Studio Graphene: Why corporates should look to startups to spur their innovation
According to the American Enterprise Institute (AEI), only 60 of the Fortune 500 companies listed in 1955 still retain their place amongst the business elite. While for some of these companies, the decline was inevitable, for many it reflects their reluctance to embrace disruptive trends that have radically transformed the business environment and the nature of consumer demands.
In their wake has come a new generation of corporate titans including tech giants like Facebook, Amazon and Netflix who have rapidly become the dominant players in their respective industries. While many of these companies had humble beginnings as startups, once they went public, they begin to adopt a more corporate mentality in order to deliver regular profits for shareholders. Tesla Founder and CEO Elon Musk is a high-profile critic of this trend, saying that: “Being public puts enormous pressure on Tesla to make decisions that may be right for a given quarter, but not necessarily right in the long-term.”
Indeed, part of what marks Elon Musk out as such a successful entrepreneur is that he has retained his entrepreneurial spirit despite Tesla now being one of the biggest companies in the world. Many of his contemporaries, visionary leaders who took their companies from startup to the upper echelons of the Fortune 500, have long since been replaced by process-oriented executives with corporate backgrounds.
As someone who made the leap from the corporate world of management consultancy into the dynamic startup landscape, I know how difficult it is for companies to retain their dynamism as they transition from agile challenger to established incumbent. While many founders bemoan the lack of a level playing field when it comes to the resources available to large corporates, being small can be an advantage for innovative startups as they are neither too unwieldy nor too conservative to implement new ideas.
What do startups have to offer?
So, if the balance of power is currently tipping away from large corporates it’s worth asking what about startups makes them so innovative. Startups generally consist of a small team which means they can remain responsive to changes in the market. They also depend for their vitality on identifying new, more efficient methods which means they usually make for more cost-effective enterprises. As private entities, startups can make decisions with the long-term in mind as they don’t have to worry about the impact of quarterly performance on their share price.
In my work with startups, I’ve seen how the need to break new ground affects the culture of many successful startups. Indeed, the most successful see their lack of scale as a virtue because it makes for clear-eyed decision-making.
However, even if corporates were to acknowledge the merits of this dynamic approach, they are fundamentally prevented by their size, structure and priorities from truly adopting a startup mentality. Simply put, innovation in the corporate world equates to risk. Risk of wasted resources, both in terms of dollars and man-hours. Risk of reputational damage if a creative project fails to bear fruit and in exceptional cases, the risk that a new product or technology will be so successful that it will reshape the industry, making it less favorable to the company who developed it.
Why do big corporates fail to innovate?
While large companies are too big and have too much on the line to be truly creative, total disregard for innovation is not an option. These days, companies understand that they have to continue innovating if they want to guard against the threat of dynamic new challengers. Of course, casting aside your traditional ways of working comes with an immense amount of risk and so it’s understandable that many executives are reluctant to wholeheartedly commit to new projects.
Some companies reach a compromise that allows them to balance these competing objectives. For example, by implementing schemes that allow employees to strike a balance between their work on existing projects and on developing new ideas. Google’s ‘20% time’ is probably the most feted example as the company’s policy of allowing engineers to devote 20% of their time to personal projects resulted in some of the company's most successful products such as Gmail, AdSense and Google Talks.
While this can approach can be a fruitful one, it’s worth noting that many companies have abandoned this model as they have become large global businesses. Corporates like Google now span too many sectors and jurisdictions to rely on such an ad hoc approach to innovation. Consequently, they need to find a framework that allows them to continue pushing technological boundaries while still focusing on maximising the value of their major revenue-generating products.
Why should large corporations look to collaborate?
The reality is that the corporate world is being disrupted at an exciting pace. Therefore, I believe that established companies would be wise to outsource innovation by partnering with young and dynamic startups. Ultimately, these partnerships have the potential to create mutual value by granting the startup access to capital and distribution networks while giving the corporate a chance to benefit from innovative new projects.
This change in corporate culture takes many forms including mentorship programmes and in-house tech incubators but strategic partnerships are gradually emerging as the most effective way of leveraging a startups’ disruptive potential.
As corporations become larger and more results-oriented it makes it more difficult for innovative ideas to come to fruition. That’s why I believe forward-thinking companies are increasingly looking to collaboration with startups as the solution. After all, there’s nothing to suggest that corporates and startups have to co-exist as separate entities. In the digital age, size doesn’t guarantee future success. If large companies don’t take the necessary action to stay one step ahead, they’ll soon find themselves falling behind.
Marketing matters: from IBM to Kyndryl
Prior to joining Kyndryl as Chief Marketing Officer, Maria had a 25-year career at IBM, most recently as the tech giant’s CMO where she oversaw all marketing professionals and activities across North America, Canada and Latin America. She has held senior global marketing positions in a variety of disciplines and business units across IBM, most notably strategic initiatives in Smarter Cities and Watson Customer Engagement, as well as leading teams in services, business analytics, and mobile and industry solutions. She is known for her work with teams to leverage data, analytics and cloud technologies to build deeper engagements with customers and partners.
With a passion for marketing, business and people, and a recognized expert in data-driven marketing and brand engagement, Maria talks to Business Chief about her new role, her leadership style and what success means to her.
You've recently moved from IBM to Kyndryl, joining as CMO. Tell us about this exciting new role?
I’m Chief Marketing Officer for Kyndryl, the independent company that will be created following the separation from IBM of its Managed Infrastructure Services business, expected to occur by the end of 2021. My role is to plan, develop, and execute Kyndryl's marketing and advertising initiatives. This includes building a company culture and brand identity on which we base our marketing and advertising strategy.
We have an amazing opportunity ahead at Kyndryl to create a company brand that will stand apart in the market by leading with our people first. Once we are an independent company, each Kyndryl employee will advance the vital systems that power human progress. Our people are devoted, restless, empathetic, and anticipatory – key qualities needed as we build on existing customer relationships and cultivate new ones. Our people are at the heart of this business and I am deeply hopeful and excited for our future.
What experiences have helped prepare you for this new opportunity?
I’ve had a very rich and diverse career history at IBM that has lasted 25+ years. I started out in sales but landed explored opportunities at IBM in different roles, business units, geographies, and functions. Marketing and business are my passions and I landed on Marketing because it allowed me to utilize both my left and right brain, bringing together art and science. In college, I was no tonly a business major, but an art major. I love marketing because I can leverage my extensive knowledge of business, while also being able to think openly and creatively.
The opportunities I was given during my time at IBM and my natural curiosity have led me to the path I’m on now and there’s no better next career step than a once-in-a-lifetime-opportunity to help launch a company. The core of my role at Kyndryl is to create a culture centered on our people and growing up in my career at IBM has allowed me to see first-hand how to prioritize people and ensure they are at the heart of progress in everything Kyndryl will do.
How would you describe your leadership style?
I believe that people aren't your greatest assets, they are your only assets. My platform and background for leadership has always been grounded in authenticity to who I am and centered on diversity and inclusion. I immigrated to the US from Chile when I was 10 years old and so I know the power and beauty that comes from leaning into what makes you different from other people, and that's what I want every person in my marketing organization to feel – the value in bringing their most authentic self to work every day. The way our employees feel when they show up for themselves authentically is how they will also show up for our customers, and strong relationships drive growth.
I think this is especially true in light of a world forever changed by the pandemic. Living through such an unprecedented time has reinforced that we are all humans. We can't lead or care for one another without empathy and I think leaders everywhere have been reminded of this.
What’s the best leadership advice you’ve received?
When I was growing up as an immigrant in North Carolina, I often wanted to be just like everyone else. But my mother always told me: Be unique, be memorable – you have an authentic view and experience of the world that no one else will ever have, so don't try to be anyone else but you.
What does success look like to you?
I think the concept of success is multi-faceted. From a career perspective, being in a job where you're respected and appreciated, and where you can see how your contributions are providing value by motivating your teams to be better – that's success! From a personal perspective, there is no greater accomplishment than investing in the next generation. I love mentoring younger professionals – they are the future. I want my legacy as a leader to include providing value in work culture, but also in leaving a personal impact on the lives of professionals who will carry the workforce forward. Finding a position in life with a job and company that offers me a chance at all of that is what success looks like to me.
What advice would you give to your younger self just starting out in the industry?
I've always been a naturally curious person and it's easy for me to over-commit to projects that pique my interest. I've learned over years of practice how to manage that, so to my younger self I’d say… prioritize the things that are most important, and then become amazing at those things.