Ask yourself: “Are we in business to create or do we cultivate a culture of protecting market share, revenue, profit or headcount … ?“
For a long time corporations and start-ups had not much in common when it comes to culture, risk appetite, values and economics. The start-up is innovative and entrepreneurial whereas the corporation has to manage (read: protect) its competitive advantage based on intellectual property and a (global) infrastructure for production and distribution.
Notwithstanding the differences, both corporations and start-ups realise the need to enter into a symbiotic relationship. Product Life Cycles (PLCs) are shortening and the rules of business are changing. Corporations start to realize that competitive advantage is no longer a guarantee for sustainable profit. Yet, start-ups are facing the downside of the shortening PLCs too. If a new product or service gets traction, a new venture needs to scale up quickly as the window of opportunity is short. Sooner than ever the newly launched products or services will hit the maturity phase. In the maturity phase products and services are no longer unique, resulting in fierce competition and margin erosion.
For decades successful start-ups were acquired by corporates as an extension to the product or service portfolio. To fully exploit the synergy potential, acquired companies were integrated into the new parent. Albeit good for efficiency, you will have a hard time trying to find what is left over of the once admired entrepreneurship and innovative culture at the acquired start-up. Not surprisingly, some statistics tell us that 80% of those acquisitions fail. Not a good start, now corporates need to innovate more than ever. It is therefore that we take a closer look at the Bay Area ecosystem and its venturing operating model.