The power of start-ups in driving digital innovation

Here, 'Justin Cross, head of BLINK at MediaCom, discusses how digital innovation can boost a start-up to success.

‘I fundamentally believe that working with emerging startup technologies is the fastest and most effective way to accelerate digital innovation for our clients and drive competitive advantage’.

This is the sentence I typically open with at almost every client meeting, event and presentation I have spoken at over the last two and a half years. And I mean it, but why? And more importantly what are the consequences for corporates and industries who don’t believe this to be true?

I began my career working for major record labels in the music industry, first in A&R departments before moving to digital marketing in 2004. During my time I witnessed first-hand an established industry’s attempts to handle huge disruption at the hands of peer-to peer-file sharing site Napster, which operated from 1999 to 2001, and the iTunes Store launch in April 2003.

Consumer behaviour

The seismic shift in consumer behaviour disorientated and panicked the music industry who feared file-sharing would turn music into a freely available good with little opportunity for monetisation. The industry has calmed somewhat in the last couple of years with the stabilisation and consumer adoption of streaming services, but from 1999 till 2009 there was genuine concern.

Of course the recorded music industry is not alone. According to Simon Devonshire, former entrepreneur in residence to the UK government, there is not a ‘single industry that will not be affected by the force of innovation happening now.’

And this is true not just of industries but of the largest corporations. Every year Innosight carries out a corporate longevity forecast of S&P 500 companies, which anticipates the average tenure on the list growing shorter and shorter over the next decade.

This year their analysis concluded that ‘the 33-year average tenure of companies on the S&P 500 in 1964 narrowed to 24 years by 2016 and is forecast to shrink to just 12 years by 2027.’

Driving innovation

There are several examples of big brands and corporations crumbling at the hands of market disruption; Kodak, Blockbuster, and Blackberry to name but a few. These examples typically all have the same common denominator in an emerging technology, which previously hadn’t even been on their radar a couple of years ago, reinventing a part of their business and in turn offering their customers a better experience.

Put simply, if you don’t innovate – you die.

Over the past decade, we have witnessed explosive growth of these new technologies and businesses. The digital economy has dramatically accelerated the speed of innovation, user adoption, and information sharing, as technologies evolve faster and permeate more broadly than ever before. For example, the telephone took 76 years to reach 50 per cent of all US households; the smartphone took less than a decade.

This rapid adoption of new technologies is resulting in massive disruption to the status quo of industry leaders and thus companies are finding that competition is tougher and staying relevant is harder.

I left the music industry at the end of 2013 and in my current role, I am responsible for designing and delivering global innovation strategies and frameworks for some of our biggest clients. But to boil it down my main responsibility is to grow and develop our services to help bridge the gap between corporates and the open innovation market.

Innovation has always been a main driver for business growth but there has been a growing trend over the last decade to direct budgets to marketing over innovation. A recent book, ‘Predicting The Turn‘ by David Knox, discusses how traditional businesses are spending as little as 2 per cent on R&D versus 8 per cent – 20 per cent on marketing. If you compare this to the leading tech companies, the reverse can be seen with around $16.1 billion being spent on R&D in 2017 by Amazon alone.

This new business landscape requires radical change, not only in in terms of a brands communication and media strategies but also in their marketing and brand strategies, innovation set-up and innovation cycles.

But what now?

Ok but are startups the answer? No they are not, but they are most definitely part of the solution. As the fear of staying relevant spreads through the boardrooms of major corporations, brands are becoming increasingly aware of the need to tackle innovation from different angles. An increasingly successful approach to driving meaningful change, whilst keeping up with rapidly advancing technology and societal change, is to partner with startups.

If done properly this can be a fruitful symbiotic relationship where brands get help with responding to consumer trends and startups can use the opportunity to test their products and run real world proof of concepts to develop their companies.

Over the last three years there has been a sharp increase in the number of emerging corporate accelerators, incubators and partnership programmes in market. Depending on what type of approach is being used interactions can vary, from the purely exploratory to more formal programmes designed to target specific objectives.

Both approaches have enjoyed certain levels of success, with some providing effective solutions to real business problems whilst others focus on more superficial gains.

Broadly speaking there are two main innovation models that dominate:

The first is ‘Tech Tourism’; a more exploratory approach which lacks the upfront strategy and ability to truly impact a brand’s core business aims. This type of corporate innovation can range from exploratory trips to tech HQs, running open innovation competition callouts, to engaging in ‘innovation theatre’ to manufacture instant PR gains.

The second is Corporate Innovation ‘Structured Programmes’; a formal process based on mutually beneficial goals to drive business impact. These bespoke frameworks blend the needs of both corporates and startups typically with traits such as senior level buy-in, different commercial and legal practises, complete transparency, and more agile processes.

They are designed with clear objectives and thought into how successful pilots can scale-up and deliver real learnings and impact on the business culture and learnings.

Understanding what framework will foster the best opportunity and deliver real results is not the only challenge corporates are facing. There are thousands of startups in the open innovation market developing interesting tech so knowing who and where they are, what they do and when to engage is a challenge in itself.

How do you make sense of this cluttered marketplace? Take the MarTech sector: Scott Brinker estimates there are over 5,000 movers and shaker in his Chief Marketing Blog, up from around 150 in 2011, so where do you start?

Our advice is to ensure you work with innovation agencies that have the best reputation in this space and importantly, work completely independently. A narrow or biased connector with their own cohort will limit the potential of your innovation efforts. Brands such as Mars, with its global Launchpad initiative, and Unilever, with its Foundry program, clearly understand the need to work with partners who look beyond their own alumni and Silicon Valley.

Finally, this space is moving fast with the largest risk today being to repeat the same traditional practices rather than reaching out and embracing new technology and thinking. For corporates this is about evolving practises to future proof their businesses to stay relevant.

For startups it’s about collaborating with businesses to help their company grow and become relevant. Time is of the essence, so adopting an agile culture is important. New services and products must be trialled quickly so successes can be taken to market as rapidly as possible.

This is easier said than done though, and a corporate success in adapting to the new normal will be the difference between those that want to grow and thrive, and those that are case studies in what went wrong.

Justin Cross is head of BLINK at MediaCom

Further reading on innovation

Owen Gough, SmallBusiness UK

Owen Gough

Owen was a reporter for Bonhill Group plc writing across the and titles before moving on to be a Digital Technology reporter for the

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