Informed Creativity Bridges Disconnect Between Old Money and Young Disruption

January 4, 2019 

 

The May-December business relationships between conglomerate corporations and young upstarts will continue to thrive across the gamut of markets in 2019, with traditional VCs playing the role of matchmaker, pairing unique skillsets to leverage innovation. VCs are reconciling the long-existing disconnect between old money and young disruption. 

 

The staggering pace and risky implications of enterprise transformation and the adoption of corporate venturing are difficult to fully grasp in real time. Last year, the tech consensus predicted that 2018 would foster a continued spike in corporate venturing, and they weren’t wrong. Corporate investments in peripheral R&D and acquisition of external innovation buoyed to levels reminiscent of the dotcom bubble. As of April 2018, CVCs were responsible for 26 percent of global deals according to KPMG. 

 

”The fusion of entrepreneurial expertise with design and build capability will help large established companies think and act at the same pace that start-ups do, and we will help them transform themselves before outside competitors challenge their markets,” said Jeff Schumacher, founder and CEO of BCG Digital Ventures. 

 

Look for traditional VCs to broker unique opportunities for corporations looking to adopt internal incubation programs. Placing powerful innovation labs in legacy companies provides enterprises with the fast-paced dexterity and entrepreneurial culture of today’s popular startups. This mutually beneficial arrangement is designed to foster, bankroll, and/or bail out underresourced startups. The corporation, in turn, comes into a diversified portfolio with transformation and growth opportunities. 

 

Post-merger integration will determine CVC longevity

The pressure is on to get the new arm operating in sync with the corporate core. So, how do the two parties extract the most value from their consolidated ventures in 2019? 

 

The lifespan of combined ventures relies on the success of the post-merger integration (PMI). Though no two PMIs are identical, the Boston Consulting Group (BCG) has created a framework for successful M&A assimilation, and it follows a three-phase process that consists of transparent direction, capturing value, and a strong organization change management. 

 

Coke Culture in 2019

A co-op space at Coca-Cola was opened to employees from across the organization to facilitate innovative collaboration amongst different teams. This creative environment hosts unstructured meetings, hackathons and internal Startup Weekends, where employees can work together to develop their own entrepreneurial ideas. Airbus and Cisco have adopted similar accelerators for employees. 

 

Futurist corporate culture is becoming a reflection of a leadership that promotes intrepreneurship and innovation, endorses risk taking, and empowers employees from top to bottom. According to Rich Lewis, lead recruiter from BCGDV Sydney, the most  important characteristics that companies should seek out in talent are entrepreneurial and ambitious mindsets, people who are consultative and methodical in their approaches, a fascination in digital and bleeding-edge technologies and customer-led thinking, the ability to embrace and thrive in ambiguity, and a deep, mutual respect for one another. 

 

Comprehensive design strategies employ informed creativity 

According to Schumacher, longevity requires more than visibility and resources. “Substantial market endurance demands an evolutionary and comprehensive business outlook.”

 

This big-picture, multidisciplinary philosophy could be the corporate glue of 2019. Legacy companies curious about corporate venturing might have success investing in what Kevin Bethune, VP of Strategic Design at BCGDV calls the currency to “make sparks and connections from rich sources of data.” Bethune suggests that an indicator of disruptive potential is an informed creative strategy developed by diverse thinkers, and executed by a cross-functional design team. 

 

Informed creativity and comprehensive design strategies will manifest swift iteration and cleaner designs, which will in turn speed up the prototyping and modeling phases. Success in the earlier phases can alleviate the challenges typical of manufacturing logistics, pricing, and deciding when it’s the right time to ship.

 

APIs, blockchains, and healthcare platforms top 2019 wisest bets for investment and incubation

What could an empowered design community do for a $3.5 trillion market in 2019? If analysts are correct, trends in sophisticated technology will increase by almost 3 percent in the coming year, with cloud computing models and SaaS products burning the biggest hole in the pockets of consumers (Gartner).

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Shumacher implied that BCGDV is looking to develop comprehensive API models in 2019 rather than single-purpose tools, telling the audience, “We’re investing in platforms, not apps.” 

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These platforms will be especially popular in 2019 as the demand for external app development tools are expected to soar as a result of fewer in-house capabilities (Gartner). The $625 million deal between Apigee and Google validates the API economy, estimated to be a $3 billion market (Forrester). 

 

Look for these additional trends and disruptive players in 2019: 

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• Mumba Cloud is a workforce mobile apps development, and an example of a well-funded venture that is poised to disrupt this sector; a market that BCGCV’s Asia director Angelo Demasi anticipates will double by 2021. ​

 

• Digital Profile is a revolutionary algorithmic professional matchmaker that eliminates the impersonal and time-wasting third-party recruiter, restoring direct communication to the talent acquisition and job hunting experiences.

 

• CES nominee for Baby Tech Award,  XinKaishi is an egg-sized acoustic fetal listening device that offers patients at-home convenience and emotional empowerment; a technology deserving of the spotlight. 

 

• A dedicated engineering team addressing the shortcomings of life-saving treatments in third-world or disaster-ridden areas have prototyped Coolar, a technology intended for the off-grid refrigeration of medical supplies.  

 

• Futurist jewelry is being created in limited editions at a slashed production cost with 3D-printed design. VOJD has collaborated with Alexander McQueen to create the first product of its kind available in stores. The McQueen umbrella is retailing for $595. 

 

• Looklet is a smart technology that offers retailers and consumers tech-enabled studio production and styling tools with unimaginable digital fashion imagery. 

 

 

Earlier this month, BCG Perspectives bared the undeniable risks of enterprise finances, operations, customer data, R&D, intellectual property, and brand reputation; a problem that could rise to $6 trillion by 2021. Though there are ample companies fighting for visibility in this space, innovators like One World Identity have the potential to create one-stop blockchain solutions for identity challenges in online commerce.

 

For a continued narrative about ongoing innovation and disruption trends for 2019, stay connected with BCG Perspectives’  ongoing conversation regarding industry trends, business topics and dynamic viewpoints.