Disruption is now a common word in the entrepreneurial and startup communities. It neatly summarises the goal of many fledgling businesses: enter a stagnant field and shake things up – or as stated during our panel, “making the impossible possible”.
For those behind disruptive businesses they see themselves as making a positive impact on an industry while making a profit. They point to examples over recent years of entire industries that have been disrupted by online start-ups and new entrants. These businesses have changed the way we work, travel, pay for things, listen to music, and share news: Google, Skype, iTunes, Spotify, Uber, Airbnb – the list goes on and on.
For the existing incumbents in these sectors, however, the presence of these new kids on the block is often viewed with trepidation and concern. Already operating with a tried and tested business model, their worry is not only financial, but also about sector reputation and market viability. Many still remember the dotcom bubble bursting at the start of the century and are wary of valuations often placed on businesses that could have a disruptive impact on their industry as a whole.
But for companies willing to look at the bigger picture and be receptive, disruptive start-ups can offer a unique opportunity to improve their own businesses. For example, start-ups that focus on disruptive technologies with long-term potential are more likely to end up licensing to incumbents or agreeing to be acquired rather than turning into rivals. While these companies would initially compete with already established organisations, they are motivated by proving the value of their idea to an industry that has not seen it before. However, once that technology is proven, the disruptive start-ups is likely to form alliances or merge with market leaders — pursuing what is called a cooperative commercialisation strategy. As one of our panelists noted, “There is rarely a single outright winner when it comes to tech. What often happens is various elements coming together, both new and established, to make a success”
Quite often, the innovations that are developed by start-ups are a direct result of the mentality, culture and passion that exist in a fresh, new and dynamic environment. They are less concerned by risk or failure because there is little capital and no shareholders. Limited resources breed creativity and force them to find innovative ways of doing things. Individuals working in disruptive start-ups are not motivated by money or glory, but by solving really tough problems that will change the world. These are exactly the types of people who many established organisations need to drive them forward.
Ultimately, and as recognised by the panel, start-ups and established corporations needn’t always be cast as natural enemies; they can both learn from each other—whether it is becoming more lean and agile or learning to run a more profitable, stable business. Business is all about being number one, but as shown above, forming a great relationship can lead to a better, more innovative market for all.