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Large organisations could become increasingly disrupted by startups if they continue to overlook the threat posed by them, according to experts.
Many UK companies are unaware how startups could affect their business, according to research by Dell EMC, which surveyed 500 leaders at large enterprises in the UK and Ireland.
The study revealed that only half of the respondents saw startups as a key challenge. Dayne Turbitt, senior vice-president of Dell EMC’s UK and Ireland enterprise sales division, said firms were more concerned about traditional rivals, and the lack of awareness was “alarming”.
“There is an interesting discussion going on in the industry right now, where you have traditional businesses and some of them are not really recognising startups and the threat that digital plays,” he said. “Some businesses have their head in the sand in the UK.
“Not everyone is putting practices or incubation teams in place to address [the disruption] or taking that threat seriously – and the threat can catch you out very quickly.”
Turbitt said he was surprised how few organisations regarded startups as potential competitors considering how companies such as Uber, Tesla and Airbnb have disrupted markets. However, the survey also found that more than two-thirds of respondents (71%) were concerned that their organisation was under threat from digital transformation.
Turbitt encouraged larger enterprises to work with startups to access new ideas and talent. “In today’s world, if you are not an inquisitive enterprise, you are missing a trick because you get two things,” he said. “One, you get really cool ideas invented that weren’t invented here; and two, you get talent that may or may not choose to work for you naturally.”
Martin Chilcot, founder and CEO of collaboration platform 2degrees, said large organisations are successful at maintaining processes to maximise cash flow, but they struggle with disrupting their own business.
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“What they’re not good at is changing processes and driving change and disrupting,” he told guests at a recent Samsung event. “Disruption is very difficult for them – it’s the innovator’s dilemma that once you make a breakthrough as a business and you get somewhere, it’s very hard, once you are established, to change again.”
Chilcot said this is one of the barriers to companies trying to collaborate with startups, adding that there needs to be a change of culture in large organisations.
“The problem they have is that much of their process is set up to keep small businesses and risk out,” he said. “So small businesses are kept at arm’s length. Even the very process of getting onto the purchase order system is the sort of thing that can kill a small business from the outset, long before anything else happens.”
Kevin Breen, founder of consultancy Cyberactive, said changing organisations’ mindset can drive disruption. “You need people to understand that disruption is positive because if you’re not disrupting, you’re dying,” he said at the event.
“The mindset of people within the big organisation is hugely important. Disruption, by and large, is positive in the modern world at the speed in which it’s moving. If you don’t think that way, there is a problem.”
Phil Lander, head of B2B at Samsung Europe, described collaboration between organisations as “critical” to innovation and said he is seeing a change in approach from large enterprises.
“Innovation is key to survival and traditional businesses have been a little bit hampered with their use of technology,” he said. “We are actually at a tipping point of that changing. We have a great opportunity around technology and innovation and changing the workplace.”