Large firms need to embrace start-ups to grow: Accenture

82% corporates say they can learn the digital aspect of business from start-ups

As large corporations seek greater revenues, they’re increasingly realising that working with start-ups/entrepreneurs is critical to their own growth and innovation, however, both are failing to use digital collaboration to innovate together.

“Corporates say they can learn from start-ups/ entrepreneurs about how to become a digital business,” reads a report published by Accenture in association with the G20 Young Entrepreneurs Association.

Talking to 1,000 entrepreneurs and the same number of large companies in G20 economies, the survey found that 82 per cent corporates say they can learn to become digital businesses from start-ups.

Large companies expect the revenue generated by collaborating with entrepreneurs will rise from an average of nine per cent today to 20 per cent in five years. Putting that into perspective, these companies are putting $1.5 trillion at risk by collaborating with entrepreneurs.

The survey also found that while 78 per cent of large companies say that working with entrepreneurs is important to their own growth, only 67 per cent of entrepreneurs hold the same view.

Further, 41 per cent large businesses think that smaller companies will support their growth, but only 24 per cent of entrepreneurs believed corporates would do the same for them.

“Corporates should not just fund start-up innovation but actively participate in it by pooling ideas, assets and intellectual property. And it will require them to take new approaches to sharing risks and rewards more equitably,” said Paul Daugherty, chief technology officer, Accenture.

Cultural differences compound this divide, with 75 per cent enterprises believing they are sufficiently entrepreneurial, but 75 per cent of those entrepreneurs who previously worked at large companies saying they left because they did not feel they could be entrepreneurial there.

According to the report, if start-ups and large companies in G20 economies collaborate better, they have the potential to add a further $1.5 trillion to the global economic output.

However, in order to achieve that, Jitendra Kavathekar, managing director, Open Innovation, Accenture believes that, “The journey to open innovation requires large companies to recognize that collaboration cannot continue to be done on their terms, on their premises or just for their benefit.”