Each day, myriad new studies, articles and podcasts cover the impact of disruptive technologies on established business models. Manufacturing, banking and other traditional industries have been shaken up to varying degrees, but one thing is certain: As the pace of disruption continues to accelerate, technology is playing an outsize role in growth—and corporate survival. Regardless of the sector, if you wait until disruption occurs to react, you risk being left in the dust as your competitive advantage quickly erodes.
Let’s look at some leading digital disrupters and their impact on established industries:
- Amazon, a leader in creating a new marketplace, e-commerce, started with an online bookstore, founded in 1994. Since then, it has transformed into a company that can dominate any industry it enters. Its reach extends far beyond books and package delivery to health care and media production. Consider its foray into cloud computing services. With its launch of Amazon Web Services, Amazon is now one of the most valuable companies in the world, valued at roughly $800 billion. Not bad for a company that started out as an e-commerce site to sell books.
- Netflix, a disrupter to the video rental business, was founded in 1997. Its huge success was a major blow to brick-and-mortar video renters such as Blockbuster, which filed for bankruptcy in 2010 and has consistently been closing stores ever since. As of today, only one still exists (it’s in Oregon). With a market cap of $156 billion, Netflix is also beginning to disrupt the traditional cable TV business. Until recently, Netflix didn’t own any of its own content.
- Airbnb, which has upended the hospitality market, was founded in 2008 and is currently valued at roughly $38 billion. For reference, that’s more than Hilton or Hyatt, and is comparable to Marriott. Note that Airbnb, the most successful worldwide conduit between short-term renters and owners, doesn’t own any of its own real estate.
- Uber, the best-known ride-hailing platform, is disrupting the traditional taxi business. In the 10 short years since its founding, Uber has achieved a valuation of about $72 billion. For reference, that’s more than GM and Ford. You guessed it: Uber doesn’t own or manufacture any cars.
If the incumbents in the aforementioned industries had been asked to name their largest competitors, they’d likely have said other large corporations in their space. Rarely would they have put an emphasis on startups or the “person in the garage,” nor would they have expected such a rapid ascent of new technologies. The takeaway? Today’s leaders must focus on running their business as well as engaging with the disruptions that will shape the future.
As the pace of disruption continues to accelerate, technology is playing an outsize role in growth—and corporate survival. Regardless of sector, if you wait until disruption occurs to react, you risk being left in the dust as your competitive advantage quickly erodes.
Starting with the startups
Engaging the startup ecosystem—that is, university entrepreneurship programs, venture capitalists and the startups themselves—is a great way to gain insight into potential industry or business disruptions. One way we are doing this at RSM is through our relationship with Plug and Play, a venture capital fund and global accelerator in Sunnyvale, California, that brings together startups and corporations through proof of concepts, strategic investment and M&A.
Many middle market companies don’t have the finances or employee resources to fully engage this ecosystem and spend significant time experimenting with this community. We are in the unique position where we can learn what startups are doing and bring that knowledge back to the middle market to help our clients achieve their business objectives.
The energy that Plug and Play participants bring to solving business problems is of a magnitude I have never experienced before. This energy and its accompanying rigor have been significant contributors to the value we bring our clients.
A visit to where it all begins
A few of my colleagues tried to explain to me what it would be like on the day I visited Plug and Play’s facilities. But what couldn’t be described was the willingness to collaborate by all of those involved.
The wow factor hit me as soon as I walked in the building. I saw logos of some of the world’s most forward-thinking companies that are corporate partners of Plug and Play looking to work with startups. I saw a list of well-known, established companies that were once budding startups themselves, which represented successful exits for Plug and Play’s venture capital arm. This list included PayPal, LendingTree and Zoosk. There was also a photo of the original Google team of about 30 people, a team that once called the original Plug and Play facility home while they started the company.
Clearly, I was in a place where it wasn’t uncommon for people to uncover the next big thing.
Clearly, I was in a place where it wasn’t uncommon for people to uncover the next big thing.
I made my way to the exhibit hall where 30 to 40 corporate innovation teams, business development professionals and VC funds were mingling and talking about different strategic challenges they were looking to solve.
Then, at 9 a.m., the startups began their pitches. Each was given about four minutes to sell their companies to the corporate partners in the room. It would be this group of individuals who would vote on which startups would be accepted into Plug and Play’s accelerator. In some cases, this outcome has a direct impact on the level of success a startup’s business will achieve.
Return on investment
The most interesting thing for me, aside from the energy and variety of the companies I saw, was the willingness of the other corporations to engage and network with each other as they shared key takeaways, successes and lessons learned along the way, and built their process for working with this community.
RSM’s relationship with Plug and Play is certainly an investment. As with every investment, there is a need to quantify the return. We have certainly seen financial gain and can quantify it, but the most surprising aspect is the qualitative value we have gained through learning, networking and increasing our understanding of new technologies and potential disruptions to our firm and our clients.
Read more on RSM’s relationship with Plug and Play. To learn about our approach to middle market innovation, check out the RSM US website.
