In a new episode of the podcast series "Chefsache", Alexander Sonntag (employee at the RKW Competence Centre) and Christian Wewezow deal with the topic "Corporate Startups - How new business models can be developed alongside proven ones".
What role does innovation play in medium-sized companies and how are the demands on medium-sized companies changing?
A: The topic of "innovations" is and will remain very present in medium-sized companies, whereby attempts are made to constantly evolve in order to integrate new technologies and optimise products. During the current CoVid 19 pandemic, there are different approaches to this. Some companies are more focused on core business and finances and are less innovative, while other companies, which are less negatively affected, nevertheless continue to focus on technical and innovative development. A certain contrast can be observed here. Regardless of the current Corona situation, the topic of innovation is also at the top of the agenda in SMEs and is becoming increasingly important as a topic for the future. Above all, the factor "business model development" has become much more important for the success of SMEs in recent years, which is not least due to increased market and action pressure, whereby entrepreneurs increasingly deal with developments, which leads to a clear change in thinking.
Is the character of innovation also changing?
A: A few years ago, investments were mainly made in process development and optimisation (machines, buildings and IT), which is no longer sufficient today. Investments in controlling are becoming more and more important, with turnover and earnings being looked at more closely. Often, however, companies should also fundamentally question their business model, as business model development is becoming more and more important.
Q: How do SMEs deal with this development and in which areas can difficulties arise?
A: Here, you can often see a clear break between companies that have been around for a while and young companies. Start-ups act more disruptively and less incrementally when it comes to identifying, evaluating and pursuing new paths. New entrepreneurs are usually eager to leave a footprint on the culture and business concept in order to influence it significantly. This is also reflected in situations of upheaval, such as the hiring of a new managing director. These new structures represent a great potential to seize opportunities and significantly challenge the business concept in order to remain successful in the long term.
Do the successors in management have a positive influence on the company?
A: Often, I've had very good experiences with new managing directors, as they are usually very committed, ambitious and determined, so that visible success can already be achieved in the medium term. Increasing the degree of digitalisation also plays a decisive role in the development of new products, technologies and artificial intelligence, which can also be offered alongside existing products. Political and technological upheavals together with the influences of globalisation open up numerous avenues and lead to an ever-intensifying structural change, which can be seen particularly strongly in the banking sector or the automotive industry, for example, with the Corona situation also being very influential.
Are there major challenges to integrating a new business model alongside an existing one?
A: Often positive influences are accompanied by problems. In most cases, a new company is founded in the form of a limited liability company, which is equipped with resources, such as dedicated staff from the old company, but also new employees, whereby typical pitfalls of a start-up process can occur.
Is it more advantageous to integrate new business models into the existing company or to found a new company?
A: It has been observed that the implementation and enforcement of new business models in old, existing companies often fail because the existing corporate cultures and processes are very focused and narrowly designed, so that it seems more advantageous to free individual employees from these processes, relieving them of operational activities of the existing company. Especially in the case of new technologies with higher risk, the form of a new company is a good way to realize new projects. In general, it can be stated that it is advantageous to rely on a spin-off when it is a question of creating something big and new. Uncertainty about, for example, profitability, resources, costs, financing and also the future plans of the company play a major role here, and the concept must be individually adapted.
What are the most important aspects that you can pass on to entrepreneurs during the spin-off process?
A: There are basically a lot of similarities to business start-ups in general. You have to consider how the business model should be designed and how it can differentiate and stand out from other models established on the market or foreseeable in the future. Another important point is the demand in the market. The characteristics of the managers, such as their leadership ability and their commitment to the idea to be realised, as well as their passions, are also essential for the success of the company. The planning of the processes and structures as well as the framework conditions of the work and the guaranteed security are also important.
How are the relationships with the old company to be shaped?
A: There are various interlocks between the newly founded company and the parent company. On the one hand, these are the employees and managers, but also resources such as capital, premises, land and a good sustainable IT structure.
Separate corporate cultures. In secondary processes such as purchasing, IT, accounting, human resources and finance, resources can often be used simultaneously. However, here too it is important to weigh things up individually within the company. Also essential are the skills of the entrepreneurs, such as independence, dealing with uncertainty and flexibility.
In summary, it can be seen that innovations are becoming increasingly important and are constantly changing. Not only are existing business models constantly being adapted, but completely new business models are also being developed. There is the possibility of founding a new company and thus materialising and realising new ideas. This should be done with a spirit of experimentation, but also with caution and precise planning. Corporate entrepreneurship and corporate start-ups represent another way to combine the best of both worlds, actively integrating personal initiative, one's own values and interests into the new company.
Authors: Christian Wewezow, Isabel Runkel
