The Power of Collaborative Innovation
We've been fascinated by the many ways in which our clients are embracing disruption. One trend on the rise is the David and Goliath effect - a traditional story of conflict increasingly turning to one of partnership. For the first time Close Encounters, our new economic study, quantifies collaborative deals between UK SMEs and domestic and international corporates and reveals how these partnerships are delivering valuable innovation.
Collaborations between large and small business are happening in great volume.
Financial services lead the way for collaborative deals.
Our economic report explores collaborations between large businesses and UK SMEs in the form of M&As, minority stake purchases and joint ventures from April 2013 to 2017.
Simon Pilling, Corporate Partner, Bond Dickinson, presents the key findings of our economic report on the power of collaborative innovation.
Deals between large organisations and UK SMEs dropped 28% in 2016/7, after a three-year upward trend in collaborative investment, according to data released by Bond Dickinson. Despite the recent fall, large organisations still invested £21bn in 1,111 deals with UK SMEs in the last tax year, 31% more than the £16bn large organisations invested in UK R&D in 2016, showing a healthy appetite remains for partnering with SMEs.
Knowledge is at the core of any successful collaboration. But how do participants ensure that collective knowledge is captured, shared and leveraged for the benefits of all the stakeholders?
The quest for unicorns is well underway. The term describes start-ups valued at more than $1 billion based on the potential of their nascent technology and intellectual property rather than on market performance.
The daunting list of challenges facing the global insurance industry shows little sign of abating. From the lingering effects of the financial crisis and ongoing political uncertainty through to sweeping technological change and coping with significant disruption from the growth of aggregator price-driven websites, the industry giants are now left with important questions about their current business models and the industry’s future.
Given the fundamental role that technology plays in the sector, this is arguably the most pressing challenge that insurers need to address. While insurance was one of the first industries to embrace tech in the 1970s and 80s, paradoxically, major insurers have been very slow to go digital.
“Modern businesses are increasingly recognising the importance of collaboration to successful innovation. Outward-looking companies are building networks and tapping into entrepreneurial talent to make them more productive and improve their products and services.”
Tom Thackray, Director for Innovation, CBI
We commissioned consultancy Cebr to conduct the economic research outlined in our Close Encounters report. Find out more.
The industry is undergoing a major shift as technology, regulation and consumer behaviour demand wholesale digital transformation.
The energy sector faces prolonged and significant pressures, not least in the form of "lower for longer" oil prices.
“We established the Reece Innovation Centre (RIC) to provide expert resources to support all of our group companies. However the RIC is also externally-focussed, working with a wide network of partners, including universities, large businesses and SMEs. We gain input and support from our partners and we provide services and expertise to them.”
Ryan Lamb, Head of Finance, Reece Group
"Collaborative innovation is a very different kind of M&A with novel objectives and outcomes."
Ben Butler, Corporate Partner, Bond Dickinson
Our data visualisation tool showcases the total value and volume of collaborations from both sectors and regions
"Collaboration with SMEs has become a key strategy for delivering corporate innovation. Neither corporates nor SMEs are perfectly built to deliver innovation alone, but the reach & power of one, combined with the agility of the other can be a potent combination."
"The major flaw with the M&A model is integration – costing vast sums and repeatedly failing to deliver value. When the aim is to promote innovation, a minority stake can be more naturally structured to incentivise both parties as it is aligned to capital growth."
Lucy Pringle, Commercial Lawyer, Bond Dickinson
Our report identifies a significant market trend as large corporates increasingly look to start-ups for agility and creativity.
London Midland created the LM Labs Accelerator. They believe great ideas come from a variety of places including smaller, lean companies who spot the pain points and can act on them quickly.
“Despite their scale and success, the majority of today’s leading corporates are built to operate, not to innovate. Acquiring innovation from new and nimble start-ups has become a powerful approach for leaders who want to stay ahead of disruption.”
Stephen Pierce, Partner and Head of Corporate, Bond Dickinson
Our infographic displays the key findings about collaborative innovation from our economic report.