How to successfully integrate smaller, innovative companies into large corporations  

Without a doubt, disruptive innovation currently ranks high on the CEO’s agenda. Large, established companies face growth challenges in their traditional businesses and now need innovation to unlock new sources of revenue. To achieve this, companies are increasingly using M&A to capture innovative growth opportunities and create the ‘businesses of tomorrow’.

What are the integration challenges for these new types of deals?

As with any acquisition, it is important for the buyer to ensure the continued success of the acquired company and to retain the innovative mind-set of the tech firm or capability that was acquired.

Speed of innovation

Smaller companies are known for their rapid pace to develop innovative solutions. The speed to market is closely linked to how they operate, focusing on proximity to their customers or even co-creation. Applying complex layers of hierarchy would reduce the speed of decision-making and can interrupt this innovation capability.

Focus on a niche

Smaller companies often have a very narrow and focused offering. They establish themselves in small, highly specialised niches and their initial success enables them to scale to bigger, established markets. Large corporations, which have been operating in such established markets for years, are suddenly confronted with innovative players able to provide competitive solutions at a fraction of the cost. 

Focus on risk and control

Smaller companies often operate with higher risk appetite and lower levels of control. This enables them to drive forward new ideas and models, and to succeed in a race that larger firms, who often emphasise risk minimisation, don’t even know is happening.