Fast-forward 20-plus years, and now every industry is undergoing digital transformative changes to stay relevant. But the way they go about their “growth innovation” has evolved. From my experience working with Fortune 1,000 enterprises and entrepreneurs, I’ve seen a change in the way large, legacy enterprises identify, incubate, and introduce innovation. Many have been building “enterprise-to-entrepreneur” engagement platforms and partnerships to get closer to where the disruption is happening and to make it easier for entrepreneurs to engage with them.
This point was emphasized at last month’s SXSW Interactive Festival—that a tipping point has happened between enterprises and entrepreneurs. Both entities now realize they can benefit from each other’s unique capabilities by harnessing the powerful combination of starting up and scaling up.
During the session “High Stakes Business Between Startups & Blue Chips,” Dave Knox, managing director at WPP Ventures and CMO of Rockfish Innovation Group, presented his new business rule book on how to conduct enterprise-to-entrepreneur engagement. Knox started his career at P&G, so he understands big legacy companies and their growth needs. That said, he has also done a lot of work with startups. So he knows how to help both parties find common ground, innovate, and create mutually beneficial business relationships.
“Innovation used to be about fighting over market share. Now it’s about managing disruption,” Knox said. “It’s not about Fortune 1,000 becoming better at digital marketing. They need to build new digital business models or others will disrupt their legacy business models. This is where entrepreneurs who don’t have to defend legacy models can be very helpful.”
Knox pointed out four key ways to innovate, along with examples:
- Acquisitions: Under Armour’s acquisition of several fitness apps to quickly access technology and a scaled athletic community.
- Investments: Caterpillar’s investment in Yard Club.
- Partnerships: P&G’s “Connect + Develop” platform.
- Disrupt the disrupters: Amazon and PrimeNow.
The theme of how large legacy enterprises are learning how to partner with entrepreneurs continued during a fireside chat with Beth Comstock, vice chair of GE, AOL co-founder Steve Case, now chairman and CEO of Revolution, and Jason Tanz, editor-at-large at Wired. They spoke about why such partnering is essential to thrive in the “third wave” of digital transformation.
Case described this “third wave” as “integrating the internet and seeing pervasive and sometimes invisible ways throughout our lives that will disrupt huge sectors of our economy that haven’t changed much in decades ... But it is going to require a playbook that is different from the ‘first wave’--building the Internet, user penetration--and the ‘second wave’--software and apps being used on the Internet. Things will be more integrated. We’ll also be able to do more and different things, and more personalized things, because we will be smarter with things like AI and machine learning.”
Key to the success of this third wave, he added: “Strategic partnerships between startups that can move quickly and large organization that have tremendous scale, credibility, understanding of their verticals, distribution, capital, and government policy so they can help startups get traction and scale up faster than they could do on their own. These partnerships will also help the big companies stay more relevant and agile. How startups and big companies engage to do things together that they could not do separately is critical.”
Comstock agreed. “Startups need quick access to global markets to scale. Big companies need access to new ideas,” she said. “The capability to partner will get both entities there faster.”
Comstock pointed to GE’s partnership with the University of Louisville and FirstBuild, its first startup, global online co-creation community and microfactory, as an example. “The world’s smartest people don’t all work for you,” she said. “You have to accept that outside ideas may get you there faster.”
And in the early days of AOL, Case said the company partnered with 300 companies. “We never would have been successful had we not partnered,” he said. “To cite an African proverb, ‘If you want to go quickly, go alone. If you want to go far, you must go together.’”
In the scope of strategic partnerships, there also is value in two enterprises working together. Such was the case in the pairing of Google and Levi’s. In the session “Beyond the Screens: the Ubiquity of Connectivity,” Dr. Ivan Poupyrev, technical program lead at Google ATAP, and Paul Dillinger, head of global product innovation at Levi Strauss & Co., discussed how their collaboration to integrate intelligent interactivity into a jacket takes the internet of things well beyond what we can do on screens and smart gadgets.
Up And Comers
If you work at a Fortune 1,000 and are looking for entrepreneurs to engage with, check out the winners of the SXSW Accelerator Pitch Event, for which more than 500 startups from around the world applied. (Disclosure: I was a member of the advisory board.) “Each winning startup reflects the most exciting innovation and cutting-edge technology in their space, and we know we’re going to see amazing achievements from them in the coming years as they work to change the world,” said Chris Valentine, SXSW Accelerator event producer.
Click here for a list of the winners.
The 2018 SXSW is scheduled for March 9 to 18. Until then, you can view 2017 featured sessions on the SXSW YouTube Channel and follow SXSW News.