Innovation: It's Not What You Know but Who You Know

Latest research from the Economist Intelligence Unit and Telstra reveals businesses are increasingly relying on digital partnerships* to innovate and drive new revenue

17 Nov, 2015, 00:01 ET from Telstra

NEW YORK, Nov. 17, 2015 /PRNewswire/ -- A global survey of leading executives shows businesses are responding to an environment of rapid change and technological disruption by establishing partnerships across firms, industries and geographies.

The second report in Telstra's global research series, Connecting Companies: Strategic Partnerships for the Digital Age, found companies driving innovation today are increasingly relying on partnerships rather than traditional in-house R&D or acquisition strategies.

The Connecting Companies research found the primary motivation of digital partnerships is to develop new capabilities that serve the 'always on' customer including the mobile-first customers of the rising middle classes in Asia.  The research also showed:

  • We are in an era of the "co-corporation", with 53 per cent of respondents believing that companies will have to be part of a network to maximise technology trends in the future.
  • 50 per cent of executives believe their digital partnerships will result in a change to their business model.
  • Forty four per cent of respondents took the view that "companies going it alone will soon be a thing of the past".
  • Half of those surveyed believing their digital partnerships have proven their value "beyond doubt".
  • Six in 10 surveyed say they expect that their partnerships will generate at least one tenth of their revenue over the next 12 months.

Martijn Blanken, Group Managing Director, Telstra Global Enterprise and Services said the research confirms that across multiple industries the pace of technology change is so great that to keep up, most successful global businesses are pursuing strategies based on the power of many.

"It is not that the age of in-house R&D and product development is dead, but in many industries you just can't go it alone anymore.  Whether it is the Indian conglomerate Tech Mahindra strategic partnership with Cisco on the Internet of Things or investments in start-ups like Telstra is making through our muru-D accelerator and Ventures Group, partnerships are a key part of business strategies," said Mr Blanken.  

"It doesn't always come easily. It's natural for a business to want to compete rather than collaborate, but to succeed in this environment takes a mindset that is open to experimentation.  As the EIU says in the research be promiscuous but take precautions. So make multiple small bets on big technologies, playing the field and being prepared to exit quickly if things aren't working." 

"Interestingly, the research reveals some regional disparities.  With the majority of respondents in fast growth economies like India, China and Indonesia saying their partnerships are driven by the desire to either expand into new markets," said Mr Blanken.

"In contrast, European and North American respondents are more interested in developing new capabilities in products and services and showing differentiation to existing segments, of course both approaches open the door for some fantastic collaboration opportunities," he added.

The research surveyed more than 1,000 respondents from Asia, Europe, Middle East, Africa, North America and Australia across 20 industries.

References to "partner" or any derivatives thereof in this article are used in an informal sense to indicate a closeness of relationship and may not indicate any legal partnership.

Key Findings from United States

  • US businesses are positive about digital partnerships
    • Nearly half (47.88) have already entered into a digital partnership more than 12 months ago
    • Nearly half (46.68) of US respondents believing that companies will have to be part of a network to maximise technology trends in the future
    • The partnerships are beginning to pay off with 48.14 per cent of US businesses believing their digital partnerships have proven their value "beyond doubt", less than the global average
  • Nearly a third (28.48) per cent of the US businesses surveyed do say they expect that their digital partnerships will generate between 10-25 per cent of business revenue in the next 12 months
  • Nearly 50 per cent (49.70) of US businesses view themselves as embracing digital disruption, however less than 20 per cent (16.39) feel as though they are responsible for it, one of the lowest scores across all countries surveyed.
  • Most of our US businesses are looking to support their start up community with nearly a third (28.48) of businesses surveyed viewing technology driven startups as a potential business partner. This is however lower than some of their Asia neighbours compared to the likes of China, where over half of their respondents feel that way.
  • US organisations are balanced about their positioning in their markets with over 40 per cent (44.24) claiming they view themselves as "Opportunistic: we must compete but we also have something to learn from them" when asked how they would react if a large technology company was preparing to enter their market
    • There is still some caution however, with over 40 per cent (31.82) of respondents either unlikely or highly unlikely to form a digital partnership with a competitor.
  • US organisations are still not looking much further than their front door step with nearly two thirds (57.58) opting to be most likely to enter into digital partnerships with companies from north America but there is ambition for slightly further expansion with 15 per cent looking to opportunities in Europe and 13 per cent in Greater China.

About Connecting Companies: Strategic Partnerships for the Digital Age

The research, commission in June 2015, surveyed 1044 senior business leaders, half (51%) of whom are C-level executives or board members. Respondents come from across the world, with 48% based in Asia-Pacific, 33% in Europe, Middle East & Africa, and 19% in North America. There is a minimum of 75 respondents from China, France, Germany, India, Indonesia, Japan, the UK and the US.

A total of 20 industries are represented in the survey with at least 80 respondents coming from each of the following six industries: entertainment, media and publishing; financial services; healthcare; IT & technology; manufacturing; and professional services. The sample is evenly split between firms with annual revenue over $500m and below $500m.

SOURCE Telstra