By living in two worlds at once—both the corporate and start up worlds—Author Dave Knox sees the fruitful interplay between the two. He sees the way startups seek to disrupt large organizations, and how big companies attempt to build “moats” around their products and services.
Venture Capital as RND.
The internet has proven to be “a dramatic leveling of the playing field,” he said in his recent presentation at the Back End of Innovation conference. “The Turn,” is a poker term used to describe when an additional community card is put into play. The irony here is that the corporations are at “the turn,” without realizing the game has changed. This is blinding them from being able to see the fierce competition for what it is.
“The companies that annually get ranked as most innovative spend three-to-four more times on RND than marketing, the reverse of most consumer product goods companies,” he claims as a telltale sign of this change. “Now venture capital is serving as the funding agent of RND.”
Domino Theory.
What dominos will knock you down? “The speed of change is always accelerating, and the dominos will continue to fall closer and closer to your bottom line.” What dominos will fall on your category? Can you see them coming? Are there blinders on? Denial? Or do you face these threats proactively?
Total Available Market.
“If we were innovators 100 years ago, we would be in the horse business. How do you fast forward 100 years? What are both the creative and destructive forces? If you look at agriculture, which was most of culture, you’d see 1,000,000 tractors, but miss all of the cars of those who use them for transportation in cities.”
Market Intelligence.
“Look at your monthly bill,” he encourages. “Think about [it] - how many monthly subscriptions are you paying?” Venture Capitalists have brought about this change. Market intelligence is the “ability to see the future of your business before it happens,” and is what venture capitalists have been doing for sometime. “They bet on the probable future they are helping to create.”
Given these forces, here’s what business leaders can do:
- Make innovation-driven acquisitions.
- Invest in change.
- Make partnerships as innovations.
- Disrupt the disruptor.
While there is no magic bullet, these four forces can empower large companies to out-compete the nimble startups.
Michael Graber is the managing partner of the Southern Growth Studio, an insight, innovation, and strategy firm based in Memphis, TN, and the author of Going Electric. Visit www.southerngrowthstudio.com