BackA tale of two ITs and a $1.5 trillion opportunity
Accenture said in a report that increase in digital collaboration to high performance levels in G20 countries could raise GDP by almost $1.5 trillion
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Bengaluru: Almost every day there seems to be news about collaboration between “enterprises" (big businesses) and start-ups, be it corporate incubators and accelerators (like Target Corporation’s accelerator programme), corporate venture investment announcements (like Wipro Ltd’s Wipro Ventures, which has a $100 million to invest in start-ups), or a greater emphasis on ‘entrepreneurial spirit’ within large companies.
However, this is not enough, and greater collaboration—joint innovation between the two stakeholders, and a broader technology-ecosystem level collaboration—can lead to greater growth at companies, according to a report, ‘Harnessing the Power of Entrepreneurs to Open Innovation’, by consulting firm Accenture Plc, for which it surveyed 1,000 large companies and 1,000 small start-ups across G20 nations.
Accenture found that a generalized increase in digital collaboration to high performance levels in G20 countries could raise global growth domestic product (GDP) by almost $1.5 trillion, through direct and indirect benefits. For India, this would mean a raise of about $52 billion to the GDP.
The consulting giant calculated a Digital Collaboration Index based on the expected impact of innovation on business performance and investment, the degree of collaboration companies wish to commit to, and the support they feel they get from governments and the broader ecosystem.
Accenture found a statistically significant correlation between collaboration, innovation and growth. Those performing in the top 20%, according to the index, achieved higher levels of revenue growth, about 4% more than the companies (small and large) that weren’t focused on collaboration.
In this tale of two ITs—One that is innovating and turning established technologies on their heads and, to use a word that has now become almost clichéd, ‘disrupting’ every day, and the one that is still moored in legacy systems and turnaround times for software products that is in months, if not years—smaller disruptors are asking themselves how they can effectively commercialise their offerings and scale, and large companies are wondering how they can bring entrepreneurial innovation within their organisations.
The report finds that closer digital collaboration will solve this. By this, they mean working with start-ups as partners, and on common solutions rather than asking, “How can I get others to help me do what I already want to do?" and only leveraging them for specific problems.
This approach requires risk-sharing, and working around the barriers that such collaboration brings to the fore—defining intellectual property management process (financials, royalties, and future exploitation of IP/product), aligning development timelines with commercialization goals, cultural issues with start-ups from closer contractual relationship and potential conflicts of interest.
Creating confidence in entrepreneurs and working on cultural barriers may be the key, as only 57% of entrepreneurial organisations that Accenture surveyed felt their partnership with large enterprises was a success, compared with 71% of the enterprises.
Despite all this, joint innovation or co-creation is seen as the most effective model of collaboration by all organizations Accenture surveyed—86% of large companies and 91% of entrepreneurs. The report said that although only about 26% of large companies currently collaborate in this way, 38% expect to do so within the next three years.
“If the ultimate goal is ecosystem innovation—a more open, equitable form of collaboration involving multiple partners on platform-based ecosystems—let’s be realistic. Most large and small enterprises are not even perfecting today’s requirements for more modest, direct and predictable forms of joint innovation between smaller, closed groups of partners," said the report.
It then recommends that, to create a foundation for this larger ecosystem innovation, all stakeholders first focus on opening up effective two-way collaboration by adapting culture, creating open networks and partnering with others.
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