XL … Bottom-up business innovation … How start-ups reinvent big business

Companies that spin into existence to solve one problem or commercialize a single idea can scale almost instantly if they find a solution that sticks. That’s what’s happening all over the marketing industry today: hundreds of tech-savvy startups are reinventing business from the bottom up.

In our research, we found new ventures in various stages of development, from two-person efforts nestled in the back corner of coworking spaces to mature companies boasting Fortune 50 client lists. Today, more university business programs are pushing students toward entrepreneurship as a hedge against an uncertain job market. The best ideas are feeding into incubators run by institutions (for example, the VentureLab at Georgia Tech), investors (such as Dave McClure’s 500 Startups), and corporations (see WalMart Labs, facing page), accelerating the commercialization of the technologies that are driving and disrupting marketing and other business disciplines.

This is not just limited to the United States. Google’s 2013 investment in the Avila incubator for Latin America, Ventures Africa by Microsoft, and the ongoing impact of Infosys in driving entrepreneurship in India demonstrate the power of this trend worldwide. If anything, the combination of rapid economic growth in emerging economies, a young and rising workforce, and the spread of digital—and especially mobile— technologies across the globe are shifting momentum from the established centers of the 20th century economy to the frontiers of innovation.

By their nature, these startups are lightweight and nimble in ways that enterprises can’t be: a potentially huge advantage in a market where speed determines success and scale no longer confers the same advantages it used to. While some large businesses live in fear that a competitor will emerge from out of nowhere to steal market share or drain away margins, startups present great opportunities for marketers looking for instant agility and low-impact ways to harness big trends without making big bets.

The companies profiled here are using recent developments in ubiquitous mobility and networks, data analytics, interface design, and cloud computing to put some real business meaning behind the trendy buzzwords.

Innovation is often difficult within large organizations, especially in an area like digital marketing that requires collaboration between marketing and IT groups at the highest levels. Engaging with startups allows enterprises to outsource rapid and risky innovation, piloting a bunch of initiatives and moving forward with the projects and partners that show the most promise.

Many of today’s most interesting tech startups are focused on delivering a single service, optimizing one key process, or solving one big problem. The diversity and vibrancy of the ecosystem offers these bene ts to enterprise customers:

  • Utility: By maintaining a narrow focus, small startups can ll gaps in mobile, social, and data faster than incumbents.
  • Experimentation: The burgeoning startup ecosystem offers customers a diversity of approaches to solve business problems. Large businesses can try different solutions without long-term commitments to see what is most effective.
  • Efficiency: Many of today’s tech-based companies are taking advantage of the low costs and scalability of the cloud to turn high-cost services into commodities, and packaging technology innovations as apps or services to make them easier for large organizations to deploy.
  • Disruptive Potential: By working at the frontiers of innovation, startups pioneer new business models and light up new market opportunities that can have an enormous upside for partners and customers.
  • Perception: Working with hip, new startups can often have a carryover effect to older brands and shift perceptions in tech-savvy audiences.

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