Competitive advantage is a fundamental driver of all successful companies. However, maintaining that advantage is becoming increasingly difficult as emerging technologies generate disruptive market forces more powerful and dynamic than ever before.
Transformational technologies such as artificial intelligence, the Internet of Things, augmented/virtual reality and 5G are driving innovation at an unprecedented pace. As technology breaks down competitive barriers, large corporations can no longer rely on operational scale and market share to fend off competition.
For corporations, success may be tied to partners in the form of innovative startups and emerging tech businesses. Their worlds couldn’t be more different culturally, operationally and economically, yet an agile, innovative startup tech company can bring cutting-edge solutions to major business problems. At times, this results in megadeals such as Amazon’s acquisition of Ring to bolster home and package delivery security.
Ring acquired Cleveland-based startup Wireless Environment just before the Amazon transaction. And, Medtronic’s acquisition of CardioInsight, also a Cleveland-based startup, helped enhance Medtronic’s atrial fibrillation solutions. These deals resulted from a dedicated Corporate Venture and Innovation (CVI) approach to engaging with entrepreneurial ventures.
CVI programs are a massive movement. In 2019, corporate-based venture capital investment exceeded $50 billion. This reflects corporations’ commitment to sourcing innovation externally, rapidly changing the dynamics of virtually every industry sector. CVI programs are becoming must-have corporate initiatives that go beyond mergers and acquisitions to provide business leaders with emerging trend insights, tech-based solutions to operational challenges and venture capital-oriented investing opportunities.
CVI programs provide increased agility, creativity and access to market-changing solutions, but to be successful, they must have C-suite buy-in and take a comprehensive approach that includes:
- Establishing programmatic goals aligned with company vision, mission and financial objectives.
- Identifying and prioritizing specific market and operational pain points tied to competitive advantage.
- Developing (or outsourcing) a process to source tech-oriented solutions from within, as well as from a broad field of local, national and global startups.
- Identifying technologies and entrepreneurial firms with the highest-quality solutions, talent and commercial potential to add value.
- Pursuing vendor relationships and/or pilot engagements to validate solutions in a true market setting.
- Applying insights gained from the CVI process to inform corporate strategy, innovation and thought leadership.
A comprehensive CVI strategy can function as a window into rapidly emerging market trends and technologies that help forecast tomorrow’s competitive landscape. Early stage entrepreneurial energy can help established businesses see competitive threats on the horizon and be better prepared to respond.
Although the entrepreneurial and corporate worlds are drastically different, bringing them together can be a powerful solution, driving state-of-the-art innovation and significant growth. JumpStart is committed to bringing these worlds together, and we are happy to discuss how harnessing that power can benefit big business and the region as a whole.