SMEs and start-ups: the perfect combination for disruptive innovations?

C ompanies that want to be competitive in the future must be agile, develop disruptive innovations and drive digital business models forward. It’s best to build a digital platform right away and make your mark according to the industry’s motto “the winner takes it all”. Only companies with new products that directly scale globally will be able to survive. Entrepreneurs in the German middle class nowadays receive these messages at many events, through reports and studies that show them that they still have a lot to do here.

But if the medium-sized company then looks at its company again, it hardly sees any need for change. His established business model works well, his grown customer relationships do not demand the latest digital trends and his own employees have no urge to want to change everything tomorrow. So what do the warnings and recommendations of a digital vision mean for today’s SMB decisions?

Free yourself from the pressure to change

It is true that digitisation will affect every industry and consequently every company and every value chain. It is also true, however, that the required “disruption” often cannot arise from within the company itself. So small and medium-sized companies should take the pressure to change away from their own organisation and bring about change through cooperation. Cooperations are particularly useful if the partners are very different and use them in the sense of their business (for their customers). For medium-sized businesses, cooperation with young, aspiring and innovative start-ups and their founders is therefore particularly suitable. In particular because medium-sized companies, as owner-managed companies, have three decisive factors at their disposal with which they can secure their future viability: Flexibility through short decision paths, established customer relationships based on trust and capital.

Different cultures collide with each other

But why do so few medium-sized companies cooperate with start-ups so far? One reason is certainly the different culture, two worlds meet. Starting with the motivation of today’s company founders after a “quick, successful exit” against medium-sized entrepreneurs who want to build their “company for generations”. The difference also lies in the understanding of innovation; the start-ups plan small, effective innovation steps, always aligned with the next investment round. Medium-sized companies, on the other hand, are more familiar with incremental development and product improvement and need the “perfect product” for an innovation.

In many cases, these contrasts can seem insurmountable, even though they actually have great potential. The question is, how can start-ups and medium-sized companies come together and benefit from each other?

Building flexible value creation networks

The added value of the future will no longer take place in contractually bound chains for years, but will be organised in networks in a much more flexible way. On the one hand, there are neutral intermediaries who are able to communicate between different partners. On the other hand, there are short, order-related contractual relationships that significantly minimize the risk of a partnership.

Using the example of SMEs and start-ups: an established company with a solid product offers complementary products or services of innovative start-ups and thereby develops an innovative solution for the customer together with the start-up companies. This immediately shows the added value of the collaboration.

Conclusion – Investment in cooperations is a step towards competitiveness

So let’s summarize: in an AgilEcosystem, value creation networks in particular have the greatest opportunities that combine the advantages of different competencies of established companies with the disruptive potential of innovative start-ups. For this to work, we need to invest in the openness of our own organization and the competence to efficiently organize cooperations.

We need cooperation competence and a culture of openness in our companies!

Dr. Alexander Bode