Don’t let startups drive you crazy; play to your strengths

Over the past years I have met many executives of corporates (corporate executives). Most of the time smart people managing companies that have been around for many decades. But despite their intelligence and experience, they are afraid. Sometimes they even seem to be paralysed. These executives have seen their markets change. Most of the time driven by technology fueling changing demands from their customers. New offerings by new competitors putting pressure on the products and services to bring to the markets. Most of these executives struggle with these changes and wonder how to cope with them. They fear being disrupted by start-ups. So they try to find an answer and invite me to discuss topics like innovation and transition. Their main question often is; how to make sure we will still exist in 10 years let alone continue the success we have had in the past. A big question.

Corporates often see the threats but miss the opportunities. They often over-rate the success chance of start-ups. At the end of the day there is only a very small number of start ups that are successful. Research from Deloitte and Y Combinator shows most of the start ups fail within 3 years. Only 1–2% becomes a true success. It is not easy to build and maintain a successfull business. Not for corporates but also not for start ups. They all have their own challenges.

So what do I advise these executives? Play to your strengths instead of focussing on your weaknesses. Many corporates have strong brands, a lot of cash (although as Paul Graham pointed out years ago; a cash cow can become a serious monkey on your back), a huge customer base (with strong relationships), deep knowledge about the industry and an organisation with probably more talent and ambition than they are aware of. These are assets that most of the start ups lack. Often one of the reasons why so many fail. Leveraging these assets is a huge competitive advantage corporates have over startups. Corporates should use them. Offensive and not defensive. Not only to protect the business they have today but even more important to create new products and services. So instead of trying to copy the agility of start ups or the ambition and drive of startup founders start with focussing on your own strengths.

Use your cash to invest heavily in R&D or a go to market strategy, use the access to your customer base to introduce new products and services faster than anybody else can do (even if that might compete with your own old products and services) and invite the talent you have in the company to contribute to the long term future of the company and not only focus on today and tomorrow. There are many ways to leverage the advantages corporates have over startups.

The biggest problem for corporates is not the start ups but the corporates themselves.

Written by

Helping start- and scale-ups grow. Active angel investor. Beard in boards. CEO at Funda. Writer of “Suits & Hoodies”.

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