David vs Goliath: why big businesses are losing out to agile start-ups

Large companies are increasingly sluggish in a fast-moving business environment. This has left the door open for more agile start-ups to thrive

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The Shoreditch Partnership is working with companies to help them cultivate an efficient team quickly, at a low cost and with reduced risk

Author: John Reilly, Co-Founder and Managing Partner, The Shoreditch Partnership

21 Feb 2018

In an era when emerging markets, globalisation and its consequential protectionism threatens businesses worldwide, senior executives can be forgiven for focusing on these large-scale issues instead of the actions of the young start-ups entering their industries. However, this approach will not save major businesses from the fact that, behind the backs of slow-moving company directors and large corporations that lack vision, agile start-ups are poaching their core business.

The next generation of entrepreneurs no longer wishes to conform to traditional corporate structures, choosing instead to freelance or work for businesses that understand their desire for flexibility. As a result, skilled employees are at a premium for large companies. However, prospective employees with entrepreneurial qualities are often seen as a disruptive influence in traditional business structures.

This conflicting paradigm is the reason that companies are struggling to find candidates with the right skill set for their business. For example, if hiring a data scientist, an employer would look for someone with a strong mathematical background, top university qualifications, a well-rounded set of communication skills and commercial understanding. This individual would make a good team member, but is unlikely to create positive change in the company.

Prospective employees with entrepreneurial qualities are often seen as a disruptive influence in traditional business structures

The type of person who could create meaningful change is likely to be non-compliant, probably difficult to communicate with and would have little interest in commercialisation. However, with a team of disruptive people like this, it could be possible to change the corporate landscape.

Encouraging disruption
The Shoreditch Partnership is working with companies to help them cultivate an efficient team quickly, at a low cost and with reduced risk. By working with businesses closely, the company is able to gain a unique insight into what clients want from new team members. The Shoreditch Partnership is the first – and remains the only – embedded accelerator that engages with young entrepreneurs.

By surrounding entrepreneurs with a skilled and experienced team, the Shoreditch Partnership helps start-ups secure the investment they need to expand. The challenge for tech ventures is attracting the right kind of investors. The Shoreditch Partnership, with its large network of industry experts, can guide businesses through the early stages of their new venture, while also ensuring that investment opportunities are de-risked for future investors.

Formed in 2014 in collaboration with some of the most disruptive minds in the emerging technology market, the Shoreditch Partnership has increased the value of its member companies by more than £50m (€55.6m) in just a few months, ensuring they become investor-ready, retain their intellectual property, secure their brand and go to market with a clean and investable asset, all the while allowing their founders to retain the majority of the company.

One company helped by the Shoreditch Partnership is Fintech Worldwide, which runs fintech events in financial hubs around the world. These global educational events are helping leaders in emerging technology markets understand and adapt to a new way of doing business. Fintech Worldwide’s core message is that if businesses don’t engage with the grass roots, they will never understand how to make effective corporate change.

Another company the Shoreditch Partnership has worked with is Detech Technologies, which offers advanced software products and services for strategic financial planning and risk management in financial institutions. Thanks to the Shoreditch Partnership, both companies have become leaders in their fields.

Cybersecurity concerns
Just about every person in the modern world is online. While this digital era brings a multitude of benefits, it also presents new opportunities to hackers and con artists. Corporations are taking on the burden of protecting their clients, information and capital. However, not wanting to appear negligent, big companies are throwing hardware, corporate consultants and intelligent software at the problem, at the cost of investors, without knowing if their money is being spent wisely.

By surrounding entrepreneurs with an experienced team, the Shoreditch Partnership helps start-ups secure the investment they need to expand

When researching the life cycle of hacks, how hackers get into companies and how they’re able to circumvent millions of euros worth of security, it becomes clear that the weak link is the workforce. The Shoreditch Partnership is working with Dynarisk, the only company in the world to focus on this problem, to find a cost-effective solution and help companies improve their cyber risk profile. Dynarisk identifies employees’ risk exposures and teaches them how to be safer online users.

At our weekly thought leadership and strategic overview meetings, the team at the Shoreditch Partnership is always amazed that the lack of thought around disruption is not restricted to the mature corporate world. Working with a large number of next-generation companies, we have noticed a trend towards the sudden emergence of disruption to existing working structures; complex and convoluted IT structures can no longer offer protection. This is a trend that has become apparent in the luxury services market, as well as the conventions and events market, leaving companies particularly vulnerable to cyberthreats.

Strategic awareness
I was stuck in Turkey recently due to the unfortunate demise of Monarch Airlines. Monarch was not the biggest or most luxurious airline, but it was functional and practical. Its demise was due to a lack of strategic awareness: it was focusing on areas of the globe that are considered a risk to travel to, and so it was no surprise that people weren’t travelling in the numbers it built its financial model on.

Monarch didn’t consider the emergence and effect of low-budget airlines such as Ryanair and easyJet, and the board didn’t consider the modern landscape it was working in. As such, board members fell foul to the consequences of their blinkered view.

Companies must move their attempts at innovation away from small, underfunded departments, and place emerging tech, innovation and disruption high on the agenda at board meetings. If it takes CEOs three years to deploy a strategy, then they will already be two years and 51 weeks behind the companies the Shoreditch Partnership is working with.