The mere mention of accelerator schemes can incite a wry smirk from many an entrepreneur but Visa is banking that the strategic intent of its current work with startups is enough to convince the naysayers its serious.
Innovation and Visa haven’t been natural bedfellows but there are signs they’re getting closer; from its corporate ventures arm to the formation of its innovation lab in 2014, there’s more structure in place to allow the company to innovate at speed. Admittedly, it’s not fast enough to adapt to the vagaries of digital commerce but it has been honing the way it works with startups to close that gap.
Part of that speed flows from its ‘Everywhere Initiative’, now in its second year, to identify and partner with startups that can help it solve short-term business challenges. Those immediate challenges are to come up with either an innovative payment system, a ubiquitous cardless service and social media product to support its sponsorship, of which the latter will launch later this month (13 April).
For anything bigger and consequently more complex, Visa’s venture arm steps in. It’s a balance that works, in part because the ‘Everywhere Initiative’ isn’t a core part of the company’s business, whereas its ventures arm increasingly is, and so there’s less pressure on the former to constantly deliver change that makes fundamental changes to the business.
“It would be a stretch to say that Visa has changed inside and out in the last year and a half but the cultural influence on the business whether its through marketing programs like the ‘Everywhere Initiative’ or by working with technology players – big or small – is indeed having a massive cultural influence,” said Shiv Singh, global head of digital and marketing transformation.
“If you talk to people outside of Visa they would say that in the last three years it has been like a sleeping giant that has suddenly awoken after a shot in the arm of startup culture that’s spreading through us.”
That behavioural change will become even more pronounced as the ‘Everywhere Initiative’ develops; currently, the ultimate winner of the scheme will receive $50,000 and a yearlong mentorship from Visa’s product and technology teams to refine. It won’t stop there, as the programme will move to China later in the year, with Visa harboring global ambitions for it in key markets.
Beyond fulfilling its own objectives, Visa feels it has more to offer startups. “They’ve learnt a lot from us, especially when it comes to the power of brand building and how to market a business,” assured Singh.
“The most successful companies are the ones that create strong eco-systems and we have issuer relationships and merchant relationships so that’s why we’re a strong business. Stuff like that is eye opening for startups because it offers a strategic view into how Visa operate and they also learn what its like to partner with a big company.”
Accelerator schemes alongside a corporate ventures arm are fast becoming more commonplace among those companies taking innovation more seriously. Diageo, Unilever and Coca-Cola are among those to try the two-pronged approach as their business models come under more pressure to use marketing – and consequently innovation – as a growth driver amid tougher economic conditions.
Crucially, these businesses are putting in place the right foundations, structure and to then make decisions that actually benefit of both start-up and brands. While Unilever for example are the world's second biggest advertiser, they also have the Foundry and their Ventures arms, which are increasingly making more inroads in the innovation and investment arenas.
“Whereas brand innovation is about cutting edge problem solving for consumers, organisations with a VC arm are looking at more longer term shifts in consumer consumption trends and less on the right here, right now,” said Mike Litman, chief executive of startup Burst Insights.
“It's strategic versus tactical. Innovation can no longer be seen to be a siloed entity with one person having an innovation job title tasked to make fundamental organisational change, it needs to be baked in across the board to make any lasting impact.”
For Visa, the tighter focus on innovation will ultimately give it visibility; what was once a company that prided itself on being so ubiquitous that it operated in the background is now trying to harness the power of brand recognition to drive longer-term adoption,