How Small Companies Are Keeping Global Giants on Top of Their Game

Increasingly, small companies are becoming the driving force behind innovation, with small, nimble startups providing products or services to larger enterprises,

learn more about Ben Judah

By Ben Judah

Shutterstock

Opinions expressed by Entrepreneur contributors are their own.

The stratospheric rise of technological growth has created an interesting problem for enterprise companies' R&D departments -- there are just too many directions to grow in. Enterprises just don't have the resources to provide R&D across the spectrum of their needs, leading to two options: stagnation or the delegation of modernization. With early stage startups and small businesses disrupting traditional industries at an ever-increasing scale, larger and less agile companies are finding it more difficult to stay ahead of the curve and avoid losing market share to the new encroaching companies.

Related: 11 Startups Taking Advantage of Business Opportunities in Space

The world of finance has traditionally been seen as a behemoth -- slow to change but powerful, impenetrable and often elitist -- but in a press release earlier this month, PwC announced that it forecasts traditional global financial firms could stand to lose almost one-quarter of their revenue to standalone fintech companies in three to five years. Eighty-eight percent of financial services companies that were surveyed saw their new competition as a real threat, but rather than attempting to squeeze the newer fintech companies out of the market, these giants are embracing the challenge. By understanding and providing for the needs of the smaller companies (access to customers, data and funding), larger institutions are implementing the new technological solutions and maintaining their leading edge.

This has led some smart global giants to rethink their innovation strategy, and shift the responsibility of companywide modernization from one single, internally facing department to each sector of the business exploring options for how they can stay on top of their game. This could come in the form of new workflows or changing internal processes, but increasingly, small companies are becoming the driving force behind innovation, with small, nimble startups providing products or services to larger enterprises, and being the differentiating factor central to their business success.

Related: 4 Tips for Success From One of Silicon Beach's Most Creative Companies

For these collaborations to work, there are numerous hurdles to overcome. Small- and medium-sized businesses can often find it difficult to connect with enterprises -- getting in front of the most relevant person, pitching and winning a tender can take years, meanwhile the enterprise is being prospected with hundreds or companies, with only a handful being relevant to their current needs. Once this prospecting process is complete, and the enterprise selects a startup to work with, a "proof-of-concept" (PoC) period is started, which leads to its own challenges on both ends. Startups need to adapt to scale their offering while larger companies have to contend with the new risks of data breaches and contingency planning if the PoC fails.

One company has sprung up to help contend with this growing challenge over the last few years. Israel-based prooV bridges the gap between startups and enterprises by operating as a service platform. Speaking with the CEO, Toby Olshanetsky, he explained, "Enterprises are finding themselves in a situation where their industries are being disrupted by more innovative startups than themselves. They're realizing how crucial it is to keep up with the smaller guys to stay ahead because if they don't, they'll quickly fall behind. Simply put: Innovate or die. So many enterprises are looking to collaborate with smaller startups, because they have the solutions to fill the enterprises innovation needs."

Related: How to Avoid Getting Fooled by Trends

Using a platform like prooV, enterprises are able to "taste" many different startups' technologies at once, running limited and secure trials on their own systems before deciding to purchase the software, or even acquire the company as a whole. This idea of "PoC as a service" has gained credence, with clients including General Electric and Amazon Web Services.

Whereas in recent years, industry incumbents viewed growing small businesses and startups as competition to be quashed, the mindset is quickly shifting to embrace these new companies as an opportunity to evolve, grow and fill in the gaps from their own R&D departments.

Ben Judah

Communications and Marketing Consultant at BNJ Marketing

Ben Judah works as a communications and marketing consultant at BNJ Marketing, and as a startup advisor. Follow him @benjudah.

Related Topics

Editor's Pick

The Dark Side of Pay Transparency — And What to Do If You Find Out You're Being Underpaid
Thinking of a Career Change? Here Are 4 Steps You Can Take to Get There.
A Founder Who Bootstrapped Her Jewelry Business With Just $1,000 Now Sees 7-Figure Revenue Because She Knew Something About Her Customers Nobody Else Did
Everything You Need to Know About Franchise Law
Travel

6 Secret Tools for Flying First Class (Without Paying Full Price)

It's time to reimagine upgrading. Here's how to fly first class on every flight, business or personal.

Business News

Carnival Cruise Wants Passengers to Have Fun in the Sun — But Do This, and You'll Get Burned With a New $500 Fee

The cruise line's updated contract follows a spate of unruly guest behavior across the tourism industry.

Business News

'Crying Northwestern Kid' Turned His Viral Fan Moment Into a Successful Harvard Admissions Essay. He Says the Experience Taught Him About Empathy.

Six years ago, Phillips was watching No. 8 Northwestern take on No. 1 Gonzaga during March Madness when he became a meme.

Franchise

How to Bring Your Franchise to the Next Level With Marketing Automation

With the impacts of inflation and associated costs of running a business, automation is a powerful solution for streamlining a positive guest experience and overall marketing.