One of my family’s favorite places to go is Disney World. We’ve been going every year since my daughters were very young. One big improvement Disney has made in recent years is the launch of what they call the MagicBand.
WIRED published an article which tells the story much better than I can. If you want the longform, be sure to read it. The shortform is that the MagicBand is a simple, rubber wristband that vastly improves the user experience. The MagicBand takes a lot of the friction out of the experience like buying tickets, standing in line, making restaurant reservations, and buying all of the stuff your kids want. The Magi Band allows guests to use one device to do just about anything they need to do once inside Disney’s ecosystem. And for Disney, this of course creates an incredible amount of data they can use to not only track their business but also forecast. The MagicBand is awesome.
But, it took over seven years to develop, 1,000 employees and cost over $1 billion.
If you’re reading this and you work inside a big, established company, you’re probably shaking your head right now thinking, “Yeah, that sounds about right.” But if you’re a VC or an entrepreneur, you’re probably thinking about Dave McClure’s post, “All dinosaurs gonna die.” Big companies need a way to move much faster with fewer resources to keep up with startups.
For most big, established companies, it’s extremely difficult to develop new products or services using new, digital technologies or business models. I’m not talking about going from idea to prototype; that’s not easy, but doable for most companies. The hard part is to actually build, launch and then scale.
That’s why we developed our co-creation model. It enables us to do what would normally be very difficult or even impossible.
We open up some of our biggest business challenges or opportunities to a global network of entrepreneurs and co-create new startups with them. In less than three years, we’ve co-created 15 startups in 10 countries generating a 3x return for Coke. Great examples are Wonolo, Hivery, S3, Weex and Winnin.
The “killer app” inside our model is that we work directly with entrepreneurs. Most big companies just simply don’t do this. But for us, it’s critical. Here’s why…
Here are three reasons we co-create with entrepreneurs:
1. Entrepreneurs burn their ships. They’re all in.
For entrepreneurs, they have no other play other than to make their startup successful. Think about it: if you work for a big company and your project doesn’t really do what everyone had hoped, most of the time you don’t lose your job or even take a salary hit. Life goes on. But if you’re an entrepreneur, you’re betting everything you have on your startup—with zero guarantee that you’ll even be able to take a salary, etc. Like Cortez and his men did, entrepreneurs “burn their ships.” To be truly disruptive, it takes this level of dedication.
2. Entrepreneurs have the speed and flexibility to go to market, fast.
Most managers inside big companies are very skilled at understanding the business challenge/opportunity, writing a brief and hiring an agency or consulting firm to help them develop something. But again, getting from an idea to a prototype/business plan is easy compared with actually building, launching and scaling the new product or service in the market. But this is what entrepreneurs do best and through our model, we can tap into this kind of hustle.
3. They create very little disruption to our core business model.
Coca-Cola is in the beverage business; we make products people drink. Our core business model is based on building brands and making/distributing beverage products to our customers (retailers) for consumers to purchase. Our business planning process, staffing model and internal systems are all designed to create maximum effectiveness and efficiency to drive our core business. But, by working directly with independent entrepreneurs, we can explore very disruptive and unproven technologies or business models very easily without affecting our core business.
David Butler is vice president of breakthrough innovation at The Coca-Cola Company. Follow the Coca-Cola Founders blog for more posts.