It can often be challenging for corporations to get started in building their own startups. This is where external partners such as The Bakery come in. External venture-building partners can help corporates build new propositions without being tied down by internal red tape and processes.
As an example, The Bakery has helped a Latin American construction company launch an entirely new business model in the social housing space. Through a lease-to-buy proposition we were able to help this construction company, who originally built social housing catering to the government, to cut out the middleman and lease their homes directly to tenants. The creation of a lease-to-buy proposition also enabled tenants to turn rent into mortgage payments over a period of time. The innovation of the lease-to-buy proposition enabled the construction company to not only diversify from low margin contracts, tendering to the government, but also to disrupt their own environment and create a new market that empowered low-income individuals to become homeowners. Beyond business model innovation, The Bakery was also able to leverage our network of startups and entrepreneurs and introduce this particular client to a technology solution that is able to rate credit worthiness and provide credit insight, regardless of credit history, using AI.
It can be challenging for organisations to adopt a positive mindset towards launching propositions in a space completely new to them. The default reaction may be ambivalence towards new propositions due to fear of cannibalisation of current environments. However, as with the scenario above and the various examples of successful corporate startups – building your own startup or working with an external partner to build a startup can enable both technological innovation and business model innovation over a short period of time. Think of it this way: the first mover advantage is not an unheard of concept. Startups often have the upper hand here, so by engaging in and taking advantage of the startup ecosystem you can ensure that you’re the first!
Innovation teams and ‘intrapreneurs’ often have competing priorities with the parent company. As many of our webinar attendees expressed, they are often torn between combining the expectations of a new target audience to that of their own organisations, in addition to the pressure to innovate despite obligations towards existing targets.
So how can this be overcome? The main advantages large corporations have over typical entrepreneurial founders are their plethora of resources, extensive knowledge of their customers, and insight into the problems/gaps out there in the market today. It is a question of leveraging this knowledge without corporate processes getting in the way.
The core business is immensely important. Getting the buy-in from senior management and stakeholders is integral and can help surpass internal barriers. But how can this be achieved? The goal is to show that corporate startups are additive to the organisation rather than an interference. Ensuring that important decision makers are on the same page and understand the value that corporate startups can bring is the key to success. A good way to frame this is to keep in mind the ‘biggest, hardest goal’ (what success looks like to your organisation), and navigate towards it by starting small.
One key takeaway from our Q&A session was building a startup for the right reasons. If your organisation is looking to build a corporate startup as a ‘quick fix’ or something that will save the business within the next year or two then you may perhaps be a little too late. If anything, these projects should start small, and scale up accordingly just as a typical startup would. This means not only can you succeed faster, but you can also make more iterative but less severe mistakes along the way.
What we have found through helping corporates build startups is that creating new ways of working can help organisations become more agile. Taking small initial steps by learning and pivoting instead of investing large sums of money in upfront research, as well as harnessing internal staff and collaborating with external entrepreneurial talent, is a more effective way to encourage new processes, ideas, creativity and agility.
Beyond the day-to-day pressures a business faces, the added uncertainty due to a global pandemic has created an imperative need to innovate. Now more than ever, it seems that there is no better time for organisations to take advantage of doing things in new ways.
An easy way to get started is to reach out to venture building partners that can help work with your internal teams, as well as employ external entrepreneurial experts, to help deliver and bring your corporate startup to life.
But it is also important to begin by identifying growth areas and opportunities in or adjacent to your market. Things to consider include challenges and threats in your industry, potential disruptors, new markets you want to capture, and even areas that could potentially cannibalise your current offerings. These could all be areas for growth. Most importantly, as mentioned above, it is crucial to get the right people on board.