by Matt Connolly

CIOs seeking partners in innovation should broaden their search

May 03, 2017
InnovationIT LeadershipTechnology Industry

It's unlikely the next billion-dollar startup, or even the one that will simply future-proof your business, is the company next door to your office.

hands work as a team managing business and technology gears and symbols to create innovation
Credit: Thinkstock

Remember when you were a kid and that really attractive girl/boy moved in next door? The one who became your best friend. And then your wife/husband?

No? That’s because it rarely happens. The same is true in the corporate world.

As a CIO you have the mandate to pre-empt and predict future requirements. It’s now a fundamental part of the day job. As is, discovering and exploring partnerships with those ventures who might help fulfil those requirements.

Yet the big corporations have become overly reliant on their connection to the local tech accelerators as a primary source of ‘disruptive innovation.’ It makes for a narrow, parochial lens which, in isolation, can seriously damage a company’s future strategy and ultimately its ability to remain relevant.

A pretty bold statement, I appreciate. 

[Related: –>Digital disruption is coming but most businesses don’t have a plan]

The likelihood that the next billion-dollar startup, or even the one that will simply future-proof your business, is the one next door to your office is pretty slim, sadly.

For years boardrooms have been tasking their teams to discover the ‘next Uber or Airbnb,’ the one that will ‘disrupt our company.’ And, in turn, execs have been building insight and knowledge into the next generation startups and scale-ups.

For the finance folk, the repertoire has evolved to discussing the threats of challenger banks Simple or Monzo, and payment disruptors such as Stripe or Adyen. For insurers, I’m yet to meet one who doesn’t love talking about Oscar and maybe Trōv, while also dropping into conversation how the Lemonade guys are employing an army of behavioral psychologists.

These are the next generation of tech ventures rethinking today’s products, services, technologies and business models. They’re exemplars of using technology in a way that quenches the consumer thirst for immediacy, transparency, mobility and choice.

The question is, why are so few corporations partnering with them?

Of course, the answer is complex and probably needs a post dedicated to answer that, if not a book. In part though, it’s because most companies still don’t truly know them; they just know of them.

[Related: –>Many businesses are just beginning their digital transformation journeys]

Without exception, all of these ventures have secured significant amounts of external capital, they’ve established their strategic, corporate relationships and are well on their way to building a business to compete head to head with the incumbents.

So, just how is one supposed to find the next, next generation?

One key strategy that has been widely adopted is to work with the local tech accelerator. This may be in the form of corporate sponsorship or for senior employees to actively mentor the cohort.

It’s not a bad strategy. There’s a chance to build proximity to a number of early stage ventures before they scale up. Your team can assess the founders behind the business and the product they’re conceieving, and then calculate the potential impact and opportunity. Most importantly, you’ll be able to make an informed choice on whether they’re a suitable partner.

But I go back to the role of the CIO needing to pre-empt and predict future requirements, and to then explore partnerships with those ventures that might help fulfill those requirements.

These are two steps. Get these the wrong way around and it’s the tail wagging the dog.

A local accelerator may be nurturing 10 or so ventures at any given time. Let’s say, and I’m being generous here, that 50 percent are candidates for creating a successful business. How many of these are the right company to help you truly fulfill your strategic requirements? I’d be surprised if any could.

In the 2016 Disrupt 100 (disclaimer, this is a research index my company produces) 76 percent of the businesses with the most potential to influence, change or create new global markets were based outside of the US. Interestingly almost 10 percent were from Israel, a country with a quarter of the population of California.

If you’re based in the US, what about the European or Asian startups that are desperate to realize the opportunity to scale in the States? In fact wherever you’re based, there’s incredible talent creating exceptional, highly disruptive businesses out there – often only held back because of a simple lack of local connections or regulatory knowledge. That’s something you may well have in abundance.

And with tens of millions of new ventures setting up every year, from all around the world, maybe, just maybe, looking outside of your local accelerator for emergent ventures is the way to go.