Can't We All Get Along?
A fight broke out last week during the Financial Times “Business of Innovation” event at Stanford Business School. Ok, I am exaggerating – it was just an argument. Sean Gourley, co-founder and CTO of Quid (a local startup) was debating Peter Graf, Chief Sustainability Officer and EVP of SAP on the topic of “How innovative start-up ideas are shaping the world”. Sean made a point to belittle corporate innovation as mainly “incremental” and that corporates are more interested in protecting their business than changing the world. Peter, looking annoyed, as if trying to swab a small house fly, asked Sean pointedly, “have you ever worked in a large company?”
Similar conversations are happening all over Silicon Valley on a daily basis as corporates are flocking to Silicon Valley to engage with the innovation ecosystem. SAP actually was an early mover in this regard, and makes heavy contributions to the ecosystem, including regularly sponsoring events such as this FT event, and investing over $1.4B in startups through their corporate venture fund.
The key element that drives these unconstructive conversations is arrogance. Arrogance is a key ingredient in Silicon Valley. There is a process of self-selection happening here where only the most arrogant engineers will succeed in building a successful business (such as Quid). The rest give up in the face of the vast amount of unknowns, the never-ending string of naysayers in the investment community, and the prospect of competition from already established players.
Large corporates also deserve to be arrogant. They have done the hard work and built a successful, global business with huge scale. Expertise and execution capability is deep, and the corporation has proven its durability for decades (if not centuries) while watching trendy startups come and go.
But in order to move the conversation forward, this arrogance is misplaced on both sides – corporates need the game-changing ideas provided by the startup community and startups, if they really want to change the world, need the industrial scale and global distribution channels of the corporates. There is a win/win arrangement that can be made, but only if the conversation starts out with mutual respect on both sides.
This blog entry is the beginning of the conversation. Future topics will include a review of how corporates are plugging in to the ecosystem here, advice for corporates on how to engage with startups (and vice-versa), thoughts on Open Innovation within the corporate R&D landscape, and an examination of the key trends that are driving this interaction. Look for weekly entries going forward!