RISING GIANTS I: USING AI & MACHINE LEARNING

Massive hidden data potential of enterprises, specifically SMEs, leveraged by tech Start-Ups

Reiner Kurzhals

16.07.2018

Some companies fear new market entrants that are gaining market share based on value-generating technologies. With a lean and highly customer-centric approach the entrants develop mostly data-driven products, that solve painful problems. These new competitors don’t even have to be in the same industry sector to disrupt them. Amazon is a well-known example here.

Other established companies would like to participate and profit from rising technologies and AI developments. The benefits are crystal clear and sound like every manager’s dream: sales growth and reduced costs in almost all areas. Incumbents though rely way too often on outdated schemes which have led to nothing more than shrinking profits despite harder work. The challenge: these companies have almost no tech experts in-house to help. Even their IT departments, usually the in-house problem solver per se, lost connection to this very new data-inspired tech era, which has only established itself in the last 2-5 years. Moreover, the problem seems to be market wide, as we see an overall tremendous lack of tech experts.

If companies strive for the merits they need to trust in these rule-breaking data-driven developments, and they better should. The logic consequence: they must trust in tech start-ups and must cooperate to get access to those accelerating tech insights. It seems to be the only way to participate in this obvious market development, to fully unfold a new era of data-driven business models.

Tech start-ups arose because the spirit of the leading tech experts didn’t fit into traditional company structures. They run on their own mantra: faster, no fear of failing and a strong bias towards action. There is no other place where prototyping, sprints and iterations are as normal as in tech start-ups.

But together, traditional companies and tech start-ups, combine a tremendous business power and make an unbeatable team, if they work together on eye level. These tech start-ups operate with a certain tech expertise on a global scale. Meaning they are not only to find in the Valley, Israel, India or in China, but also on your home turf. The most obvious difficulty here is to build up trust. This can be solved by tech start-ups, which are able to offer a service based on a pricing and delivery model which beats traditional service providers in this field by far.

My prediction is that with the help of tech start-ups, SMEs will be able to rise to the challenge of defending their market share and attack new markets. This way some may become giants (again). Otherwise, SMEs will be ambushed for good – faster than expected.

In my next article, I will be writing about how the collaboration between these different teams will work operationally, in particular for SMEs.

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