Friday, May 24, 2024

Start-ups as accelerators of sustainable development


Support for start-ups is becoming increasingly important on an international and local economic and labor markets especially as we navigate through a recession.  Startups are companies or organizations that are in their early stages as a whole or through a part of their product or service and are characterized by high uncertainty and myriad of risks.  Despite the high level of risk, they form an engine of innovation, economic growth, and jobs creation. Over the past several decades startups have been the engine for many economies and a recent study has shown that start-ups have been responsible for nearly all of the net new job growth in such economies and including the United States. As we reflect on the new year and as the new government settles in, we will need to ask ourselves if Kenyan economy can benefit from the opportunities presented by the startups in the near future?

The failure rate of startups is notoriously high. Roughly three-quarters of all startups don’t make it past their first year, and only a tiny fraction become “unicorns” companies that achieve billion-dollar valuations. This is one of the reasons why most corporations and governments withhold support citing the larger probability of failure especially in the third world countries where most startups heavily rely on support from the Western world or end up closing prematurely without reaching their potential.

Government role is to provide an enabling environment through policies, regulations and building a start-up infrastructure that will make it easiest for founders to push their idea into products and services.  Corporations on the other hand, have a major role to play when it comes to supporting startups as most industry captains need to see themselves and their organizations as enablers to startups. Corporations working with startups are able to easily spot trends and future insights on the next big thing in the industry and maximize on insights on future customer demands so that they can gain elusive first mover and competitive advantage. 

Over the years large corporates have tried internal innovation as way of seeking growth- the results are mixed depending on the industry as well as the capacity of executing internal innovation strategies. In most cases, this mode of innovation has been slow, expensive, and distracting from core business priorities. Working with startups and naturing them allows access to new ideas, more agile delivery, different ways of thinking and execution approaches that will enable companies to better leverage their own resources, assets and technology. 

Corporations interaction with the startups offer them the ability to observe and learn new business practices and techniques that they can subsequently be adopted to create more effective, productive, and impactful ways-of-working. A good example is the culture in organization where companies that are involved with startups can gain some lessons on how to develop their talent. This will be through direct observation and interaction with startup teams, borrowing internal operation systems and methodologies such as scrum which is an agile methodology for project delivery as well as helping them to broaden their perspectives to gain new aptitudes and skills. Working with external entrepreneurs/ founders can also foster entrepreneurship within the organization

In a sustainable development era, governments, corporations and start-up will become winners if they embrace innovation and collaborations within those new innovations. Recently, I was advising a global food company on its innovation journey specifically on the reduction of food waste. Working with start-ups became the go to strategy to assist the company to reduce its food waste and at the same time increase its stakeholders value. This formed a long-term strategy for the business and that required change of the status quo as working with startups is not part of the DNA of the large corporates.  As we executed the strategy, the biggest dilemma was on how to attract and maintain trust of the founders to enable the co-create of workable solutions. To achieve these elements among other required us to deconstruct some of the beliefs within the organization as well as seeking third party support especially to create the enabling environment for the cooperation between the start-ups and the food company.

In a world that is dynamic and that requires development to be sustainable, innovation will become the solution and especially when it is coupled with sustainability elements. There is need for development of responsible products and services that will be powered by the start-ups and accelerated by collaboration between start-ups and big corporates. For this to work, there is need for all parties involved including the government to rethink their strategic approaches on innovation. This will call for a different breed of strategies who understands sustainable development, strategy, innovation and the entrepreneurship world.   

Dr. Edward Mungai
Dr. Edward Mungai
The writer, Dr. Edward Mungai, is a global sustainability expert. He is the Lead Consultant and Partner at Impact Africa Consulting Ltd (IACL), a leading sustainability and strategy advisory in Africa. He is also the Chief Editor at Africa Sustainability Matters. He can be contacted via

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