Should Big Business partner with start-ups and the entrepreneurial community?
At the LaunchLab we believe the answer to this questions is “yes” and that Big Business not only should partner with start-ups and the entrepreneurial community, they must. Currently, the speed of technological advancement has created a dilemma for Big Business because of the disruptive nature of this advancement. Big Business is good at implementing a proven business model based on its core business and competencies.
Referring to the diagram, this business model relates to known ideas and existing markets with incremental innovations fitting into core competencies and business. They serve as enablers to run the current business more effectively and are also important so that a business can remain relevant in the short-term. However, in order to identify future revenue streams, businesses need to identify Breakthrough Innovation. Big Business is disruptive and will change the way business is conducted in many areas. Accessing Breakthrough Innovation will mean adopting new technology, new processes, new customers, new knowledge and as a result new business models.
This is the Big Business dilemma mentioned earlier: the tension between executing an existing business model and identifying and experimenting with Breakthrough Innovation. Big Business would not be able to achieve extensive gains or remain relevant in the medium to long-term by simply tackling efficiencies and productivity improvements (incremental innovation). To achieve such gains, Big Business will need to improve their ability to disrupt. In order to access disruptive breakthrough Innovation, Big Business will need to look outside themselves and tap into external ecosystems like the LaunchLab. They create an environment where start-ups can experiment with new technologies and business models quickly, easily and cost-effectively.
So how does Big Business benefit from this? It is best explained with a practical example from the LaunchLab. The media industry is an industry that has seen a great deal of disruption due to new technology and the changing content consumption behaviours of the millennials. MultiChoice, South Africa’s leading video entertainment company, identified that it needed to tap into disruptions or Breakthrough Innovations in order to remain relevant and also saw the challenges of trying to do this themselves. They teamed up with the LaunchLab to help gain access to these disruptions. The LaunchLab provides access to a unique community of campus-based entrepreneurs as well as an environment where start-ups can test new technologies and business models without corporate restrictions.
MultiChoice may choose technologies they prefer from options that the LaunchLab has sourced and then observe them as they develop while focusing on their core business. Once a new idea shows promise, MultiChoice may then provide that start-up with an opportunity it would normally struggle to get: access to market. The result provides a win-win situation where Big Business and the start-up ecosystem are able to leverage their strengths.
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