CEOs in the UK are increasingly looking to work with startups in a bid to drive innovation and support their growth objectives.
That’s according to KPMG’s 2018 Global CEO Outlook a survey of 150 UK leaders and 1,150 global CEOs.
The survey found that 61% of CEOs in the UK are relying on a network of third-parties to support their growth and innovation plans, compared to just 53% globally.
Partnering with third-party cloud tech providers topped the list of actions for CEOs who are planning to take over the coming three years (65%), followed by collaborating with innovative startups (61%).
Additionally, the data showed that 70% of UK CEOs agreed that the only way for their organisation to become more agile was to increase third-party partnerships. Only 53% of CEOs outside the UK said the same.
Kirsty Mitchell, director of growth at KPMG, commented on the findings: “The explosion of new technologies, which has impacted customer behaviours, has changed the landscape for businesses looking for growth. As a result, CEOs are having to turn to new strategies to increase the agility of their often large and multilayered businesses. We are seeing more collaborations between large corporates and small businesses as they attempt to outpace their competition in the race for innovation to results.
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“Entrepreneurial energy, an ability to spot gaps in the market for innovative products that consumers actually want, and speed of response to changing demands are what start-up ventures offer and what big businesses want to emulate. Conversely, small businesses benefit from big businesses’ strong routes to market, greater sophistication in business processes and mentors with worldly-wise experience.
“It takes a board that is sufficiently entrepreneurial in its outlook to recognise that small and interesting companies could become a very valuable link in their supply chains. These newcomers might be your future competition. Better to be alongside and invested in them than competing against them.”
Strategic alliances or partnerships were cited as the most important route for achieving scale, as opposed to just eating up startups via M&A activity.
Seven in 10 UK respondents said they had reconsidered third-party partnership that could have helped with growth because the third party did not fit well with the organisation’s culture and purpose. Just 49% of global respondents agreed.
Mitchell added: “Whilst an alliance might make sense on paper you cannot ignore the vital importance of having shared aspirations and culture, which is often difficult to achieve. It is really important that both businesses are absolutely clear from the outset about what they are hoping to achieve together. A lack of understanding about how the other culture operates can stifle a good collaborative relationship.”
Other findings included: 55% of UK CEOs (53% global CEOs) were considering establishing an accelerator or incubator program for startups; 51% of UK CEOs (50% global CEOs) were looking to increase investment in disruption detection and innovation processes to help with growth; and the main barrier to using third-party networks is the challenges of measuring ROI from third-party partnerships (25%).