short-term, however, in order to identify future revenue streams, what businesses need is to identify Breakthrough Innovation.
Accessing Breakthrough Innovation will mean adopting new technology, new processes, new customers, new knowledge and as a result new business models.
This is the Big Business dilemma mentioned earlier: the tension between executing an existing business model and identifying and experimenting with Breakthrough Innovation.
Big Business would not be able to achieve extensive gains or remain relevant in the medium to long-term by simply tackling efficiencies and productivity improvements (incremental innovation).
To achieve such gains, Big Business will need to improve their ability to disrupt. In order to access disruptive Breakthrough Innovation, Big Business will need to look outside themselves and tap into external ecosystems.
This is where collaborations with partners such as the LaunchLab come to the fore. Together we can help to create an environment where startups can experiment with new technologies and business models quickly, easily and cost-effectively.
A win-win situation
So how does Big Business benefit from this? It is best explained with a practical example from one of our own projects. The media industry is an industry that has seen a great deal of disruption due to new technology and the changing content consumption behaviours of millennials.
MultiChoice which is South Africa’s leading video entertainment company, identified that it needed to tap into disruptions or Breakthrough Innovations in order to remain relevant, and also saw the challenges of trying to do this themselves.
They teamed up with Launchlab to help gain access to these disruptions. We provide access to a unique community of campus-based entrepreneurs as well as an environment where startups can test new technologies and business models without corporate restrictions.
MultiChoice chooses the technologies they prefer from options that the LaunchLab has sourced and then observe as they are developed, while still focusing on their core business.
Once a new idea shows promise, MultiChoice may then provide that start-up with an opportunity it would normally struggle to get: access to market. The result provides a win-win situation where Big Business and the startup ecosystem are able to leverage their strengths.
About the author: Philip Marais has a Masters degree in electrical engineering. As the CEO of the Launchlab in Stellenbosch Marais coaches startups on university campuses countrywide, with a focus on providing them with key skills for making their businesses a success.