Picture courtesy of Dachis Group
Big companies are usually slow and burocratic. There have official procedures for this and official procedures for that. That, in my opinion, is one of the main reasons why big companies are always behind when it comes to innovation.
I mean, there is no way they can do product development faster than a small and smart start up.
So, what´s left for them? how do they keep up with their competition?
Well, they might not be fast but they are incredibly wealthy. So, instead of doing it themselves, they go shopping. They select a pool of small companies that already developed the product (and in some cases are already selling it ) they want to offer to their own customers.
A bit of due diligence here and there and they buy. Now everybody is happy, the start up owners got some millions (billions in some cases) and the big company has finally a product that puts them back in the innovation game. The paradigma of that was Microsoft´s aquisition of Yammer in June 2012. Some even called it the deal of the year.
As the social media industry in all its forms matures, we might be seeing the broad outlines for the end game. Or, as it turns out, at least the ongoing game. Firms that offer successful collaboration software, social customer service, social marketing, and social media analytics are all currently in play or likely targets as they reach an interesting size. Yet, most don’t have the kind of traction to achieve a dramatic IPO or even a major acquisition that would please their investors.
Yet there is significant pressure for acquirers to make moves now. Fueling these particular flames are data such as IDC’s latest prediction that social software and team collaboration will be two of the three big areas that lead growth in the software industry this year. Industry leaders just can´t afford not to get invested where the market has traction.
What do you think will be the next acquisition in the Social Media and Social Business world?