Developments in corporate strategy come in all shapes and sizes. They can be anticipatory, with companies foreseeing new breakthroughs or deals before they happen, or the may be reactionary, as companies realize existing industry conditions can be harnessed for their benefit. Frequently they are a combination of both.
Increasing global connectivity is an example of change that has wrought both anticipatory and reactionary strategies, and it has empowered small businesses to compete on a scale that was previously unattainable. Employees from around the world are collaborating on projects through cloud computing and using sophisticated technologies available online, all while the companies maintain low overhead costs and a nimble corporate structure.
Problems are arising in larger corporations because they simply cannot take the risks or move as quickly as these small companies. The barriers to entry that were insurmountably expensive in the past are diminishing, traditional in house R&D is proving costly, and acquisitions are highly risky. The result is a new “ecosystem investing” strategy that allows corporations to create new revenue streams now and hedge against unforeseen developments in the future.
William Holstein explains that “ecosystem investing” is a way for large corporations to “harvest ideas” from smaller companies through partnerships, licensing agreements or other mutually beneficial relationships. It provides a pipeline into start up sectors and high-risk technologies for the corporation, and funding, exposure and experience for industry incumbents. It is an effective method to minimize financial risk, yet allow multi-national corporations to stay on a leading edge of innovation that is increasingly being led by companies that previously couldn’t compete.
Change occurs in everything. Those people, companies, countries, etc. that consistently take stock of their surroundings, and adapt their strategy to take advantage of current and future developments are those that will thrive in the long run.