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3 ways to unlock the world-changing power of start-ups

The value high-growth start-ups have brought to the marketplace has increased exponentially in recent years and is becoming ever more crucial across all industries

By: EBR - Posted: Wednesday, June 16, 2021

"Existing companies should not feel threatened by start-ups, but enter into multistakeholder collaboration."
"Existing companies should not feel threatened by start-ups, but enter into multistakeholder collaboration."

by Saemoon Yoon and Susan Nesbitt*

The value high-growth start-ups have brought to the marketplace has increased exponentially in recent years and is becoming ever more crucial across all industries. They are a significant driver of economic growth, creating jobs and injecting competition with established enterprises. The global start-up ecosystem represents the future of our massive business community. So many among them take upon their shoulders the task of solving the world’s most pressing problems, such as climate change, and enabling future workforces to be correctly skilled. In this article, we call on the collective wisdom of the Forum’s community of Technology Pioneers to delve into how to support and further unlock the potential of world-changing power of start-ups.

1. Justice, equity, diversity and inclusion (JEDI)

Innovations occur across borders. World-changing solutions generally spark from well-known start-up ecosystems such as California’s Silicon Valley, which is synonymous with the word innovation. But with rapid growth in the internet and mobile-phone adoption, we are witnessing innovations emerge from start-up ecosystems, such as in China, South Korea, Brazil and Kenya, once perceived as lagging behind Silicon Valley. They are not only implementing innovations locally, but have reached a level in which they are capable of bringing industry-leading solutions with the potential to go beyond their region.

The opportunity to network with start-up founders from different geographies and backgrounds can help expose community members to a diverse and new set of perspectives and ideas. The World Economic Forum encourages the cross-pollination of ideas among its innovators by providing a space for industry-leading companies from different regions and industries to engage and collaborate to broaden their vision and ultimately their global impact. “The Technology Pioneers community is like a particle accelerator. The platform creates an opportunity for hyper-energized founders and ground-breaking ideas to collide, and when this collision happens, it leads to new inventions, discoveries and solutions that can have an positive impact on a global scale,” said Stuart Oda, CEO of Alesca Life, a Technology Pioneer cohort of 2019.

Gender diversity is also an important building block. Women are still under-represented in all walks of life, including the political, business and academic worlds. Looking at the current industry landscape, only 37 of Fortune 500 companies in 2020 are led by women. The start-up world is no exception: Only 20% of start-ups have at least one woman co-founder, a statistic that is exacerbated as companies mature, with woman CEOs often being replaced by male ones.

Research supports the idea that gender-diverse groups are often better performing, with an ability to better absorb different viewpoints, ideas and market insights, leading to creative solutions to business challenges. But we are still nowhere close to witnessing equal and open opportunities for women. One of the 2021 Technology Pioneers, Nita Madhav, CEO of Metabiota, said: “In order to survive as a woman CEO, I’ve often needed to strive to be extraordinary and prove myself to a greater degree, working 10 times harder just for people to take me seriously.” Acknowledging such sentiments, the World Economic Forum has increased the gender representation of the Technology Pioneers cohort to have more than 30% of women CEOs in 2021, enabling the creation of a start-up world where more women can meaningfully contribute.

Racial diversity cannot be ignored either. 2020 has not only been a year of COVID, but pivotal in terms of addressing racial justice, with the Black Lives Matter movement exposing the racial inequality deeply embedded in our society. From a business perspective, the lack of conscious acknowledgement of racial diversity could lead to widening divisions in the workforce. We often hear of algorithms lacking data sets for certain racial groups, resulting in AI bias towards people of colour. When designing an algorithm or a product, there needs to be equal opportunities and benefits for all groups, regardless of their size and social status. 54Gene, a US-based Technology Pioneer cohort of 2021, are working towards remedying this. They are trying to solve the issue of heavily skewed pharmaceutical research by including under-represented African genetic material (which currently accounts for less than 3% of samples) in global genomics research.

 

 

2. The importance of a surrounding start-up ecosystem

Start-ups have the power to bring innovation to market, but equally important is to have meaningful interactions with relevant stakeholders to amplify their work. This can take the form of start-ups partnering with large corporates to benefit larger set of customers. Start-ups get funded by venture capital funds to help them navigate towards long-term execution; universities also help early-stage academic researchers to commercialize their work.

The public sector also has an important role in setting proper guard rail and sandbox environments to ensure emerging technologies maximize their positive impact, while protecting against the potential risks. The notion of start-ups being a threat to incumbents needs to change, shifting towards a culture of collaboration and synergy. A multistakeholder concept is vital, shifting away from a concept of a zero-sum game.

To allow start-ups to benefit from the multistakeholder framework, the Technology Pioneers community now allocates the companies to each of the Forum’s platforms, where workstreams are composed of relevant stakeholders. That said, the Technology Pioneers start-ups do not merely contribute as one of the stakeholders, but initiate and steer projects. Rize, from the Technology Pioneer cohort of 2020, are a good example, initiating and leading their “safe-at-home” manufacturing project, which aims to tackle the widening of income equality due to COVID. They mobilized relevant stakeholders from industries, academia and civil society organizations to envision new business models that allow low-trained workers to run their own micro-factories at home in collaboration with an integrated ecosystem of partners.

3. Ethics at the heart of all technologies

Many start-ups start their journey with a mission to change the world, but sometimes we hear of scandals in this high-pressure environment, such as malpractice at the blood-testing company Theranos. Start-ups, like other stakeholders, can be prone to falling prey to moral temptation. Oftentimes, leadership teams are under immense stress to deliver solutions within a timely period to bring the profit back to their trusted shareholders and backers.

Though meeting these short-term milestones is crucial, the view to maximize profits solely for shareholders has been changing. With businesses shifting towards focus on sustainability, ESG and long-term impact on the planet, start-ups need to think about an ethical use of their technology from the get-go.

The World Economic Forum is further emphasizing the importance of setting high ethical standards for all start-ups it engages with, by requiring them to consent to ensure their technologies are used for the greater good. A standout example is led by Hypergiant, a 2021 Technology Pioneer. They have created a so-called ethical reasoning process to provide their clients and partners with a three-step guidance for each proposed AI use case offered by their products, thereby gaining trust from their users.

Start-ups have immense potential to bring positive value to the world. Their success depends not just on the amount of capital they can secure, but on a nourishing environment that has the right ingredients to maximize their potential.

*Community Lead, Technology Pioneers, World Economic Forum and Head of Global Innovators, World Economic Forum
**first published in: www.weforum.org

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