5 Assets Corporations Can Use To Master The Startup Game

There’s a common belief nowadays, that corporations are too slow to innovate and that entrepreneurship only arises within misfit geniuses working from their parent’s garage. 

Forget all that, it’s a myth. 

I’m about to walk you through the 5 essential corporate advantages you can leverage to accelerate growth and innovate in a way that is more effective than any startup!

But first things first, let’s take a look at some of the market changes that have a lot of corporations shaking in their proverbial boots.

How is the corporate ecosystem changing?

According to the McKinsey Global Institute, the average life-span of an S&P 500 company in 1958 was about 61 years. That same study estimated that by 2016 the life span of S&P 500 companies would fall dramatically down to an average of 18 years.

More recently, a study by Innosight predicted that the lifespan of an S&P 500 company would shrink to a mere 12 years by 2027. The stats are not very encouraging. 

And the change is not just limited to startling reports on the life-span of a corporation. Recent years have been marked by the fall of some of the most prominent industry giants like Toys ‘R’ Us, Sears, and Thomas Cook.

Shrinking company lifespans are generally attributed to a combination of complex factors like rapid shifts in technology, market saturation, changing customer demands, and sudden economic shifts. 

Yet another theory is that in today’s fast-moving, technology-driven ecosystem, corporations have become too large to keep up; slowed by bureaucracy and long chains of command, they end up missing on opportunities to adapt:

  • Using the same outdated business models to tackle new and changing markets;
  • Taking too long to respond to disruptive competitors in low-profit segments;
  • Failing to foresee and invest in new growth areas.

Justin Trudeau described it best during his 2018 World Economic Forum speech:

“The pace of change has never been this fast, yet it will never be this slow again.”

His quote accurately describes how this period of rapid growth, disruption and technological advances we’re currently undergoing, is just the tip of the iceberg.

And amidst all the chaos, are the startups with their lean and agile operations, getting things done with the latest and most innovative strategies and technologies.

The rise of the startups

It’s true, startups have some neat advantages over their more traditional corporate counterparts. 

They start off with an innovative idea, backed by a passionate entrepreneur who then builds a team that believes in the project and they all work together as one towards the goal of scaling the business to meet extraordinary new heights. 

No bureaucracy, no long chains of command. Just agility, resourcefulness, focus, cutting edge technology and a clear grip on the needs of the client. And their small size makes it easier for them to pivot in response to sudden changes in the market. 

It almost sounds like a business fairy tale doesn’t it? And perhaps it is.

According to recent studies by Startup Genome and Small Business Trends, startup failure rates are estimated somewhere between 70% and 90% depending on the industry.

Despite the stats, the startup formula clearly works, as evidenced by some of the more popular cautionary tales — e.g. Airbnb vs traditional hotel chains, Uber vs the taxi and rental car industries, Amazon vs the retail industry, the list goes on and on. 

But are things really that cut and dry? Are corporations just supposed to wait around for the next startup unicorn to come in and steal their market share from under them?

The answer is a definite and resolute no!

How can corporations stay ahead of the startup game?

Despite all the dire stats and trends showing how corporations are just another casualty of “creative destruction”, these companies actually have an arsenal of advantages over their smaller counterparts.

Let’s take a closer look at some of these assets.

The 5 advantages that corporations have over startups

startup game fund

1. Funding

Most startups use growth hacking, cloud computing, and venture capital to gain market entry. They operate on a very limited budget, making the most out of their talent and pushing themselves to innovate.  

In fact, insufficient funding has taken down quite a few promising startups; in some cases, because they take too long to cash in on their product or service (e.g. excessive iteration and re-engineering) and in other cases because they’re unable to raise the capital they need to operate adequately. 

This makes them quite vulnerable when competing directly against a larger and infinitely better-funded corporation. The latter has the monetary resources to invest in things like product development, sales, and marketing giving them the edge they need to compete effectively with any small newcomer moving in on their market shares. 

Additionally, corporations are exempt from having to make the exhausting and continuous run to investors, to ensure funding. This is a huge hack in terms of speed for bigger businesses.

Even one bad decision can send a startup tumbling into bankruptcy, while corporates have a comfortable margin of error in which they can test and develop new strategies.

startup game

2. Brand Trust

One of the benefits of being a globally recognized household name is that it commands trust and has a certain prestige among consumers. The bottom line is that most people prefer to do business with a familiar and reputable company over a new startup they know nothing about.

This makes it very hard for new startups to compete at the same level.

startup game

3. A Customer Base

With the prestige and trust that comes from being a household name comes a loyal customer base.

Young startups are at a disadvantage here because they have to work and spend their already scarce resources on building a customer base. Not having an established customer base makes it harder to find out if there is any real demand for a product or service. 

In addition, many startup founders are reluctant when it comes to getting early client feedback, preferring instead not to go public with their prototype until it’s “ready”. This can be detrimental for a startup in terms of missed opportunities for iteration and product improvements.

Corporations, on the other hand, have a built-in customer base as well as the time and funding needed to invest in large scale market research projects.

This is another big win for corporations.

startup game

4. Channels

Aside from their relatively endless monetary funds, corporations have access to a very important resource when it comes to launching a new business: channel relationships.

Having the right channel relationships can give corporations an edge in terms of accessing the right market knowledge, sales expertise and distribution channels they need to successfully sell their product or service.  

Developing these partnerships takes years and in many cases funding, putting young startups at a significant disadvantage.

startup game

5. People

Having the right talent in place is crucial when it comes to competing in today’s corporate ecosystem. Most corporations have been around for years and have had the time to develop expertise in different areas like finance, marketing, operations, human resources, legal services and IT. 

This type of environment fosters highly loyal and skilled department leaders and employees committed to the success of the company.     

Startups, on the other hand, tend to lack expertise in these areas and don’t usually have the funding to outsource it.

Corporations 5, startups 0…

Play the Startup Game wisely

As you can see, the battle is far from lost when it comes to a corporation’s ability to compete effectively in today’s corporate ecosystem.

Intrapreneurship and startup speed is all you really need not only to survive but to thrive.

Knowing what your strengths are over the newcomers in the market is the first step towards effectively competing with them. It’s all about leveraging your corporate assets wisely and strategically to get the edge over any startup counterpart.

Click here for some practical tips on how to get your company ahead of the startup game.

Want to learn more about your own unique corporate assets? Looking for innovative ways to disrupt your industry and tackle new markets? Let’s talk!

We’ll help you take your innovation strategy to the next level.

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Ritza Suazo

Ritza Suazo

Innovation Journalist