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innovation

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chris floyd

There’s a knack to finding people to meet your digital challenge

Getting Big Data talent won’t be easy Chris Floyd is a Rolls Royce leadership educator

agree to a high acquisition price, based The ability to collect and interpret data has on a multiple of potential future sales, is become critical. The retail and banking challenging, particularly for a loss-making sectors have been addressing this software startup with uncertain prospects. challenge for years, and it is a growing There is a further complication in that priority for consumer and industrial software tech companies are often at such products businesses. an early stage that it is not clear in which The strategic challenge is broadly the market the technology will deliver most same regardless of sector: data is becoming value. One aerospace company invested essential to future success, and there is in analytical software for predictive a real risk of disintermediation – with maintenance, only to find that the biggest corporations ending up as commodity market for it was in the healthcare sector. suppliers to the big software and data Despite these challenges, it is vital that businesses, such as Alphabet and IBM. multinationals take action, as they need to Whoever controls the data controls build the software capability to collect and the industry. interpret their own data. The obvious way forward is for Before buying software companies, established multinational corporations to arm yourself with information. Build an acquire software capability for themselves. internal team of experts, But this is not easy, as and hire managers many are finding out. Data is essential to who have experienced The first challenge is both startup and that most multinationals success: control the multinational cultures simply don’t know data, control the industry and can act as a bridge how to manage small, between the two. This high-technology team can help you through the interim step companies. Large global corporations are of buying in software and support services, structured, bureaucratic and well-ordered, and also help you adjust your approach to with explicit and implicit hierarchies plus increase the chance of success. well-managed investment allocation and Don’t rush in too early. It is tempting financial reporting processes. to buy very early-stage companies, as they Small, fast-growing software startups are comparatively cheap and provide firstare the complete opposite. Software mover advantage. All the evidence suggests engineers are passionate about their it is better for large corporations to bide software, rather than the company they their time, and that post-acquisition work for or the markets they serve. They integration is more successful where the expect to be treated differently, provided acquired business already has structure, with a flexible working environment and sales and profits. given fast-rising stock options. Alternatively, with board and This does not fit with the structured and shareholder support, you could take a more bureaucratic way in which multinationals aggressive stance, investing heavily to buy work, so it is not surprising that the key companies and transform the business. For talent often walks out of the door shortly example, in the 1990s, IBM succeeded in after an acquisition, leaving the parent migrating from hardware to software. company owning a hollow shell of a With GE Digital, GE appears to be doing business with limited value. the same. The second challenge comes from For most, the best approach is to build the multinationals’ shareholders, who internal competence gradually and then are usually more focused on shortacquire capability. Given this is a slow term performance than on longer-term process, you had better make a start now. investment. Persuading shareholders to Q3 2016 Dialogue

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11/05/2016 12:21

Dialogue Q3 2016  
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