Conor Carmody from The Innovation Exchange on the important role of tech scale-ups in helping large corporations overcome the challenge of digital transformation.
As we head towards 2023, many business leaders had expected by now to be focused on implementing strategies to drive growth in a post pandemic world. Instead, there is a focus on the threat of recession, managing the impact of persistent inflation, as well as dealing with crises in supply chain, energy sourcing and managing a return to the office for employees.
Against this backdrop the rate of change in technology continues to rapidly advance with the emergence of new cloud technologies, developments in the metaverse of AR/VR along with advances in AI, machine learning and process automation. Well-established companies are now under increased pressure to innovate to maintain or gain competitive advantage in these uncertain times.
“For many SMEs, a collaboration with a multinational or large corporation can be a make-or-break moment, having significant benefits for reputation and revenue”
The evidence suggests that many companies see the value in boosting their innovation engines by collaborating with start-ups or scale-ups rather than pursuing an internal, incremental response to market disruption.
While the future is uncertain, enterprises must still identify and commit to strategic outcomes and drive a return for stakeholders. As they look to the future it is clear that technology is key to delivering on the strategic plans and therefore, businesses need to be aware of technology advancements and the potential impact on their business.
Over the next couple of years, digital transformation is expected to be the top strategic business priority of enterprises across almost all industries. With 60% of CIOs and CTOs surveyed in a 2021 IBM study indicating that their IT modernisation program is not yet ready for the future, we see many fast-tracking their digital technology initiatives this and next year.
Digital transformation presents an organisation with the opportunity to reimagine the way its business is run through the use of new digital processes and tools. However, there are challenges to face throughout every stage of the digital transformation process.
Multinational corporations must understand that digital transformation challenges are not always directly related to technological concerns or technical barriers. They also include people-centric issues, organisational structures and other non-tech factors. For many large businesses the internal process and structures are proving to be slow in responding to the pace of change and therefore are now looking to partner with a third party to deliver on the Innovation roadmap.
Technology scale-ups have become a valuable resource for corporations that want to foster innovation and business development. Importantly, these agile technology companies can be instrumental in changing the company culture.
Successful collaborations can unlock game-changing mutual benefits. These partnerships give corporations access to start-up creativity, new ways of working and comfort with emerging technologies. In return, start-ups gain access to new markets, customers and industry expertise. For many SMEs, a collaboration with a multinational or large corporation can be a make-or-break moment, having significant benefits for reputation and revenue.
The collaborative approach
The main benefits to corporates in engaging with scale ups is both the agility and an innovative approach to new technology development. Due to their propensity for trying new approaches, moving faster and being more cost-effective than existing businesses, scale ups can be very helpful for enhancing core business functions, such as lowering costs, increasing margins and getting products to market quicker.
The start-up ecosystem is well known for shortening the cycles of innovation, leveraging new technologies, disrupting existing business models, integrating entrepreneurial culture and inventing new cultures more quickly and effectively than big corporations.
Corporations can benefit from collaborating with start-ups by sourcing the latest technologies or innovative business models and avoiding the obstacles that companies regularly face when trying to solve things internally.
Entering new markets
In cases of large multinational corporations setting up an international office, they can be challenged by language and culture as well as a lack of knowledge of local institutions that can help boost innovation. When this is the case, partnering with a local start-up or scale-up can provide valuable expertise and knowledge to allow the business to integrate into its new community easily and gain a localised, competitive advantage before they might become costly problems.
An increased emphasis on sustainability and the environment will also elevate the need for digital transformation. As customers start to think about how they are designing products and bringing those sustainability requirements into it, this is another area where we are going to see a role for innovation and a deep understanding of emerging technologies. Many scaling companies, particularly those which were founded within the last ten years, have values that align with reducing CO2 emissions and have the expertise to create solutions that allow for sustainable innovation.
Process automation is an area that will require significant investment from the multinational corporations to fully automate back-end processes and reduce the manual handling that is currently in place. This is an area that is seeing significant development within the start-up community and offers a significant potential for collaboration into the future.
The industrial metaverse and virtual reality is also becoming more commonplace
It’s more than gaming, it’s more than visualisation. It’s about being able to have real-time, physics-based simulations and operations of your products as well as your production processes. Industry trends may also follow those of mobile devices, which feature simplified interfaces and greater reliance on the cloud data.
Risk-averse organisational culture
Many established and large businesses have a broad employee base with employees of various competencies and experiences. It is common for these employees to face challenges adapting to new technologies introduced by top management.
Employing external tech solutions providers to work with internal staff to implement new digital strategies will ensure that no staff, digital native or not, will be left behind during digital transformation. Partnering with such start-ups or scale-ups will encourage a culture of change, innovation and creativity among staff. It will allow staff to explore new and beneficial ways of work.
Identifying the right innovation partner
Start-ups are often the preferred resource because they are ready to enter new partnerships quickly and easily, they are more open to thinking outside the box, they bring more flexibility when it comes to adjusting their technology and core offering and lastly, they understand state-of-the art technology.
There is strong evidence to suggest that innovative solutions providers can help large corporations survive the challenge of digital transformation. Collaborations can help corporations to stay competitive and at the same time help start-ups to grow and become commercially successful. The success of collaboration is highly dependent on the commitment of the top management and prioritisation of execution by all parties.