How does a big brand adapt in a world where startups are innovating faster than they can keep up? Playing Yoda to the newbies is a growing trend…
When we surveyed Millennials on their retail motivations, we found that 63% would rather buy a product from a smaller company that is innovating within the industry than buy something from a brand that has a monopoly on the market.
Millennials are Retail Rebels, a group of consumers looking to alternate and independent ways of buying in order to disrupt the traditional systems and support innovation. 67% say they are interested in buying from companies that say they are disrupting the status quo, and 50% of Millennials say that when it comes to the brands/products they buy, helping a small business beat out a big business is important to them.
Many big brands have been struggling to attract these young consumers, who, thanks to the internet, have easy access to startups that think outside of the box and are winning over young consumers by moving quickly and creating products and services that cater directly to their desires and needs. Traditional brands tend to move more slowly, and can have trouble adjusting long-standing systems to Millennials’ expectations. So what’s a big brand to do in a world where startups are the hero of the story? Playing Yoda to industry newbies is a growing trend for companies who want to infuse their culture and offerings with invention and new thinking.
A few weeks ago, Disney held their second annual demo day for their startup incubator Disney Accelerator. The program was created to foster and mentor innovators, who are given the environment and tools to potentially become the next big thing. In the course of a 15-week program, about 10 entertainment and media entrepreneurs from the startup incubator TechStars are given an investment of $120,000 in exchange for a 6% stake in the company. Disney Accelorator companies receive mentorship from Disney executives, including Chairman and CEO Bob Iger. The brand’s EVP of corporate strategy and business development told Fortune, “We realized that not all of the best thinking can possibly come from inside the enterprise. We’re bringing in folks with fresh points of view that wouldn’t otherwise be in our sphere.” This year’s inventions include a headset that allows wearers to control objects with their thoughts, and a 3D printing company that lets kids design their own toys, those startups, along with the other program particpants, could be the basis of a gamechanging future Disney product. Perhaps the biggest evidence of Accelerator’s potential is Disney’s BB-8 droid, the toy that continues to make headlines. The BB-8 was created by Sphero, a startup that participated in the first year of Disney Accelerator, and who worked with Disney to make their rolling droids into the star of the new Star Wars products, and one of this holiday’s hottest items.
Disney is just one of many brands who are making startup incubation a part of their corporate innovation plans. TechStars also works with Kaplan, Barclays, Sprint, and Nike. General Mills recently announced that their own internal venture-capital arm, 301 Inc, will be creating new partnerships with small, innovative food startups—a move Grub Street says is happening “in part because major food manufacturers like General Mills have seen their market shares shrink as consumers’ tastes change.”
We’ll no doubt continue to see this trend play out, as big brands continue to find their industries disrupted by startups, and Millennials continue to support small, innovative newbies. Making those newbies a part of your team, and even helping them find greater success, could be a smart move.