Why Are Corporates Struggling to Innovate and How Can They Change The Game

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It’s a tough time for corporates right now. Business models are being disrupted by digital transformation, consumers are more empowered than ever and traditional markets are being re-purposed by tech-savvy, free-thinking startups. From Netflix to Grab, WeChat to Slack, it is the new breed of tech giants and startups that are leading the race.

Corporates can lead the race but only if they approach innovation very differently.

The challenges facing corporates

  • Traditional industries are being disrupted by more agile, creative and well-funded startups
  • Digital and mobile-first companies continue to take market share and increase their command global consumers, content and business services
  • Hype surrounding social media and digital innovation is often promoted by digital agencies, making it hard for corporates to move away from hype to something more sustainable and effective
  • Corporates are allocating valuable resources to harness digital innovation, yet the existing approach seldom results in disruptive and substantive change for corporates

With a continued flow of venture money and brainpower into high-growth technology firms and startups, the challenges for corporates will continue to get worse.

Why are corporates having such a hard time?

There are many reasons sighted for why corporates are having a hard time. Observers often list operational, financial, structural or leadership issues as the cause. (This Venture Beat article highlights some of these issues in more detail)

Whilst systemic issues certainly exist, the most powerful and clear cause that plagues almost every corporate on the planet is one of Mindset and Ambition. 

Whilst systemic issues certainly exist, the most powerful and clear cause that plagues almost every corporate on the planet is not one of ability, but one of Mindset and Ambition.


The mindset problem

Despite many visionary and creative people throughout all ranks of corporate enterprise, the general mindset is that they are very different to startups. The consensus is they must operate differently. Corporates often feel that executing a disruptive idea is hard because of bureaucracy and their ability to execute.  There is an acceptance that maintaining existing business models is the right thing to do because it is what they do best. There is a rather defeatist mindset that despite attempts to innovate, they are just playing a different game to that of a startup.  All too often, this causes corporates to watch disruption from the sidelines instead of leading the charge.

The ambition problem

Corporates contain many budding intrapreneurs and many employees who know that change is needed. There will be plans and strategies being born out of consultant-led workshops intent on helping them re-imagine their company. Even the most forward-thinking companies are right now building product innovations and digital strategies intended to take them forward. The problem is not one of trying, it is one of ambition from both the companies themselves and many of the advisors they are using. Ambition in the corporate world is restricted to the immediate markets they serve and to the trends disrupting their industry in the startup world (be it mobile, social media or new technologies). Ambition stops within their current ecosystem and known technology.

Many traditional businesses such a publishing, banking and consumer goods rarely lead disruptive innovation.  Some argue this is to be expected given they are not inherently technology focused in the first place. Expected or not, this lack of ambition has created huge opportunities for startups to disrupt. The evolution of  Tencent’s chat-service WeChat into Chinese internet-bank WeBank, is a striking example of what can happen. Traditional businesses need to expand their ambitions far beyond the known boundaries of their industry.

Corporates from tech-centric industries, such as telecoms and IT hardware, are expected to fair a little better. They have delivered more mass-market digital innovations such the mobile phone and home broadband. Yet despite a more recent history of innovation, they too often lack ambition.  New products and services often follow hype instead of creating something new. They often miss future market changes because they hang on to past innovations and historic market trends. The result is that within a few years, the new products hailing from tech-centric corporates will yet again be made obsolete by the next new startup innovation or consumer change.

There are many examples of lost opportunity and wasted investment. Consider how many set-top boxes and streaming services have died whilst Netflix prospers. Consider how many telco-led chat services have fallen to WhatsApp and WeChat. Real ambition for disruption and change is still mainly the preserve of startups.

What can corporates do to change the game?

There is huge potential contained within large corporates. They have huge untapped assets in the form of knowledge, people, brands and capital. In fact, almost every corporate out there is sitting on a startup goldmine, it just needs to be unleashed. Despite all the challenges corporates are facing, there is nothing inevitable about business. Quite the contrary, corporates are in a great position to play a different game and win.

Almost every corporate out there is sitting on a startup goldmine, it just needs to be unleashed.


To succeed, corporates must apply the following rules:

Change of mindset
Corporates must believe that they can operate and achieve the same successes as any startup. From every junior staff member to the Board, corporates must believe in themselves and the potential they have. Afterall, corporates start with much more capacity, assets and knowledge than any startup I have ever seen. It is not a lack of operational, creative or technical skills that cause problems, it is the mindset that prevents them from turning assets into a disruptive business that equals any startup out there. Starting with the key decision makers and CxOs, once the mindset has changed, you have overcome the main barrier to changing the game.

E.g. The largest music companies could have built Spotify. The fact they didn’t is partly down to the fact they never even considered it.

Identify existing value 
Corporates should look at the inherent assets they have i.e. The value that is generated from day to day activities. This might be a customer service process, a collection of products, the knowledge staff gain from daily activities.  The reality is that many corporates are sitting on exactly the assets needed to build a highly disruptive and powerful new business.

E.g. A large media company has access to hundreds of journalists who search through reams of online articles every day. The most valuable articles could be shared by the journalists and packaged into a curated mobile news app. Unlike most blue-sky innovations, this would require little change to BAU, yet the resulting product could be a future news platform (Think Flipboard with journalistic curation)

Embrace entrepreneurs  
Corporates should enlist the help of proven entrepreneurs. They should seek out the personalities that risk everything to challenge convention and build companies from the ground up. They should find individuals that have built global digital platforms, groundbreaking mobile apps and other disruptive technology businesses.  They should re-think their consulting strategy, to have less dependence on general innovation companies and digital consultancies, towards entrepreneurs who have the real battle scars of success and failure in the startup world.

Be highly ambitious
Corporates should approach innovation and growth with the same passion and global ambition as a startup. Ambition to disrupt. Ambition to change an industry. Ambition to capture the highest possible consumer audience, even if that means building a business used by your competitors.

E.g. A telecommunications company may build a set-top box for its local (country level) consumer base or a chat app only for its device subscribers. What they should do instead is build Netflix or Whatsapp. Instead of battling to maintain their traditional revenue channels in the face of disruptive communication apps, they would actually own it. There is no reason at all why the growth ambition of the next corporate innovation should not be the same as the startups that are disrupting every industry.

The situation for corporates will improve hugely if they choose to think more like a startup, unleash ambition and bring entrepreneurs into their advisory structures.

The future is bright for startups and corporates alike

Many corporates have already been brave enough to break perceptions and give startups a run for their money. Take Nike with their Nike+ fitness ecosystem. This could have come from the start-up melting pot yet instead it was Nike who took the lead.

It is worth considering the state of the corporate world had they created the startups that are disrupting their industries right now. It is worth considering a world in which a corporate had built the social media companies that now command so much of their attention and resources. Companies like Facebook, Snapchat or Instagram could have been started by a bank, a media company or an advertising firm. There is absolutely no reason why a corporate couldn’t have started and built a company like this. The only difference is they would be playing the game instead of paying for sideline seats.

  • What if Universal or Sony had started Spotify?
  • What if Blockbusters or Warner Brothers had started Netflix?
  • What if Unilever had started Ocado?
  • What if Comfort DeGro had started Grab? (Nod to my Singapore base)
  • What if New York Times had started Flipboard?
  • What if HSBC had started Atom Bank?
  • What if British Telecom had started WhatsApp?
  • What if LVMH had started ASOS?


Nothing is to be taken away from the startup ecosystem. They build businesses with wonder, creativity and progression for all of us to benefit from. They transform the world we live in. They challenge convention. They are here to stay. The more innovation coming from both corporates and startups, the better the world will be for consumer, corporate shareholders and staff. There will come a time where corporates and startups don’t look so different. Where they are all moving forward with ambition and innovation.

There will come a time where corporates and startups don't look so different. Where they are all moving forward with ambition and innovation.
Stephen Barling. MD and Chief Creative @ Greyspace
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