You’ll find more smart people outside your company’s four walls than within them.
It’s a simple but powerful fact. And you’ve probably heard it before.
In fact, you already know you need these smart people. The kind who can help you create new products and services. Who will help make sure your business is not only around but flourishing 10, 20, 50 years from now.
[Yes, that’s why Walmart bought Jet and Unilever bought Dollar Shave Club — but hang on, we’ll give you the bigger picture in a moment. ]
Where are these smart people?
Many of the most determined and passionate problem-solvers are running startups.
How do you work with them?
That’s more complex, so we’ve come up with a succinct way to explain it: the Corporate Innovation Spectrum.
Activities on the Spectrum range from engagement to commitment, moving from hypothesis (ideas & theories) to thesis (defined strategy & action).
Most corporations start with low barrier, one-off engagements with startups. For example, thousands of corporate executives meet entrepreneurs on their Silicon Valley tours each year; VC firm Andreessen Horowitz said in 2013 it does 1200 briefings annually with Fortune 500 management teams. Corporations also organize hackathons to see what smart people do with their data or products.
Corporate leaders are (rightfully) inspired by such tours and events. At that point, some are ready to increase their commitment. They might set up an accelerator program or pursue partnerships, eventually moving towards investments or even acquiring the ones they deem crucial to their future success.
The journey isn’t necessarily linear, however.
Most savvy corporate innovators (including Walmart and nearly all the rest of the Fortune 100’s Top 10) are active at multiple points on the Spectrum. They seek out solutions to existing problems and startups that can transform their businesses.
They acquire startups only after getting to know relevant ones through accelerator programs, partnerships and/or corporate investment.
In this context, $1 billion-plus acquisitions — like Walmart + Amazon competitor Jet, Unilever + direct-to-consumer Dollar Shave Club and GM + self-driving-tech startup Cruise — make sense and shouldn’t come as a surprise. These alliances remove potential disruptors from the marketplace and unlock new offerings and product opportunities for enterprises.
These corporations have invested considerable time and resources engaging startups through other activities as well.
Walmart used its 2011 acquisition of social media company Kosmix to accelerate its then-newly formed and startup-like @WalmartLabs in Silicon Valley, key to its strategy of becoming a digital company. In the past five years, @WalmartLabs has grown organically as well as acquired several more eCommerce-related startups.
The Unilever Foundry, which matches its global portfolio of brands with startups that can solve their marketing challenges, has run 100 pilot programs since 2014. Of those pilots, 40% have led to long-term relationships.
GM formed its venture capital arm in 2010, but made its biggest move in January 2016 with a $500 million investment in ride-sharing startup Lyft.
You can bet that Walmart, Unilever, GM and many others will continue to invest in startup relationships across the corporate innovation spectrum.
Contact us when you’re ready to find the companies that will disrupt your business.