UK: Disrupt The Enterprise: Five Ways Corporates Can Help Start-Ups Excel In Scotland

Last Updated: 21 April 2017
Article by Deloitte LLP

By Bruce Walker, founder of WeAreTheFuture

Young companies have the potential to completely transform the Scottish economy and its business landscape. Their energy and bravery are causing the ears of larger, more established businesses across Scotland to prick up; listening and paying close attention to the moves they are making.

Large Corporates have an important choice to make. Do they follow the new, disruptive path start-ups in Scotland are laying? Or do they stand their ground, in the hope that it will remain business as usual?

I know which option I'd choose.

There's no denying that start-ups, and their entrepreneurs, have added a new spark of life to the Scottish economy. Companies such as Snap40, Administrate and TVSquared are all exciting examples of Scotland's offering. But to fully unleash the potential of our start-ups, there are a few things the business community can do:

Share knowledge and learn from each other

A symbiotic relationship between an established corporate and a start-up can be extremely powerful. Young companies can learn from them, and a vital tool they can provide is access to trustworthy, honest and experienced advice. As an early stage business, there are many obstacles to overcome and corporates should share their own, similar experiences.

Start-ups too can lead by example. They're extremely disruptive, innovative, fast-moving and usually unencumbered by complex systems and processes. Corporates could adapt certain aspects of their business to think more like a start-up and observe how they approach things.

This kind of relationship is exactly what we hope to achieve with the Disrupt the Enterprise programme. In April, four of Scotland's most disruptive start-ups will pitch their business ideas to a range of companies, investors and academics at Deloitte's Digital Studio in Edinburgh, with the winner receiving a three-month secondment from the firm's consulting practice.

Embrace the change, don't fight it

When fintech emerged, some bigger financial institutions watched nervously as the sector developed, realising it could have the potential to take away a big chunk of their market share. Some may have been inclined to combat it, ensuring they stayed on the cutting edge without having to catch up. Eventually, those within the industry trying to fight it understood that working alongside the technology, and the smaller companies developing it, would be much better for business.

Corporates shouldn't hold back the innovation brewing among start-ups. Instead, they should embrace the wave of change that is enveloping the industry. In Scotland, there's a resoundingly positive attitude towards corporates working with start-up companies, which is great to see.

Look beyond our shores

The US has led the way on collaboration between corporates and start-ups. It evolved over time, with large companies getting involved in accelerator programmes; not only by becoming corporate partners, but by organising and running their own.

RocketSpace in San Francisco was one of the pioneering facilities promoting this collaborative approach. It allowed corporates to work closely with start-ups, meaning they had access to new and innovative technology before anyone else.

Scotland isn't quite at that level yet, but we're moving in the right direction. There have been some good examples of collaboration recently, with Royal Bank of Scotland and Entrepreneurial Spark being one of them. CodeBase in Edinburgh is also a very similar concept to RocketSpace, which has produced some notable success stories.

Changing attitude to risk

Taking risks and not being scared to fail is important. Businesses shouldn't be afraid to talk about their failings, as it can be invaluable learning material for start-ups.

Interestingly, in the States, some investors even ask companies to return to them after failing a few times. They're seen to be a safer option, as they've had the courage to get back up and start again after learning from their mistakes. In Britain, we don't think in the same way. Deep down we know it's okay to fail, but there's still an overwhelming fear of failure that lingers in the marketplace.

Scotland built much of its reputation for financial acumen on managing money – a by-product of which is an attitude to risk that sometimes prevents growth capital from being released. But for Scottish start-ups to succeed, this capital needs to be liberated.

America is more daring, with Snapchat being a good example of the country's bold nature. The company launched publicly for £31 billion without making a profit – something that wouldn't happen in the UK. We're always looking to invest in 'sure things', with traction and a quicker journey to revenue or profit. In Scotland, we need a hybrid model - somewhere between America's bravery and Britain's caution.

Play the long game

Any company strives for a quick return on investment. But, when working with start-ups, investors need to be prepared to have a bit of patience, understanding they're making an investment for the future.

Achieving the billion dollar status as quickly as possible shouldn't be the goal, and we cannot create an ecosystem surrounded by that kind of vanity. Instead, a business should focus on sustainable growth and create an environment where the company not only impacts the shareholder, but makes a wider contribution to the local and global community.

That's also true for start-ups. There are very few cases of overnight success stories. It took Skyscanner ten years to get to where it is today and I can't wait to see what the next decade holds for businesses in Scotland.

They say patience is a virtue, and in this case, all good things will come to those companies collaborating and driving innovation right now. I look forward to seeing some of Scotland's most ambitious start-ups and their ideas at the Disrupt the Enterprise event in a few weeks' time.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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