How startups can save large corporations

23rd July 2020  

by Sammy Squatriti

Large organizations are increasingly involving startups, in part due to the awareness that companies are not built to respond to the accelerated pace of change in a timely manner.

This even at the cost of restructuring the entire organization from scratch, working with startups that are usually freer from bureaucracy, short-term shareholder demands and employee incentives. As a result, it is an easier way to tap into technologies, business models and emerging talent.

In fact, it makes sense for most large organisations, as startups tend to explore disruptive innovations, which usually have a low margin, relatively small market and high risk to start with, do not support short-term and often large growth targets. Take for example the Blockbuster case, notorious for losing the opportunity to buy Netflix for $50 million. A company that to date is worth 140 times that amount.

Crises stimulate creativity and change, because companies are forced to focus on priorities to cope with emergencies. A typical condition for startups, which are companies that have efficiency and speed in their DNA: they have limited resources, so they are used to optimize operations and maximize results. The emergency we are facing in Italy, because of Covid-19, has certainly forced companies to think as if they were startups. This is the solution that allows them to emerge from a crisis: change. It is possible that this digital transformation could help us appreciate more the positive effects of new technological structures and a new cultural approach in the working world.

In the current circumstances we are all increasingly appreciating the technology that allows us to better deal with an emergency that years ago would have completely blocked any company and consequently the whole country. Such as videoconferencing, distance learning paths, the possibility of remote interviews and much more.

Despite the various downsides, we now have a decisive opportunity for our future and the future of the world of work. On the one hand, we have to sacrifice social relationships and contacts with people in order to slow down the spread of this virus as much as possible. On the other hand, we have a great challenge, and consequently opportunities, to transform and improve our working approach.

In Italy, the government has decided that this opportunity should not be wasted, but rather has decided to pour as many resources as possible into the world of innovation. With the recent "Relaunch Decree," the state has allocated 1 billion euros to the innovation and start-up sector, including support measures and investment incentives. It will also recognize an increase in the tax deduction from 30 to 50% on capital invested by "informal investors," up to 100,000 euros.

The sector that has benefited the most from the investments made by Italian Angels in 2019 is precisely the sector that has been most present in our lives in recent months, that of information & communication technology, which will continue to be increasingly important for maintaining contact with our colleagues and also with people close to us.

I would also like to remind you that innovation is not only operational, product or service innovation, but also cultural innovation. In large companies the most difficult part to change is usually culture and one of the main themes is the so-called "culture of error." Without errors there is no change and without change there is no progress, innovation, evolution. It is thanks to mistakes that mankind has managed to create penicillin, pacemakers and other revolutionary discoveries. Right now, more than ever, we need a culture of error. The one that has made so many startups, from Facebook to Amazon to Google, great. Hurried decisions are made to seize opportunities, these can lead to error, but "errare humanum est" and should not be a problem, but a learning opportunity. As Mario Andretti, the Formula 1 champion who also won in Nascar, IndyCar, to name a few of his results, said: "If everything is under control, you're going too slowly."

Right now we need to believe in the future and take a leap into the void, only then we can look to future generations aware that we have done everything possible to leave our children a better world.