The Rollercoaster: An anniversary of elementary
We have now celebrated an anniversary as a new start-up and it has been an amazing year which has been intense and fulfilling. So, as we approach the festive period, I felt like reflecting on what has happened.
In this first part of rumination, I dwell on some reminders of what happens when you are a start-up and I’d probably sum up that this episode articulates why big companies are only really set up to do business with other big companies.
The lack of transformation in “Digital Transformation”
One of the things we at Elemental Concept pride ourselves on is our ability to help any type of company innovate to enter, create or transform a market. Given that this is the age of obsession with the words ‘Digital Transformation’, you would think our approach was tailor-made for the companies that know they need to do something for fear of being left behind.
Before I continue the rant, remember that the key word in Digital Transformation is transformation. This means the business model needs to change and the company must do something different.
However, it has taken me this year to remember why it took us a long time, in our previous guise as Leo Tech, to really be engaged by big companies who truly want to transform. I give some of the reasons below, it’s not exhaustive but will hopefully help fellow start-ups understand why things can be bewildering.
a) Fear of Self Cannibalisation
Overwhelmingly, this is the biggest obstacle to a company taking on change/doing something different. The fear that this new path might impact on the existing way of creating revenue for the company. This as an objection sounds sensible until you really think about it. Just remember, if they don’t do it, someone else will. When you look at the great companies like Blockbuster, Nokia, Kodak, Blackberry, whose once extremely successful product and business units have become footnotes, you realise that in part their lack of adoption to change caused some of their decline. The other half being other companies releasing products that did the cannibalisation. The lesson is simple – Do it yourself, quicker and better than anyone else can.
b) It doesn’t have the right buzz words
Technology gets new buzz words from time to time. For some big companies, showing that they are in the know with the latest and greatest and trying to adopt it is more important than whether it actually delivers value. Two of the latest buzz words are Blockchain and AI.
As technologies go, they will definitely change a lot of things and create efficiencies, accountability and learning that at present, we don’t really understand. We are lucky enough to have some exciting projects that allow us to build and learn more about both technologies (see later).
However, we won’t recommend to a customer to utilise these technologies if they don’t seem appropriate.
Herein lies a problem you can probably sell something for a lot of money that doesn’t make sense because it might help them with investor relations, but does that really help you change their business?
c) You haven’t done the same thing for one of their competitors
Probably the one thing that makes the least amount of sense to me is that some companies are reluctant to engage because you haven’t helped one of their competitors do a similar transformation. Is it me or is this nuts?
From where I look at it, they shouldn’t want to copy others from the same industry. They might want to understand best practice and even adopt features that work well but we are all about helping companies differentiate and lead a market not follow along..
So, our problem here is that we don’t have a boiler plate template that we can roll out and say this is the best way to transform if you are in blah, blah industry. If that’s what you want, the big consultancies are absolutely right for you. As a consumer, that is really worrying as every product will be the same and we can live the nightmares of sci-fi films that project a future where everything is uniform and controlled.
In our world, we recognise the true talent for change, as well as the real appetite and knowledge for what it should be, comes from within the company we are helping. All of our practices are designed around teasing it out of them. We don’t offer boilerplate solutions because each case is different. All we can do is help them by bringing insight from other industries and challenging them to see if they are really solving the problems for their customers.
d) Procurement processes
Assuming you somehow manage to bypass the obstacles that I note above, and you have managed to convince a big company that you don’t need 15,000 employees to know what you are doing, you still have to deal with the elephant in the room – The procurement process. This is an archaic process which serves as the ultimate road block.
Procurement processes, whilst designed for the right reasons of corporate governance, are also some of the most inappropriate and innovation stifling regimes I’ve seen. Below I list some of the questions we get asked and the some of the answers that go through my head (but thankfully don’t leave my mouth) in response:
Q: We will have to get three quotes for this piece of work, can you please provide a full proposal with detailed costings?
A: Sure – I think that I have done this a few times already to win this piece of work but if it makes you happy, I will resend what I have already sent to a number of your colleagues.
Q: As this is now an RFP, please can you ensure you are on our pre-qualified suppliers list?
A: I’m obviously not, otherwise I don’t think I would be speaking to you. We are also a brand new company so I would have had to have qualified before we actually existed.
Q: To check your financial viability, can you provide your past three years of profitable accounts?
A: I can provide you with the fictional accounts that I used to prequalify before my company existed. By the way, when you did your D&B check on us did you not notice we have no history?
Q: Please can you provide three reference clients of a similar size and nature to us?
A: I can’t as I had the same problem with all of their procurement processes.
As you can tell, big company procurement isn’t really designed to enable the start-up to sell to them. Indeed, it isn’t set up to do anything quickly.
e) Fear of entering the void
Commercial processes being designed purely for big companies doesn’t stop at buying services, it even applies when they are providing services. We experienced similar problems when we realised we needed to expand to a much bigger office and take on a grown-up lease. Because we couldn’t provide three years of profitable accounts, we were being asked by landlords to provide one year’s rent as a deposit and personal guarantees. As a start-up, this is nuts: Tying up a year’s rent would only really be possible for a ridiculously well-funded start-up or surprise surprise a big company
Many years ago, when I was going through one of my first start-up experiences, a good friend explained the big company thing to me, stating that “this phenomenon is simple” and he used the phrase “Nobody got shot, buying from IBM”. I have nothing against IBM so you could quite as easily replace their name with Accenture, PwC, BCG, etc. What I took it to mean was they are the safe option, they will generally have a sensible solution which no one could be blamed for procuring, but was it the optimum choice?
This makes a lot of sense but our world will become pretty stagnant if we rely on big companies for innovation. They have processes to eliminate risk and that is sensible management. Unfortunately, transformation requires risk and guts to change and do something different.
All I can say is hooray for the small guys. (see next post).
