Startups and Established Companies dance the tango

Certain activities cannot be performed alone — such as quarrelling, making love, and dancing the tango. I would like to add one other: doing business.  If startups and established organisations are to start doing business more often, like in tango, one person has to take the lead and another follow, but both need to want to dance. Bear with me.

Last year I was on a panel at the Queensland Supply Chain and Logistics Conference (QSCLC) discussing the effects of digital technology on procurement and the supply chain. During the conference it became evident to me that innovation in this space is indeed aplenty, but not necessarily flourishing and challenging the status quo as much as it could be. It was clear that procurement officers are often the gatekeepers of, and determining factors in, whether new products and services are adopted by their company; and furthermore, who those solutions are acquired from – existing providers or new market players?

 This got me to thinking more broadly about innovation, how it’s initiated, how it's embraced and by whom.

What has become apparent to me through talking to a range of startups, is that they are all too often left standing at the blocks holding onto their baton of innovation, with no one running to grab it from them. Anecdotally this is because organisations (especially more established ones) are playing it safe; tending to go with existing and established providers/brands/solutions because, as the old adage goes, “no one ever got fired for buying IBM”. And in some ways you can understand this mentality.

It was with interest last week that I saw the introduction of the government's new digital marketplace initiative which is aimed at opening up access to $5 billion worth of contracts from government departments, which were previously inaccessible to small firms and tech startups.  

Enter James Chin Moody, the founder and CEO of Sendle, a courier startup in competition with Australia Post. James penned an interesting article in the Financial Review on 29 March 2016 which proffered the digital marketplace is only going to be as effective as the government’s willingness to work with innovative new companies and embrace new technologies.  At its core this was the dilemma I was grappling with after the QSCLC conference.  James asks the question in his article “Will the government continue to support their last incumbent federal monopoly, Australia Post? Or will they instead start sending parcels through more innovative and efficient logistics?”  

In my view, the answer to this question and to the broader question of “how to break from the status quo where customers tend to go with existing and established providers/brands/solutions” is that both sides of the equation need to work together and have a desire to innovate.

For startups, they need to embark on a steady process of education and engagement with potential clients.  If there is a risk aversion on the part of a customer to use a startup or new product/service, then it’s up to the startup to do everything it can to allay these concerns and build credibility.  For organisations, and in James Chin Moody’s case, the government, they need to have an open mindset and to want to be ahead of the curve and innovate themselves: to want to be better than the status quo.

After all it takes two to tango.