Over two decades ago, initial proposals were presented for the emergence of a new open innovation model in Latin America. Since then, large companies such as Bimbo, Ab InBev, Cemex, Accenture, Telefónica and others are part of a growing list of companies in Latin America that have chipped in to collaborate with startups and young companies as a source of innovation. Jorge Zuñiga Blanco, an entrepreneur and technology expert from Costa Rica, discusses how the plans are working out.
In 2017, Cemex launched the Cemex Ventures platform, which selects and supports startups with solutions for the different challenges of the industry. Another case is that of Banco Credicorp of Peru, which, in 2018, created the subsidiary Krealo as an innovative arm for the investment and management of FinTechs throughout Latin America.
Acceleration, digitalization and technological change will deepen in a post-pandemic horizon. This will make open innovation strategies increasingly necessary.
The collaboration of large companies with startups, as a source of innovation, continues to advance and becomes relevant in post-pandemic growth strategies. It is a recent phenomenon of great potential, but it also generates numerous challenges. For now, the companies involved in these initiatives are a small vanguard within the corporate world, but they cover a wide range of sectors, both traditional and technological.
“Many of the corporations add collaboration with startups to the internal efforts made by their research and development (R&D) areas,” explains Zuñiga. “They are attracted mainly by the possibility of innovating in products and processes within the framework of digital transformation and the 4.0 revolution. Other key sectors are Fintech, renewable energy and agrotech.”
In the vast majority of cases, these are very large companies that operate, mainly at the regional level. The existence of platforms that transcend the borders of each country is a fundamental asset, which could favor the processes of scaling and internationalization of startups.
On the other hand, the group of SMEs that is beginning to experiment with working with startups is marginal. This raises a question about the scales from which these initiatives make sense, both for companies and entrepreneurs.
Innovation in products and processes linked to digital transformation and the 4.0 revolution drive the open innovation strategies of large companies.
Corporate entrepreneurship initiatives include activities such as incubation, acceleration, investment, co-design and co-development of solutions, as well as contests and hackathons. These activities allow entrepreneurs to take advantage of the platform of experiences, contacts and infrastructures of large companies.
The work of corporations with startups poses an agenda of important challenges. These must be taken into account along with the promises associated with their potential, especially by involving such diverse actors.
For most corporations, it still seems relevant to achieve a better understanding and a broader commitment to innovation and work with startups, as well as to be able to move towards more agile processes, promoting training and having more appropriate human resources and budgets.
On the side of entrepreneurs, the results of the research should help them to be more attentive when joining a corporate program, taking into account the existence of different work models and degrees of commitment. “Likewise, entrepreneurs should adjust their expectations regarding the times and processes of corporations, as well as keep in mind that knowing how to settle differences of opinion can be part of the game,” adds Zuñiga.
Governments, for their part, could take this study as input for the design of programs that encourage the work of large companies with the SMEs. In addition, it can be useful for the selection of those corporations capable of providing effective support to entrepreneurs in the framework of the intelligent promotion of corporate entrepreneurship policies, away from prejudices, either for or against big business.
A “smart” strategy involves investing public resources to “wake up” and leverage private resources. The goal is to obtain a positive net balance, favorable for the development of entrepreneurship and innovation ecosystems.
It is necessary to promote a greater debate about the type of public policy intervention required, as well as to obtain empirical evidence on the most appropriate instruments. In addition, in a post-pandemic scenario, resources will have to be managed in an increasingly strategic way. Therefore, it will be very relevant to be able to distinguish between corporate initiatives that, in the end, may be more oriented to marketing and the construction of an institutional image, from those that promise greater results by having a greater commitment to innovation as a true engine.
About Jorge Zuñiga Blanco
Jorge Zuñiga Blanco is a leading eCommerce expert who has provided his services to growing organizations throughout the world. He has a diverse background of industries to his credit, giving him the ability to relate and contribute to business owners in a variety of markets. He has more than 20 years in the eCommerce industry and, for the past nine, has dedicated his expertise and knowledge to helping executives and managers develop their businesses.
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