THE IMPORTANCE OF DIGITALLY ENABLED COLLABORATION

THE IMPORTANCE OF DIGITALLY ENABLED COLLABORATION

Digital innovation is at the heart of improving companies’ performance. Based on our survey of 1,000 large companies and 1,000 entrepreneurs (generally, smaller startups), 97 percent of large companies and 82 percent of entrepreneurs believe that digital innovation is critical or important to their future performance. Collaboration is and will be the engine to accelerate digital innovation—collaboration both inside and outside the “four walls” of a company. The good news is that, as demonstrated by Figure 1, there is a healthy appreciation for working with multiple partners of different kinds.

The promise of collaboration is indeed appealing. According to Figure 2, large companies see collaboration with entrepreneurs as a way to inject new approaches, including technology and talent, into their innovation processes; entrepreneurs see the promise of accelerated commercialization of their products and services through collaboration with large companies. Although the difference between those expectations creates potential misalignments in strategic objectives, our research indicates that 82 percent of large companies admit they can learn from startups/entrepreneurs about how to become a digital business. And half of the large companies feel that they need to work with entrepreneurs to be sufficiently innovative.

For their part, entrepreneurs value collaboration with large companies for several reasons. Foremost is gaining access to a large company’s distribution network and customer base and becoming a supplier. Also important, however, are the opportunities of tapping into market knowledge and securing investment from corporate venture funds. (See Figure 2.)

Digital collaboration boosts economic growth

Large companies in our survey expect to generate 28 percent of total revenues from digital technologies, products and services in the next three years, up from 16 percent today. And collaboration is expected to be a critical way to increase digital revenues. Today, the proportion of revenues generated by collaboration with startups/entrepreneurs on innovation already represents a significant nine percent of large companies’ total revenues. In three years this proportion of collaborative revenues is expected to rise to 12 percent; in five years, as collaboration accelerates, that number is expected to more than double, to 20 percent.

Our economic modeling suggests that the more that companies collaborate in their ecosystem, the more they innovate and grow their revenue. There is a strong correlation between the attitudes that enterprises have about collaboration and the likely levels of innovation, revenue and economic growth. Accenture calculated the Digital Collaboration Index of economies and industrial sectors based on the expected impact of innovation on business performance and investment, the degree of collaboration companies wish to commit to, and the support they feel they get from governments and the broader ecosystem. We found a statistically significant correlation between collaboration, innovation and growth—among both large companies and startups—in all the G20 countries that we analyzed. A generalized increase in digital collaboration to high performance levels in G20 countries could also raise global GDP by almost US$1.5 trillion or 2.2% of world output. This calculation includes the direct impact on GDP of company revenue growth and the indirect gained through broader value chain effects. This is based on the assumption that all entrepreneurs and large companies performed at the same level as today’s top 20 performers in terms of their digital collaboration. Caution: Challenges on the journey to more open innovation Collaboration that brings together very different types of companies with different cultures and organizational structures is not always easy. “Large companies want to work with startups but do not know how,” said the vice president of a Silicon Valley technology campus. An executive from a leading European bank admitted to “lengthy and bureaucratic procedures at large companies” that can inhibit effective collaboration with smaller, nimbler partners. Large companies often do not know how to integrate their walled-off research and operations into a collaborative economy. Three-fourths of large companies feel that their employees are sufficiently entrepreneurial; yet, of all the entrepreneurs who worked in a large company previously, 75 percent left because they felt that they could not be entrepreneurial within the corporate setting. Our research points to three primary challenges large companies and entrepreneurs alike face as they attempt to increase their collaborative work.

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