Start-ups, launch-pads, incubators… these have all been hot topics in business news and politics this year. There’s a huge amount of interest being paid to new businesses that have found early success and a great deal of faith is being put in these saplings to solve unemployment and grow our economy. All we need do is look at the ‘ideas boom’ agenda which apart from a trickling of offerings for education and established businesses, focuses primarily on start-ups.
This is great. Actually it’s more than great, it's brilliant. We should be doing all we can to encourage entrepreneurially-minded people to go into business and make their own living. But, let’s not kid ourselves. Start-ups are not the sole answer to the job crisis, or our economy. They are part of the solution, but the reality is that new businesses can take a long time to grow, and in those early years they’re lucky to have more than 5 people employed. Those which grow rapidly from start-up to large-scale company are few and far between.
What we should be giving equal if not more attention, is to 'scale-ups'. After all, established businesses have a more proven model, they have resources, experience and ultimately they have a greater capacity to employ and grow. In fact, we have over 54, 000 businesses in Australia with more than 20 staff members*. Imagine if each of those businesses were able to employ at least 5 more people. We’d be well on the way to solving our unemployment problem.
So, how can they do it? How can existing businesses grow bigger? The answer is quite simple. They need to innovate. Innovation is change that increases emotional engagement and unlocks consumer value, so it's something that every brand and organisation must focus on. In order to grow larger, existing businesses need to be consistently developing and commercialising new ideas and moreover, in these rapidly changing times, they need to be agile in their innovation activities. Taking lessons from the start-up community, they must start working smarter and faster.
Many businesses are weighed down by bureaucracy, hierarchy and everyday duties which means that idea development is slow and arduous, with ideas being typically incremental, taking years to come to fruition or always being reactive. This is where start-ups have the advantage- they can be pro-active, make decisions fast, learn and move on quickly.
However, despite appearances, it’s not actually that difficult for established businesses to be nimble – agility, just like any business skill, can be taught. What we find works best is a focus on strategy, process and culture. In our experience, these are the three cornerstones of agile innovation, and are what set the disrupters apart from the disrupted.
Firstly, businesses need to understand and implement a company-wide strategy for innovation. Having a strategy in place that balances risk factors with some radical activity and outward looking collaboration gives meaning to ideas and motivation for staff to present them. The second step is to embed an innovation process. A structured process which focusses on market insight, user engagement, experimentation and iteration can be the difference between maintaining the status quo or having the competitive edge.
By giving meaning to ideas through a strategy, and providing a path to fruition through a robust process, gradually a cultural shift can take place. The barriers to idea generation are removed, more time is dedicated to innovation and better ideas, developments and ultimately new opportunities can emerge.
The existing talent, resources and systems within established businesses form a powerful foundation for innovation, enabling challenges to be quickly overcome and opportunities readily seized. These businesses just need to recognise what they can achieve by investing in their future, so that they can re-calibrate their innovation activities to drive growth in the economy, alongside of the start-ups.
So let's start talking more about scale-ups...
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*Based on figures in Australian Bureau of Statistics: 'Counts of Australian Businesses, including Entries and Exits, Jun 2011 to Jun 2015'.