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Tue 7 Mar 2017 09:21 AM

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Six reasons large corporates should work with start-ups

SPONSORED CONTENT: Being open to new developments and new trends is essential for any business to survive, grow and thrive. However, most corporates suffer from inefficiencies or long decision making and alignment processes. “We have always been doing it this way” becomes the main killer of innovative thinking and pushes away employees with good potential. Collaborating with or investing in start-ups offer a simple solution. Here are the top 5 reasons for corporates to dive into the start-up economy.

Six reasons large corporates should work with start-ups

Transform, but smartly

By working with a start-up or by incepting a start-up themselves, large corporates can find a way to launch required large-scale transformation projects without disrupting the existing business. It allows them to become fit for the future without having to deal with internal power struggles and personal ambitions by legacy players within the team.

Become bold again

Decision makers in corporate environments often are reluctant to take risks. The perception is that there is a lot at stake. Careers and credibility are built over many years, and nobody wants to lose them by taking one wrong decision. Start-up leaders and team members follow a “fail quickly – recover soon” approach. Hence, they keep trying out new approaches until something works. They are bold in the way the explore new paths and are not afraid to fail – unlike decision makers in large corporates who have a completely different personal risk profile.

Speed

Start-ups are agile. Their teams are usually small, and the team members come from different disciplines. Decision making happens quickly, i.e., there usually is a Founder or a Founders’ team that quickly calls the shots. There are no levels of hierarchy; there is no one that “you have to speak with to not offend him/her”. Start-ups simply do things, and then they see what happens and react quickly. This is a fundamentally different approach to decision making.

Incremental growth

How many disruptive ideas came from large industry incumbents in the past 2-3 decades? How much of their existing business was cannibalised by a new revolutionary product launch they have initiated themselves? The truth is that the big disruptive changes to our world were initiated by start-ups. Investing in start-ups or collaborating with them opens the door to participating in a steep growth curve without exposing too much of the large corporate’s existing business. However, the likelihood of hitting a true disruptor is very low compared to the likelihood of betting on the wrong horse. Corporates must be prepared to spend time and efforts learning before they benefit from investing in start-ups.

Back to the roots

Start-up people usually are intrinsically motivated and aspire to change the world through what they are doing. They are very dynamic and not only go the extra mile; they are prepared to run marathon after marathon. Working with a team of talents from a start-up often inspires staff members at large corporates, and over time they become much more motivated to achieve extraordinary results.

Be on the pulse!

Start-ups follow the latest trends. They are part of an eco-system that mingles and exchanges ideas constantly. Working with a start-up enables a large corporate to gain access to these latest trends before they even become a trend. Making investment decisions in innovation gets another useful source of knowledge and hence becomes less risky.

Muhammad Chbib has been in the online sector in the MENA region since 2011. He is a McKinsey alumnus and currently leads Saudi travel giant Al Tayyar Group’s Online Businesses and is CEO of tajawal.com, which has emerged as the leading Online Travel Platform from the MENA region for the MENA region. For more information: http://www.tajawal.com

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