Stories about technology innovation, digital disruption and business transformation seem to be everywhere these days. Mobile first, always-on and the internet-of things. Cloud computing, artificial intelligence and augmented reality. Siri, Alexa and the voice-search revolution. It’s undeniable that the pace of technological change is accelerating – rapidly. There is a powerful drive for companies to innovate – whether that is big banks creating innovation hubs to stave off the intrusion of nimble FinTech startups, global corporations setting up innovation partnerships just to try and stay one step ahead of the curve or the world’s largest shipping companies and technology firms joining forces to drive digitisation. In fact, a whole industry has emerged to promote – and profit from – the ideas and ingenuity of young startups.
According to a study by Gartner, 25% of businesses now have a ‘Chief Digital Officer’ to help navigate this complex technological landscape and create a long-term digital strategy. Others have created innovation teams and digital transformation initiatives or simply tasked individuals with the relevant skills – like the CIO or a systems manager – with doing the job. For some organisations, it may remain a board-level discussion.
Whatever approach companies take, more and more budget is being assigned to the art of innovation and engaging with the startup community. Much of this appears to be just for show – a bit of tinkering just to be seen to be doing something cool. Experimentation doesn’t have to be a bad thing though. In fact, having a budget for exploration can lead to huge efficiency gains and revenue generating opportunities. Google famously had a management philosophy called ‘20% time’ where a set proportion of every employee’s working week was given over to projects that the individual felt would most likely benefit the company in the future. Discovering the next big idea is no easy feat but adopting a pragmatic approach to uncovering opportunities can help you maximise your chances of success.
The first challenge is knowing where to look for opportunities. In our recent article How to bring your dry bulk shipping process into the digital age, we outlined the steps you can take to help uncover areas for potential innovation and develop a smart digital plan.
The second challenge is deciding who will deliver on the plan – whether you will build an inhouse capability or work with specialist provider that already has the technology you need. If you choose the latter route, you could end up working with a young ‘startup’ business – but not all startups are the same. There are different levels of organisational maturity, stages of product development and rounds of funding and investment. Picking a partner whose stage of evolution doesn’t match your appetite for innovation could mean that your exciting new solution never comes to life – wasting a lot of time, effort and money along the way. Of course, the safe bet would be to work with an established software company, but if they don’t have the technology solution you need then they won’t be much help.
Understanding the different growth stages of a tech startup can really help you to choose the right partner for your business and avoid the potential pitfalls.
Development stage startups
Some startups are at a very early stage of development. They may have an intriguing idea but little to prove their idea will ever work in reality. There is clearly a risk here. As with many relationships, transparency and openness are important, but they are vital when working with a development stage startup. When co-developing solutions, the chances of success will depend on strong buy-in from the product’s ultimate end-users, but that won’t be easy to get if there is no clear value proposition from the vendor.
Despite the obvious risks, if you feel that the startup’s vision is strongly aligned with yours and you are prepared to set aside time and budget to experiment and explore, you could end up with a solution that adequately meets your needs and comes at a fraction of the normal costs. On the other hand, you could end up with nothing.
Often, the first big step for a growing startup organisation is to obtain funding – some ‘seed’ capital to help them get their business off the ground. This could come from an individual or ‘angel’ investor or from a more institutional source.
To secure funding in the first place, it would be reasonable to assume that the product has evolved beyond the initial idea stage and that a solid customer proposition exists – one that is deemed to add significant value. Whilst this will not be fully proven at this stage, it does offer an element of comfort over and above the risk level of a purely development stage startup.
When working with an early-stage startup, the product will have just enough features and functionality to make it attractive to a potential customer – we call this the minimum viable product or MVP. The upside of implementing a ‘half-baked’ solution like this is that you will have the chance to help shape its development – to meet the specific needs of your business. As an early adopter in their technology, you should also expect a high-level of customer-care and attention from the startup company which could go a long way towards making this a much less risky option.
Mid-stage startups and beyond
Startups that make it past the early stage of development, will now have a proven concept and a maturing product. They will be better placed to put the finishing touches to the product and customer proposition, to build brand awareness and drive revenue growth, and to scale the team and business processes to meet their growth objectives.
This is a broad category of startup organisations – all at different stages of funding, development and maturity – but partnering with them can often provide the best of both worlds. With a well proven product and relevant customer references, you can sign up to their offering without a great deal of risk. As an early customer though, you can still expect a high level of attention and the opportunity to influence the final product – helping you to gain a powerful advantage over your competitors.
Alternative options to consider
As the old saying goes; No one ever got fired for buying IBM. Working with a large, established player can seem like the safe choice, but when it comes to fast-paced technology innovation, the analogy of ‘Turning the tanker’ comes to mind. If the technology solutions being developed are comparable, working with an agile, responsive and hungry mid-stage startup could be your best bet for delivering on your digital strategy.
There are pros & cons of each choice, but when procuring from older, more established companies there are two key pitfalls to avoid:
Beware of large companies juggling many new product lines, even if their core product is market leader. If new product ideas don’t soundly fit into the strategic vision of the company, there is a risk they’ll ever get the love and attention to be best-in-class. Nowadays, with Open APIs, your technology procurement doesn’t need to be a one-stop-shop; it’s much easier to sync best-in-class technologies from a range of companies.
Similarly, shipping software providers offering to build a bespoke solution for you – and charging you handsomely for it – but with the real hope of packaging it and selling it to other companies, brings with it several problems. If the product doesn’t end up being core to their business, there is a risk that it will not be regularly maintained – just keeping your software working and up-to-date could end up costing you a lot of money.
As you can see, the software landscape is complex and selecting the right technology partners can be hard. To set you on the right path for your digital strategy, we’ve compiled some initial questions to ask your organisation.
- Do you want to pioneer new digital solutions, or would you prefer to be a late-adopter and just follow the crowd?
- Do you have a budget for exploration, experimentation and innovation or just for technology procurement?
- Do you have any specific problems or potential areas of the business that could benefit from being transformed digitally?
- Do you have the right team in place to uncover opportunities and explore solutions, as well as the support from management and end-user stakeholders?
- Do you want to try and solve these problems in-house or work with a specialist technology partner that can help?
We believe that real-time team collaboration, automatic information processing and intelligent application interfaces are the future of dry bulk shipping software. If you are looking to explore the best ways to devise and deliver your digital strategy, we’d love to talk. We’d be delighted to share our product roadmap and customer references with you too.