The challenge of 'going digital' is hardly new –
many companies have been working on it for almost twenty years. But
even those parts of the economy most suited to digital
transformation continue to evolve in unpredictable ways, with new
offerings emerging all the time. Online newspapers today include
live blogs, video and interactive content; music is streamed and
packaged into playlists; banking services are offered through
For incumbent firms, this continuing evolution presents a tricky
challenge: If you know your industry is going to be transformed in
surprising ways, that don't simply involve digitising existing
offerings, how can you capitalise on the opportunity? Who should
you talk to about what these new offerings will look like?
One thing seems certain – you cannot do it on your own.
Your employees are held back by a pre-digital worldview and for the
most part they lack the skills to develop cutting-edge digital
offerings. So companies are increasingly seeking ways to tap into
the creative milieu of the start-up world.
One option is to buy your way in. WPP, the largest
marketing services company in the world, has bought more than 400
digital businesses over the last decade, and gives them sufficient
autonomy that they continue to grow. You can also try to buy in
digital talent directly, though for that to work you need to give
them a compelling reason to work for you.
The more ambitious approach is to work proactively with the
start-up community – investing in them, working with them,
and hopefully learning from them along the way.
For example, a few years back, The Irish
Times launched a model called FUSION, where they welcomed
around 20 new ventures into their offices to help them develop new
digital offerings. It was seen as a way to get closer to the
cutting-edge of innovation in the advertising industry, and to act
as a culture change programme for the established business. Several
of the start-ups have now become viable in their own
right. Another example is Unilever's
Foundry, in which established lines of business put forward
challenges that start-ups are invited to respond to. Over the last
two years, they have screened bids from 4000 start-ups and have
ended up building commercial tie-ups with around 40 of them.
Likewise, in the financial sector, many banks such as Barclays have
built accelerators to give them direct exposure to FinTech
start-ups. Deloitte also grows businesses under their own brand or
takes stakes in start-ups outside the firm to innovate their
As an incumbent firm, working with start-ups is no panacea. You
still need to figure out how to scale up and leverage the ideas
that come your way, and how to overcome the inertia in your own
internal systems. But as a first step, it is invaluable as a way of
getting to grips with the diversity of opportunities out there in
the marketplace, as well as giving insight into the speed at which
start-up companies move.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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