Large Companies and Entrepreneurs Face Cultural Barriers to Achieving Open Innovation, Finds Accenture Study
October 06 2015 - 8:01AM
Business Wire
Failure to use digital collaboration puts at
risk a $1.5 trillion growth opportunity
As corporations seek greater revenues from working with
entrepreneurs, large and small businesses are failing to use
digital collaboration to innovate together, according to new
research by Accenture (NYSE:ACN). As a result, they are putting at
risk a $1.5 trillion growth opportunity, equivalent to 2.2 percent
of global GDP. In the United States, $433 billion of potential
growth is at risk, equivalent of 2.7 percent of the U.S.
economy.
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The report, “Harnessing the Power of Entrepreneurs to Open
Innovation,” published in association with the G20 Young
Entrepreneurs Alliance, surveyed more than 1,000 entrepreneurs and
1,000 large companies in the G20 economies. It found that 82
percent of corporates say they can learn from startups/
entrepreneurs about how to become a digital business. And they
expect the proportion of their revenues generated by collaboration
with entrepreneurs to rise from an average of 9 percent today to 20
percent in five years.
Large companies and entrepreneurs agree that today’s corporate
venturing and incubator models of collaboration will increasingly
give way to more open and joint innovation, whereby corporates
don’t just fund startups, but use digital collaboration to jointly
create innovations in broader networks of partners. However,
corporates and entrepreneurs don’t see eye to eye on how to achieve
that.
While 78 percent of large companies say that working with
entrepreneurs is important or critical to their own growth and
innovation, only 67 percent of entrepreneurs hold that view. And
while 41 percent of corporates believe small companies are
committed to supporting their growth as they work together, only
one quarter (24 percent) of entrepreneurs think large companies are
likewise committed to supporting the growth of their smaller
partners. Further, entrepreneurs and startups are four times more
likely than corporates to say their counterparts lack commitment to
working together (29 percent versus 7 percent).
Cultural differences compound the divisions. The report found
that, while 75 percent of large companies judge themselves as
sufficiently entrepreneurial, 75 percent of those entrepreneurs who
previously worked at large companies left because they did not feel
they could be entrepreneurial there.
“In the digital economy, corporations have the opportunity to
disrupt their markets by working more effectively with innovative
startups to jointly create new products and services,’ says Paul
Daugherty, Chief Technology Officer, Accenture. “That means
corporates should not just fund startup innovation, but actively
participate in it by pooling ideas, assets and intellectual
property. And it will require them to take new approaches to
sharing risks and rewards more equitably.”
Digital collaboration boosts growth
The report also reveals that greater digital collaboration
between G20 large companies and entrepreneurs could result in an
additional $1.5 trillion in global economic output, according to
Accenture’s Digital Collaboration Index and economic model,
equivalent to a 2.2 percent uplift to global GDP. $779 billion of
the total would be generated directly through greater revenues by
large companies, and $671 billion would be generated indirectly
through economic activity in value chains. The Index uses the
survey data and economic modelling to predict the potential
dividend of greater digital collaboration. It shows that the top
fifth of those committed to collaboration achieved higher levels of
revenue growth and that, if all entrepreneurs and large companies
were to achieve the degree of collaboration of the top 20 percent,
revenue growth rates could rise between 3 and 18 percentage points
for entrepreneurs, and between 2 and 16 percentage points for large
companies.
“The journey to open innovation requires large companies to
recognize that collaboration cannot continue to be done on their
terms, on their premises or just for their benefit,” said Jitendra
Kavathekar, managing director, Open Innovation, Accenture. “To make
a success of digital disruption will require new forms of
innovation in which multiple partners collaborate to create, fail
and try again in more experimental and entrepreneurial settings.
That can only happen if more participants come together through
digitally enabled networks to create innovations together.”
“Harnessing the Power of Entrepreneurs to Open Innovation,”
makes a series of recommendations. Large companies are encouraged
to:
- Set a clear strategy that
defines shared outcomes to give all parties confidence that their
ROI and commitments will be shared equally
- Define and budget for success:
Ensure that successful ideas are not stranded beyond pilot phase
and can be scaled quickly
- Seed an “intrapreneurship”
culture by seconding employees to start-ups and encouraging
employees to launch their own start-ups.
The report also makes recommendations for governments to
consider:
- Develop co-financing models:
Encourage a greater range of financing models, from public grants
to crowdfunding, to meet the varying need of entrepreneurs at
different stages.
- Create collaboration networks:
Actively build clusters and networks by supporting and funding
groups of partners rather than single universities or
participants.
- Encourage a borderless physical
world: Support digital trade through regulation that encourages
the safe exchange of data across borders and immigration policies
that secure the supply of critical talent.
About the Research
Accenture explored the views and attitudes of entrepreneurs and
large companies relating to collaboration and innovation. The
research, conducted in cooperation with the G20 Young
Entrepreneurs’ Alliance, comprised of the following:
- An online survey of 1,002 entrepreneurs
and 1,020 executives at large companies
- In-depth interviews with 20 executives
at companies and institutions
- Analysis of the digital business and
collaboration landscape in all G20 countries
About Accenture
Accenture is a global management consulting, technology services
and outsourcing company, with more than 336,000 people serving
clients in more than 120 countries. Combining unparalleled
experience, comprehensive capabilities across all industries and
business functions, and extensive research on the world’s most
successful companies, Accenture collaborates with clients to help
them become high-performance businesses and governments. The
company generated net revenues of US$30.0 billion for the fiscal
year ended Aug. 31, 2014. Its home page
is www.accenture.com.
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AccentureMatthew McGuinness, + 1 917 282
7187matthew.mcguinness@accenture.com
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