How can big business encourage innovation? Work with competitors

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On June 22, 2016

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If you’re a leader in a big business in charge of digital transformation, what should you do? Start building relationships with partners that can solve your problems, even if they are competitors. And do it quickly. That’s the verdict from the Telegraph’s Digital Leaders conference I attended recently. The conference brings together over 200 business leaders whose job it is to encourage digital business innovation and transformation throughout their customer journey.

Some of the UK’s biggest companies across manufacturing, retail, public sector and automotive industries (and me) listened to Narry Singh, head of digital strategy, EALA, at Accenture talk about delivering business innovation through partnerships. He advocated developing strategic collaborations at management level – even with  potential competitors – to tap into the best of their services. Next to him was Bertrand Bodson, chief digital officer at Home Retail Group (and funnily enough) an Accenture customer. Home Retail Group owns catalogue retail Argos. If you haven’t heard of Argos, they’re a kind of in-store Amazon. Customers go into the store, look through a catalogue to order their goods, and go to a counter to collect them as they arrive from the in-store warehouse. (The customer journey is a throw-back to the pre-internet age but the model apparently still works today.) Now you would have thought that rival eBay was the last person Argos would want to shake hands with. After all its internet players like eBay that have helped clear high streets. But Bodson talked about how they teamed up with eBay to offer ‘click and collect’ for eBay customers in their stores. Why? Because the service works for both companies. It gives eBay an easily accessible place for customers to pick up orders, while Argos benefits from the extra footfall in their stores. Instead of struggling to compete with a more nimble online provider, Argos tapped into the one thing eBay doesn’t have, high street locations.

And it wasn’t just big businesses that Singh urged digital leaders to get involved with, but competitive startups too. ‘The idea that you are going to out-innovate a startup is ridiculous,’ said Singh. He argued that a startup is much more focused on innovation, free from cultural barriers. So instead of seeing them as enemies big businesses should work with them to improve flagging parts of their own business.

Now working with the competition doesn’t sound like the best of moves. But the more I listened, the more it struck me as making perfect sense. In my industry, tech PR and digital marketing we do it all the time. If we lack a skill to win a piece of business, we team up with a partner that can help.  Why should big business be any different?

If you can’t solve a problem yourself, then working with someone who can add a bit of digital technology magic dust is a no brainer. Corporate history is littered with examples of businesses that ignored or failed to react to changes in markets. Who knows what would have happened if record labels had chosen to team up with, instead of fight Spotify or Napster? Or if the Internet’s early leaders like Ask Jeeves or Netscape Navigator had decided to properly collaborate with startup Google? Just to prove the point, later in the day Adrian Blair, COO at takeaway portal Just Eat mentioned his experience of joining Ask Jeeves (now Ask.com) just as upstart Google started biting at their heels. ’We had a human editorial team matching the questions people were typing into Ask Jeeves to the right results.’ When Google came along and started gaining market share, Ask Jeeves were still convinced that ‘their way was best’ until it was too late. His advice was to use external expertise and not to get stuck in an internal mind-set. One thing you get with startups is a challenge to ingrained cultural thinking.

But how should big companies work with smaller players to encourage innovation? Buy them? Invest and build their teams? Or perhaps follow the trend and set up incubators? Kathryn Callow, global digital 2.0 media manager, Unilever warned it wasn’t enough for big corporations to have small pockets of innovation and ’think you’ve done your bit.’ She argues that if one small part of the business is innovative but all the rest isn’t, nothing will be achieved. The goal should be collaboration that challenges thinking across the entire business.

As Singh points out, today if anything it’s the big business that’s actually more than keen to partner. Startups are becoming ever more resistant as big corporates can appear just to be looking for answers rather than genuine partnerships; using collaboration as a way of gaining intelligence to develop their own digital technologies. But he argues that the startup community have much to gain from partnering with bigger businesses. Not least funding and extensive contact books.

But it’s more than that. Surely big business offers a way for startups to gain insight from the customers of a bigger player? Startups often talk about practising being a ‘lean startup’. The concept is based around a book by Eric Ries ‘The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses’. The idea is to eliminate waste and increase value during the early product development. You become lean by tapping into customer feedback so you create features that customers want and don’t invest time in the ones they don’t. What better way to tap into the views of future customers than by using the opportunity to speak to a large customer pool of your collaborative partner?

So come on Twitter, Groupon, Tesco , Sears (or any struggling business) while you can’t beat them, you can join forces and win.

Which big and small businesses would you like to see team up in 2016/17?

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