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The secret of corporate startups

The surge in innovative online options in recent years has made boardroom executives of the largest and most powerful companies very nervous. The fear is that six months from now, the company might be swallowed up by a competitor whose existence they did not anticipate, as the Airbnbs of this world have shown. Now’s the time for the established order to take charge…

There is a growing realisation that a business model currently being devised in Silicon Valley, for example, could disrupt the entire market in the not too distant future. Management boards need to anticipate, and even initiate, radical innovation. Of course, that’s easier said than done. It’s almost impossible to achieve the agility required to innovate within the established structure and culture of a large company. Things take too long and ideas lose their edge. An established culture does not allow for the emergence of ‘the new’. DNA cannot be changed. Yes, you can produce an improved version, but not one that is fundamentally different.

Best of both worlds I see a trend developing; large companies that have an idea are choosing to develop it as a startup. That way, they can capitalise on the potential of an agile organisation, intense focus and ambition, high energy levels, quick decision-making, adaptability and relentless determination to overtake the market on both sides. The major advantage that these ‘corporate startups’ have over traditional startups, is that the funding, knowledge and infrastructure are already in place. There is little span-of-control lost in arranging funding. And often, a few bright minds of the parent company are involved.. Talented individuals are often keen to rise to the challenge of applying their knowledge in a new way, and in a completely different context. These corporate start-ups also have faster access to the market and to potential customers looking for new, faster and better ways of doing things, as promised by the startup. This comes with the added benefit of having a well-known company in the background.

These defining features make corporate startups very powerful, in fact, far more powerful than ‘traditional’ startups. They really do have the best of both worlds.

Brand Building Traditional startups have to make business their first priority. They get a cheap logo and develop their own brand and online marketing strategy. They only invest in the brand if the business takes off. And that makes sense. However, if you can get it all right in one go, you can hit the ground running and don’t have to retrace your steps later. For a corporate startup, brand building is as important as ever. In fact, it can make all the difference.

We are currently developing a comprehensive brand identity for two corporate startups. Of course, the fact that the new brand is supported by the parent company is a major advantage. This means that it is not only ‘100% new’, but also ‘powered by’. This inspires confidence in potential customers.

These corporate startups are backed by the parent company (knowledge and funding), yet, at the same time, they are doing something innovative that meets the specific needs of the market. The key challenge is to ensure that this story is sufficiently convincing in terms of the positioning. It’s important to give some thought to how you want to position the startup in relation to your existing brand and the existing digital disruptors.

This process sometimes involves cannibalisation. Companies have to be prepared to accept this. The startup has to be able to pull out all the stops in pursuing its objective. If not, other tech initiatives will take over. Better for you to bite into your own flesh than an outsider.

Opportunity for the established order We will see a lot more of these kinds of startups in years to come. They represent a tremendous opportunity for established companies. To avoid being trumped by an unforeseen competitor, these companies need to surpass themselves in order to forge new ways to the future.

Corporate startups add significant impetus to the existing organisation, not only in terms of business, but also in terms of the corporate culture. They introduce a new dynamic and innovation that is so vital in ensuring the continued life-cycle of established companies. The secret? Make sure you have a razor-sharp and relevant positioning from day one. And let it be your direction, you leading principle in everything you do, from developing your online platform to branding and (online) marketing. That way you will always be one step ahead of the ‘Silicon Valley’ startups.

This blog is written by Tom Dorresteijn, CEO of Studio Dumbar (part of Dept)