Why corporate Australia and startups need each other

Big businesses urgently need to collaborate with startups in order to turn Australia into an “innovation hub” and stem the brain drain of entrepreneurs leaving the country, StartupAUS CEO Peter Bradd says.

The peak body for Australian startups released a new report on Tuesday morning examining the need for corporates to build relationships and partnerships with the startup sector, and the mutual benefits involved with this.

Big businesses have an important role to play in ensuring Australia’s best entrepreneurs stay in the country, Bradd tells StartupSmart.

“Startups and entrepreneurs can and will move to international hubs,” he says.

“But big businesses are stuck here in Australia – they can’t just pick up their operations and move overseas.

“They’ve got a lot of power so they need to be using their influence to get the government to continue to support innovation.”

Turning Australia into an innovation hub

The report identifies a need for Australia to become a hub for all things startup in order for local companies of all sizes to compete against the big international players.

“There is no perfect substitute for innovating in an innovation hub,” Bradd says.

“Australia is not an innovation hub, and if we are not an innovation hub then how will our biggest companies continue to innovate and compete with the more nimble international players?”

He says large businesses show a keen interest in partnering with startups but this often doesn’t translate to their actions.

“They come to an event, they talk and they get quite excited but then they go away and get back to business as usual,” Bradd says.

“It’s difficult to make this a priority – the longer term work just isn’t being done.

“Business is too busy talking about their business models today rather than talking about the kind of environment they need to create the business models for tomorrow.

“We are so far behind and we need big business to be championing the message that they need Australia to be an innovation hub as well.”

The need to work together

The StartupAUS report, Scaling up our growth opportunities – Why Australia’s big business economy is working to create a thriving startup environment emerged from a roundtable discussion held in August by StartupAUS and KPMG with senior executives from the ASX 20.

The main conclusion from the discussion was that without this “vibrant startup environment” then the larger organisations “face increased risk of disruption from startups overseas”.

“Tech startups are actually vital to the existing companies servicing existing markets – especially in the digital world that we are currently living in,” the report says.

“It is essential they work with external entrepreneurs and innovators. In doing so they can bypass internal barriers, outsource a lot of the initial risk and allow for much more speed and agility.”

There are also many benefits on offer for startups that are willing to collaborate and partner with the corporates – most importantly with getting access to large markets and customer bases, Bradd says.

“Today you’ve got innovation leads in most of Australia’s biggest companies with a mandate to work with companies and co-develop,” Bradd says.

Three key requirements for big businesses interacting with startups emerged from the report:

• Acquire startups to improve current businesses and explore new revenue streams
• Partner with, become customers of, license from and co-develop ways to reduce costs and increase efficiencies
• Cultivate the talent these startups have through exposure to them or more permanently through acqui-hire or headhunting

“Australia’s top 20 companies must have a vibrant culture of innovation within and around them,” the report says.

“It is essential they work with external entrepreneurs and innovators. In doing so they can bypass internal barriers, outsource a lot of the initial risk and allow for much more speed and agility.”

A way of life

An important part of turning Australia into an innovation hub is ensuring startups are “visible and prevalent” in the day-to-day lives of Australians – that they are a “way of life”.

“Just like plants need water, air, nutrients and sunlight to grow, industry needs a pro-entrepreneurial culture,” Bradd says.

“The existence of startups provides a serendipity towards innovation, in giving the right entrepreneurs the right opportunities to come up with solutions that allow the largest organisations to innovate, if not become disruptors themselves.”

A big part of this culture change has already started to take place with the recent change in political leadership, he says.

“We’ve gone from a PM that wouldn’t talk about innovation to a PM that almost only talks about innovation,” Bradd says.

“Turnbull is going to celebrate innovation and entrepreneurship. Just like we celebrate music stars and sport stars, we need to celebrate our best entrepreneurs.”

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