True innovation lies in the power of many
In the digital age, strategic partnerships are far superior to internal research and development (R&D) or acquisitions, according to new research from the Economist Intelligence Unit and Telstra.
The survey shows more businesses are responding to an environment of rapid change and technological disruption by establishing partnerships across firms, industries and geographies, and it is these companies that are driving innovation, more so than their traditional counterparts.
The Connecting Companies: Strategic Partnerships for the Digital Age research found the primary motivation of digital partnerships is to develop new capabilities that serve the 'always on' customer, including the mobile-first customers of the rising middle classes in Asia.
The research also showed:
- We are in an era of the ‘co-corporation’, with 53% of respondents believing that companies will have to be part of a network to maximise technology trends in the future.
- Half of all executives believe their digital partnerships will result in a change to their business model.
- Nearly half (44%) of respondents took the view that ‘companies going it alone will soon be a thing of the past’, and 50% believe their digital partnerships have proven their value ‘beyond doubt’.
- Six in 10 surveyed expect that their partnerships will generate at least one tenth of their revenue over the next 12 months.
Martijn Blanken, Telstra Global Enterprise and Services group managing director, says the research confirms that across multiple industries the pace of technology change is so great that to keep up most successful global businesses are pursuing strategies based on the power of many.
"It is not that the age of in-house R&D and product development is dead, but in many industries you just can't go it alone anymore.
“Whether it is the Indian conglomerate Tech Mahindra strategic partnership with Cisco on the Internet of Things or investments in start-ups like Telstra is making through our muru-D accelerator and Ventures Group, partnerships are a key part of business strategies.”
"It doesn't always come easily, it's natural for a business to want to compete rather than collaborate, but to succeed in this environment takes a mindset that is open to experimentation.
“As the EIU says in the research be promiscuous but take precautions. So make multiple small bets on big technologies, playing the field and being prepared to exit quickly if things aren't working,” he says.
"Interestingly, the research reveals some regional disparities. With the majority of respondents in fast growth economies like India , China and Indonesia saying their partnerships are driven by the desire to either expand into new markets," Blanken says.
"In contrast, European and North American respondents are more interested in developing new capabilities in products and services and showing differentiation to existing segments, of course both approaches open the door for some fantastic collaboration opportunities," he added.
The research surveyed more than 1,000 respondents from six regions across 20 industries.