By Andrew Shipilov, Professor of Strategy at INSEAD
Despite all the hype, augmented reality, virtual reality, mixed reality, blockchain and 3D printing have had a small impact on businesses in the last few years. Big data analytics has had the biggest impact, according to a recent survey in which respondents were mostly senior executives and around 50 percent of them worked in large companies.
Big data analytics, cloud and machine learning have all had a significant impact on business in the past two years. Big data analytics seems to have changed almost all business areas (creation of new revenues, core business protection, improvements in operational efficiency, new customer acquisition, increased retention and loyalty of existing customers). Cloud computing primarily helped improve operational efficiency.
Using directors as innovative boards
In addition to partnerships, decision makers increasingly turn to an unusual source of innovative ideas – the board of directors. Traditionally, boards exist to ensure compliance, manage risk and supervise the top management team.
However, over a third of the respondents (working for companies with a board of directors) indicated that their board strongly encouraged top management to pursue risky initiatives that could help reinvent the company’s business. This is an interesting finding: it seems that many companies are using directors as “innovation boards”.
The interviews with top management indicate that, in some companies, board members actively suggest potential alliance partners and review the company’s alliance portfolio. In some firms, the CEO even actively takes his or her board members on tech discovery safaris, so that they can become more acquainted with opportunities (and partnerships) to challenge the CEO later on.
Joining start-up accelerators
Slightly under 40 percent of companies joined start-up accelerators. Some of them were start-ups searching for corporate partners; the others were in the reverse situation. The needs of start-ups and corporate partners were different. Start-ups sought funding, credibility and advice while the corporate partners looked for innovative ideas, exposure to start-up talent and investment opportunities.
However, corporate partners do not automatically benefit from participating in accelerator programs. Even if a company chooses to work with a start-up, it may not necessarily be able to turn the start-up’s ideas in a concrete project. Corporate partners that reported the most satisfaction from start-up accelerator programs had individuals whose formal role was to act as an interface between the chosen start-ups and the rest of the firm. An engagement manager ensures that the company executes on projects with start-ups, as well as learns from them. (We need to increase the sample size to make the comparison statistically meaningful, but this seems like a plausible relationship consistent with our interviews.)
Overall, the survey showed the transformational nature of different digital technologies. Companies have a variety of options to deal with the impact of technologies on their business models: partnerships, corporate board engagement and start-up accelerators. There surely are other ways.
(Part I of this leadership op-ed was published on July 13. The author Andrew Shipilov is a Professor of Strategy and the John H. Loudon Chaired Professor of International Management at INSEAD.)