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Innovation Ecosystem: How Startups Can Accelerate Digital Transformation in Large Companies

By Josep Celaya, Global Head of Transformation - Open Innovation, MAPFRE

Josep Celaya, Global Head of Transformation - Open Innovation, MAPFRE

The vertiginous changes that are taking place in the business world, driven by technological advances, are forcing companies to adapt to a new reality. The fundamental challenge facing large organizations in traditional sectors is the transformation process that they must inevitably address. The objective is to ensure that business models that have been stable, profitable and productive so far can adapt to the changing world in which we find ourselves.

These classical players need a new set of skills to operate digitally and avoid getting left behind, or worse. The question that arises is one of how to transform a traditional organization that operates in a traditional sector. Acquiring these skills through productive partnerships with the digital ecosystem that allow them to remain competitive is a critical factor. It is therefore necessary to create open innovation systems that facilitate importing innovation (in technology, in business models, in ways of working) from the entrepreneurial world to within the company. The secret to achieving this lies mainly in the company’s ability to generate a mutually beneficial relationship with startups.

The relationship between a traditional company and one that has just joined the playing field can be complex, however. Stability is a prime characteristic of a large corporation, the result of operating in much more mature markets and having very bureaucratic processes in place. In other words, large companies can be seen as cumbersome machines designed to do things with great consistency and rarely fail, which is why they consequently move at a slow pace. Their structures are designed to maintain a business, not create a new one. Startups are at the other end of the spectrum: they are small, flexible machines created to seek out a viable business model. Everything is uncertain and they are exposed to risk, resulting in short-term time frames, because they need to act quickly to keep moving forward.

Large companies and startups speak completely different languages and both tongues are imperative to future survival. A traditional organization needs to modernize if it wants to survive, and a startup needs the experience and financing of the large corporation to sustain itself, grow and become profitable, which brings us to the logical realization that both parties need to reach an understanding. The manager who wants to work with entrepreneurs must know how their world works so that the process of mutual collaboration bears fruit.

The best example of a roadmap for the transformation of a traditional area, as is the case with insurance, is the one we have rolled out in MAPFRE through insur_space, a cornerstone of the Disruptive Innovation pillar of MAPFRE’s Open Innovation strategy. This insurtech open innovation platform was created specifically to promote collaboration between the entrepreneurial ecosystem, the company and innovation-focused institutions, with the main aim being to reduce the friction that currently exists between traditional and new companies.

"A traditional organization needs to modernize if it wants to survive, and a startup needs the experience and financing of the large corporation to sustain itself, grow and become profitable"

The insurtech phenomenon is defined as a collaborative environment where insurance and new technologies come together. The idea is that it is more viable for entrepreneurs to generate unique value propositions that can be integrated and developed with traditional players in the insurance sector. MAPFRE is looking to benefit effectively from this external disruption, in return offering the startups in the insurance sector access to its diversity of business lines and activities, as well as its international footprint, all of which drive their product and service growth and overall development.

Insur_space has two programs in place: one focused on acceleration, to help entrepreneurs get their businesses up and running by developing a minimum viable product, and the other focused on adoption, which aims to promote and consolidate more mature companies through the pilot programs. With this initiative, MAPFRE aspires to be one of the world's innovation leaders, and 100 million euros per year have been allocated to developing innovative solutions that facilitate the company’s digital transformation and ensure it adapts successfully to the new paradigm.

If there is one thing that characterizes the times we live in, it is that the ability to learn and embrace change has become a fundamental competence in a large company’s ability to continue competing and generating value. The adoption of externally-driven innovation and the implementation of technologies, business models and ways of working found in the digital world are essential to survival and prosperity. Companies not suitably prepared to do this will lose momentum, won’t be able to compete effectively and will end up falling by the wayside, which is precisely why this meeting of minds is, and will be, paramount to ensuring that transformation objectives are met.

Weekly Brief

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