Big Companies should love Startups – or atleast know what they’re up to

One of the biggest issues facing big companies is the white space – those new growth areas that could be big one day.  Simply put, younger, less restrictive organizations are better able to jump into and exploit these opportunities than established corporate giants.  This could be good or bad for the giant.

It’s good if the giant doesn’t have his eyes closed.  That means every giant corporation should have some eyes on what is happening in their industry white space – if not, then one day it won’t be ‘their industry’ any longer.  An internal team tracking innovative startups, concepts, etc. that could be a great opportunity for success.A great example of this is Google – yes Google is now a giant – who has grown from being a nibble company but has not lost focus.  Now, instead of having to invent the next great idea, they buy those that have done so the best (YouTube, JotSpot, Writely, etc.).

A bad example is most telecommunication companies.  I say this with respect of course, but from my experience of having many telecom as clients, they react to market threats instead of seeing opportunities. Granted they’re too big to create the next big thing, but that doesn’t mean they should recognize and partner early with the two kids in the garage that can.  

The CIO of a prominent telecom recently told me that he doesn’t agree that his company may one day lose the consumer content relationship. Basically, that they may only own the pipe to the customer but not the content relationship. An example is how in the past, energy companies used to sell you the light bulb and the electricity but now can’t compete on bulbs.  I suggest that is exactly where the digital world is heading and those that own the ‘pipe’ – telecoms, cable – should be looking to add value to services they can offer on the pipe.  How about buying an online storage company? Enhancing T.V. on the pipe through interactive services? There are a lot of possibilities. 

Thinking that you can stem the wave of online television, or worse, that your website will be the consumer destination for video instead of YouTube or iTunes isn’t smart business.  Recognizing the two guys/girls in the garage that can make your business better is.