Shark Tank: 3 Ways Leading Companies Are Keeping Their Brands Innovative

Also, CEOs want to inoculate their companies against fast-moving hornets, if possible, before being stung by them. They recognize that, in many industries, new and nimble smaller companies have been strapping up the Gulliver-like major players like never before; think of Uber and auto makers, or Sparkling Ice waters and soft-drink brands.

“More incumbent companies are worried about disruption than ever before,” says Tom Ciccolella, U.S. venture-capital leader for PwC, the consulting firm. “Or they want to make sure they have the finger on the pulse of what might be disruptive to their business.”

These companies searching for investments specifically see that startups tend to have a better grasp on the digital technologies that have become crucial to nearly all industries and usually possess a better understanding of the sensibilities of the key millennial generation—in large part because many of the entrepreneurs themselves are members of it.

Savvy chiefs of large and mid-size companies also want to get access to the best talent, and direct relationships with entrepreneurs are one of the best ways. And advocates of a big-to-small strategy see value in the possibilities for revitalizing their own ossified company cultures in the process.

“The real [key performance indicator] is—have we fundamentally changed how people think and how we’re preparing to enter into the next generation of our approach to organization?” says Bonin Bough, vice president of global media and consumer engagement for snack giant Mondelez International, which has launched accelerators for startups in both mobile tech and shopper marketing. “We have recognized that we can bring a startup mentality and culture shift into the organization.”

On the flip side, startups are greeting this development with open arms. Many indeed have the stuff that big companies are seeking, but the little guys usually lack the resources and backing to prove, market and scale their innovations.

Larger-company sponsorship can provide exposure, clients, capital, distribution, sales growth, marketing muscle, financial expertise and other things of commercial value—and, of course, maybe the ticket for them to reach the next level of business or strike it big.

One of the earliest successes of the big-to-small era involves Sky TV, the cable giant in the UK, and Saratoga, California-based Roku. Searching for a quick and effective way to enter the domestic streaming-video market, Sky invested in Roku and “white-labeled” its technology platform, branding it “Now TV.” For fiscal 2015, Sky TV reported its strongest customer growth in 11 years—most of it provided by Now TV.

“We could have built [a streaming platform] ourselves, taken a year and a decent amount of money,” says Hilary Perchard, head of U.S. investments for Sky. “But instead we searched and found Roku in Silicon Valley. We’ve also used their technology platform to grow Now TV and our overall business at a faster rate than in 10 years thanks to the rate at which it engaged consumers.

“For Roku, it has given them the huge success of distribution in a market where they didn’t have that much traction before. So it has proved to be hugely synergistic for both them and us. And since then, they’ve been cutting similar deals with operators around the world.”