You won’t find the people you need on LinkedIn or Monster: they’re more at home in a younger, fresher, hipper environment than the belly of an ageing corporate beast. My take is firms need to shake up their approach to innovation, one that leverages the speed and agility of a start-up, with the security and compliance of the large corporate—one that attracts the people needed to change the game. Welcome to the second of five posts (part 1 is here) laying out the groundwork for a next-generation innovation strategy. Cue Part 2:
What Start-ups Want
Start-up's matter to firms, like good ideas matters to innovation. Start-ups challenge the status quo; they disrupt; they raise the innovation bar, and generate jobs in their wake (if they're successful and scale and many do). They focus on breakthrough innovation—the stuff that radically switches a process, customer experience, or rewrites an entire industry value chain. In my experience, smart kids flock to work for them and no wonder: unleashed from the crushing inertia of the big corporate beast and the traditional greasy-pole career, they relish the devil may care attitude and the potential on offer. If a start-up hits pay-dirt, then the rewards are massive! Go on admit it, if you were starting your journey into work, where would you want to spend your precious time and energy?
Ok, ok, so the money might not be great, but start-ups offer a lot more to keep their people engaged, which established corporates often struggle to do. Working at a start-up means helping with everything! The ask goes way beyond the official job description, and it means opportunities for learning and professional development are numerous. The start-up founders and their employees work closely together (what? no middle management?!), so people that work there learn from the best (or, depending on your perspective, from an individual spirited and brave enough to try something different). I suspect there's real pride in growing a company together, watching it scale, and sharing the roller coaster ride. This creates a tight-knit team that is culturally hard to replicate in a large legacy company. These are the benefits, and some folks will prefer to take them compared to the fixed paygrades, paid holidays, office politics, and in many cases, slow death through boredom. And others won’t.
Corporates need to know the differences in start-up dynamics that change the rules of engagement with them (Part 1 explains why you need to think about start-ups because corporate innovation needs a reboot). For example, do you know your start-up from your scale-up? A start-up is a company or project initiated by an entrepreneur to develop and validate a scalable business model. The owner might come from an industry where a solid commercial idea or opportunity presents itself; they decide to pursue the concept outside the confines of their firm because a) it's lucrative and they see the bigger picture, or b) they aren't able to secure the resources, trust, and freedom to explore the idea (*sigh*). They'll use their own money or seed capital, and as a result, they're vested big-time validating and scaling the concept.
Scale-ups are in a different phase of company growth. This proposition has achieved a lot so far, with a raft of impressive results and interest from potential customers and investors. The owner is ready to take things to the next level, and they and their investors won't be looking to cash out at the first corporate innovation team that flashes the cash and wants an exclusive. Contrary to popular belief, start-ups and scale-ups are not interchangeable terms—they describe two distinct phases of company growth. Start-ups move into scale-up territory when they’ve run through their first rounds of funding and reached the Series A stage (or something similar). They're keen to grow their revenues, employees, and client proof-points. Whatever stage of growth, the most committed entrepreneurs, will want to pursue their passion no matter what.
The real risk for corporations is that they end up with a run-of-the-mill start-up that's too early in their growth journey, rather than a proven scale-up that could radically change the way their business/team/product or service work. Critically, there are no certainties that the large legacy organisation has the right assets, processes and culture to attract the most innovative founders or the necessary sophistication to pick the most promising ideas. Just ask any scale-up about the ongoing frustration with procurement and legal frameworks and agreements, which often move at a snail's pace. They will be ready to walk if they cannot see things changing fast enough.
Corporates also need to know that innovation has gone truly global. No matter where you are in the world there’s a thriving start-up scene somewhere nearby (check out the meet-ups taking place near you); it’s so easy because the rulebook for being an entrepreneur is available to every person everywhere across the world (thank you Internet): Global standards for everything are emerging and shared, from the programming tools, communication styles (Slack, always) back-office platforms, down to the hipster dress code. But with so much choice, how does the beleaguered corporate know which promising idea is worth burning their energy on?
One thing we can be sure of however is leaders don’t need to travel halfway across the world and do the Silicon Valley “petting zoo” thing (you know, meeting with all the same VCs, talking about the same technologies and start-ups). My previous analysis of Europe reveals a mosaic of emerging capabilities in regions, nations and localities across the region. Europe, in effect, offers a menu of game-changing innovation moving at different speeds and trajectories and a lot of it flowing out or start-ups and scale-ups. Some countries show a higher concentration of them around specific technologies, like AI in the UK, virtual reality in Estonia, or mobile commerce and big data in Hungary. We also discovered emerging industry-specific developments, as well, such as agricultural-tech (“agri-tech”) in Russia, and sustainable tech in Italy (“clean-tech”).
Despite the increased start-up activity, Europe has some way to go to match the sheer number of start-ups and scale-ups generated in the U.S. and Asia Pacific. For example, the number of active start-ups in the U.S. is roughly four times higher than in Europe (and they raise eight times more funding than their European counterparts!). What’s interesting is that London money currently dominates Europe’s start-up and scale-up scene, and a looming Brexit could threaten to skew things (but I suspect things will be OK). But in an era of global innovation with start-ups sprouting everywhere, then other destinations might become central to bringing corporate and scale-ups together…
PS. Check out Cognizant Connect in Zurich. Why Zurich? Now there’s a story. If Switzerland wants to maintain its place as a centre for world-class innovation then its need to do much better attracting start-ups and scale-ups into the country. Cognizant Connect offers entrepreneurs multi-country access to customer spending, quickly scaling revenue and boosting value. And this is what any start-up or scale-up wants, no?