In my previous article, Entrepreneurship 3.0 — The Third Wave of the Industrial Revolution, I discuss a new era of entrepreneurship that merges startups, large corporations, and research universities in symbiotic partnerships. startups benefit from the research and resources of their new partners, while corporations are able to empower innovators and profit from their work instead of competing against them. In acknowledging the growing importance of the entrepreneurial spirit, corporations are investing in the companies of tomorrow and preparing themselves for long-term success. In this article I’ll share a few current examples of Entrepreneurship 3.0 and explain their significance.
Developing Cutting Edge Technology – “Beyond Verbal”
Beyond Verbal is a startup that studies the science of emotion. They developed a proprietary technology that identifies a person’s moods, attitudes, and emotions through analysis of their speech. In a sense, the company exists to provide insight into your personality. Beyond Verbal’s technology was especially intriguing to Lieberman Research Worldwide, a global marketing research consultancy. Through their Pragmatic Brain Science Institute, LRW provides insight into consumer behavior. For all their resources, LRW could not provide the service that Beyond Verbal offered.
Rather than competing against each other, Beyond Verbal and LRW partnered in June 2014. The partnership integrates Beyond Verbal into LRW’s existing suite of services. By utilizing LRW’s commercial resources, Beyond Verbal no longer needs to worry about monetizing their product, and can instead focus all of their energy on optimizing their technology, now with the research of LRW at their disposal. LRW, in turn, benefits by turning a potential competitor into an asset. Including Beyond Verbal’s technology into their existing portfolio of services allows LRW to market themselves as a holistic solution, a market leader with a wide array of unique tools at their disposal. Together the two companies form a sum that is greater than their individual parts.
Revolutionizing the Customer Experience – “Aisle411”
If Beyond Verbal and LRW exemplify how a partnership can successfully market an existing product, Walgreen’s work with Aisle411 is a case study in how a large corporation can partner with a startup to develop game-changing products together. Beginning in 2012, Walgreens, the largest drug retail chain in the United States, has been working with Aisle411, an indoor location services platform, to revolutionize how consumers find products in retail stores. Leveraging the research of Google’s Project Tango (which works closely with major universities and research labs), the goal of the partnership is to create an indoor GPS for shoppers that can pinpoint the exact location of products and provide special, targeted deals for users. With the support of a large company like Walgreens, Aisle411 fast-tracked the development of their product and ensured an immediate application once that development is complete. Walgreens creates a faster, more convenient customer experience with the product and opens new avenues for engaging with consumers (utilizing the app as a loyalty program, highlighting special deals, incentivizing customers to discover new products, etc).
3 Companies Reinventing Businesses for the Modern Age
Walgreens is clearly an early believer in Entrepreneurship 3.0. Their relationship with Aisle411 is just one in a portfolio of partnerships with startups. While Aisle411 is focused on revolutionizing the in-store experience, additional partnerships are focused on developing entirely new revenue streams for Walgreens. The company teamed up with digital health startup MDLive in 2014 to offer telehealth consultations to customers. In 2013, Walgreens partnered with diagnostic biotech startup Theranos with the goal of providing affordable, needle-free in-store blood tests to customers. A partnership with tech startup Loopback Analytics lets Walgreens assist customers in taking medications on-time and refilling prescriptions when appropriate. The net result of these partnerships sees Walgreens transitioning from simple pharmacy to innovative digital health platform.
An influx of technology into a traditionally brick and mortar business is helping keep Walgreens relevant in today’s increasingly digitized world. Sensing the growing threat of traditional competitors as well as online retailers, Walgreens has leveraged startup partnerships to deliver a unique customer experience. Loopback Analytics CEO Neil Smiley succinctly summed up how Walgreens benefited from partnering with his startup, saying “[Walgreens] had done some things on their own, but they decided our technology would be pretty helpful.” Walgreens reinvented their role in the marketplace and are now becoming serious players in the highly lucrative healthcare industry. It’s unknown if Walgreens execs 10 or 20 years ago foresaw this direction for the industry, but it is obvious that embracing entrepreneurial innovation has enabled the company to stay on the forefront of a changing landscape.
Implications: Innovate or Die
It’s clear from the examples I’ve just discussed how the resources of large companies can help with the development and application of startup products. It’s equally clear how corporations benefit from their innovative partners. Smart companies like Walgreens are already realizing that it’s better to adopt startups as allies instead of competing with them for many years to come. As a cautionary tale, consider the impact that WhatsApp’s rise has had on the wireless industry. Wireless providers lost out on $32.5 billion in texting fees in 2013 due to free messaging services such as WhatsApp (Bloomberg). That projection is expected to grow to $54 billion in 2016 (Bloomberg). When startups experience explosive success without the guiding hand of a corporate partner, the results can be devastating for every established company in that industry. Imagine the competitive advantage had a wireless company partnered with WhatsApp from the start. Given the impact of independent startups like WhatsApp, moving forward it’s not a matter of if Entrepreneurship 3.0 is the way of the future, but how quickly businesses embrace it.