To Innovate, Mid-Marketers Should Partner With Startups

Dozens of Fortune 500 companies today—ranging from Ford to Google to Nike to Tesco—have been breaking down stereotypical walls and avidly seeking ties with startups and entrepreneurs. In doing so, they are unlocking secrets from their smaller, nimbler counterparts that they can use to grow their businesses.

Their strategies range from buying startups outright to taking equity stakes, expanding their venture-capital funding, nurturing new outside enterprises with accelerators and incubators and even staging contests to attract new ideas.

Some mid-market companies are following their larger mentors’ lead, and perhaps those that haven’t considered the idea yet should.

For example, Kwikset, a $500-million-plus division of Spectrum Brands, has partnered with a startup called UniKey which had designed a digital “smart lock” that threatened to disrupt Kwikset’s traditional security device market share. Now UniKey has helped Kwikset introduce its own smart lock ahead of its rivals, and the relationship with the startup is teaching Kwikset how to act more nimbly in general.

“We’re also leveraging this relationship to develop more of a small-company feel inside our larger company.”

“We recognized the industry is evolving quite quickly to the electronic space, and we had to contemplate what was the best way to get after that,” Greg Williamson, Kwikset’s chief marketing officer, told Mid-Market CEO Briefing. “And now, we’re also leveraging this relationship to develop more of a small-company feel inside our larger company.”

KPMG Capital unit is working with mid-tier clients to “invest in the best and brightest technologies we can take to them,” Mark Toon, CEO of the business unit told the Briefing. “Entrepreneurship and the technologies being developed globally are certainly being developed by small companies, and getting access to those companies is really hard for our client base.”

In fact, some experts believe mid-market CEOs may have an advantage over much larger companies when it comes to developing relationships with startups. “In some ways, they are better positioned” than Fortune 500 concerns, said Mark Morin, chief operating officer of Start Garden, a $15-million startup-financing firm in Grand Rapids, Mich. “They still have a fairly nimble structure, making the interface with startups less of a disconnect.

“It’s not as much about money as it is access to intellectual and social capital,” Morin told the Briefing. “Where large corporations have connections and access to large academic and research institutions, mid-market companies often have a significant regional social capital and relationships, via employees and their supply base, that make them a more likely access point for local innovators.”

Mid-market who haven’t yet probed this arena for ways to stay ahead of the competition and changes in their industries, they may be in a better position than they assumed, and now may be the opportune time.



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