Technology disruptions and digital transformations are nowadays become a strategic topic in the business world and StartUPs are playing a key role as a generators of new business models.
Clouds, Mobile APPS, IoT and Analytics, together can create new business opportunities easier than few years before since they enable the creation of digital ecosystems among different industries.
As a matter of facts, most of big companies nowadays invest on Start UPs and embrace disruptions with dedicated investment fund (Seed, VC) and Acceleration programs.
So, how do big companies deal with Start UPs? Do big companies consider StartUPs as a threat or as an opportunity in order to embrace disruptions?
For each company, by evaluating its:
- Market Leadership in the industry
- and the Disruption Attitude towards innovations and investments in StartUPs
in the Figure below, an example applied for the Insurance Industry where are shown four strategic positions toward digital disruptions: Disruptive Leadership, Conservative Leadership, Disruption Hunter and Conservative Niche.
(Market Leadership: HIGH & Disruptive Attitude: HIGH)
Companies that have a proactive attitude towards disruption because they leverage theirs market leadership and resources to develop accelerator programs for Start UPs as well as dedicated Seed or VC investment founds
AXA one of the biggest insurance companies worldwide, with AXA Strategic Ventures is the most active.
Its portfolio is well developed and wide with more than a few potential successful digital insurance Start UPs such as Policygenius and LimeLightHealth as well as with Biobeats in order to explore new businesses opportunities and ecosystems in healthcare enabled by wearables.
Other big players are filling theirs disruption leadership GAP by investing more resources and encouraging more initiatives.
Smaller players like Munich RE and Marsh are insted pretty active on scouting and investing early stage digital insurance Start UPs (see CB Insights Seed & A Series top Seed and A Series investors in insurance).
(Market Leadership: HIGH & Disruptive Attitude: LOW)
Despite its leadership, Conservative Leadership companies have a reactive attitude toward disruptions ans compete in the insurance market by mainly employing its resources on “traditional” investments:
- Agents’ Networks & Brokers
- Dividends and Investors relations
- M&A of developed Start UPs
- Internal Product Development (close innovation)
Big insurance players such as Zurich, Prudential and Berkshire Hathaway Inc. do not have any signficant accelerator or investment found dedicated for StartUPs and they just M&A whenever a small companies reach a significant stage of development in terms of customer base and traction.
So, with a Conservative Leaderships approach the market risk of disruptions its just mitigated rather than exploited.
(Market Leadership: LOW & Disruptive Attitude: HIGH)
Despite they are not leading the market many insurance companies might invest (or speculate) on disruptive Start UPs.
Due to the limited amount of resources compared to market leaders, Disruption Hunters neither can institute accelerator programs as Disruptive Leaders do nor acquiring already developed Start UPs.
However, there is still the opportunity to scout early stage StartUPs that required a limited amount of investment at Seed or A Series levels.
According to CB Insights, respectively top three acquires of digital insurance StartUPs during last year.
(Market Leadership: LOW & Disruptive Attitude: LOW)
Mainly many and many SMBs or independent insurers agents & brokers that are conformable with theirs networks of loyal customers.
So, a framework for identifying the strategic position towards StartUPs’ disruptions have been just applied for the insurance market and it can be extended to other industries (Automotive, Telecommunication, Banking,…).
Concerning insurance, many companies have strengthened theirs effort and interest regarding StartUPs, maybe also because already other big players from other industries like Google have attempted to threat the insurance market (see Compare Auto Insurance recently closed).
What if insurers become comfortable with disruptive digital ecosystems? Would they threat other sectors as well?
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