Show Notes 227: Why Radical Innovation Needs Courage, Not Just Capital
What does it take for an established company to create the kind of breakthrough that changes its market?
In this episode of the Cambridge Tech Podcast, James Parton speaks with Joe Corrigan, Chief Technology Officer, and Tim Fowler, Chief Commercial Officer, at Cambridge Consultants.
The conversation explores The Deep Tech Index and a challenge familiar to founders, investors and corporate leaders alike: businesses say they want radical innovation, yet their systems often make it difficult to pursue. The guests unpack why incremental improvements can preserve the status quo while disruptive ideas create genuine strategic advantage.
Joe and Tim argue that innovation is not simply a technology question. It is a leadership and execution question. Radical ideas can threaten an existing business model, which is precisely why they are often slowed down by familiar processes, short term return expectations and organisational caution. The organisations that succeed are those with a clear strategic direction, leaders who can sustain conviction and teams able to turn technical promise into commercial momentum.
The episode also offers practical insight for startup founders selling into large companies. Rather than relying solely on procurement, the guests recommend building broad internal support among technical and economic buyers, identifying the value that is unique to the customer and creating enough stakeholder belief that a decision cannot be easily delayed.
Key takeaways
Radical innovation is designed to reshape markets, not merely improve an existing product.
Leadership appetite is high, but internal systems can create a radical disconnect between ambition and execution.
Early stage projects need strategic conviction, not an unrealistic five year return forecast at the first decision point.
Technology alone is not enough. An accountable champion is often the force that carries an innovation through to market.
Artificial intelligence is a powerful enabler, but much of the next opportunity lies in its convergence with physical technologies, biology, engineering and data.
For corporates, building, buying and partnering can all play a role. For startups, proving a clear advantage and building internal advocates is essential.
Cambridge success stories including Arm, Raspberry Pi, Riverlane and CuspAI show the value of talent, experience, networks and a willingness to work through uncertainty.
Standout quotes
“The machinery of the corporation has inoculated itself against taking big risks.”
“Standing still really is not an option. You really have to innovate radically as if you were a startup.”
“The whole point of doing radical innovation is to be chosen.”
“The most successful startups are those who have got that experience somewhere in their leadership.”
From the iPhone’s platform play to the hard choices behind stopping weak projects, this is a sharp conversation about how companies can move beyond safe bets and create durable advantage. Listen now for a grounded view of where deep tech value is built, how founders can engage enterprise buyers and why the next category defining business may begin with the courage to disrupt itself.
Subscribe to the Cambridge Tech Podcast for more conversations with the people building the technologies, companies and investment stories shaping the future.
Subscribe on all major podcast platforms or visit cambridgetechpodcast.com. 🎧
Episode Transcript
[Speaker 2]: Welcome to the Cambridge Tech Podcast. Talking all things technology from the heart of the UK's tech capital. Here are your hosts, Faye Holland and James Parton.
[Speaker 3]: Welcome to Cambridge Tech Podcast. This week we're discussing radical corporate innovation with Cambridge Consultants. I'm joined by Joe Corrigan, CTO of Cambridge Consultants, and Tim Fowler, who is Chief Commercial Officer. Joe, Tim, welcome to the show. It's lovely to have you on. We really enjoyed chatting to your colleague Tim Ansall back in April about physical AI, so really looking forward to this conversation as well.
[Speaker 1]: Morning, James. Morning.
[Speaker 3]: We always like to start by getting to know you a little bit better. So could you introduce yourselves and tell us a little bit more about your backgrounds?
[Speaker 1]: Sure, I'll go first. So, I'm Joe. I have worked about 20, 25 years in innovation. Over that time, I've founded a couple of startups and worked across healthcare, AI, fintech, insurtech, and then more broadly in the consumer space as well. And essentially, we've been pushing state of the art of AI in a number of different domains. And so the teams that I've been working with have been doing that, have pushed that across in biomarkers, in valuations, and and also in the way that we think about doing innovation.
[Speaker 4]: I'm Tim Fowler. My background, I started in innovation about 40 years ago, which I can barely believe. And I started in the telecoms industry and when I started work, the big comms technology evolution was happening in a technology that became known as GSM. Quite a lot of the standardization was driven from Philips Communication Systems that were based here in Cambridge at the time. I was an undergraduate engineer there and I worked for them through a whole range of telecoms innovations. And I became a client of Cambridge Consultants in about 1992 for the first time. I've worked in the telecom industry, but I joined Cambridge Consultants about just over 20 years ago in communications, commercial development. And I've worked on a whole range of communications innovations since then, from the early days of broadband through mobile broadband and largely non-terrestrial networks over the last 10 years.
So extending the sorts of services we take for granted when we're in a nice urban center to places on the planet where you can't normally get those services. So that's my background.
[Speaker 3]: Thanks for that. now we're here today to talk about your latest report, the Deep Tech Index. So what was the gap that you spotted to lead to the creation of the report?
[Speaker 4]: So it was driven by by a question that we had around a gap that we, I think we can all see. If you're immersed in a a tech cluster like Cambridge, radical innovation is something which goes on everywhere. Your neighbors are doing it, the people over the road are doing it, all of the companies around are doing it. So it seems completely normal to want to do that. But if you look in the general economy, not just in the UK, but across Europe, APAC, and North America in fact, it's not as common as you might think. It's clustered in a small group of organizations, but the general economy sort of steps forward without it. And one of the things we're interested to know is that because for most people they think innovation is for somebody else to do or is it because there's other things that prevent them? So we were just interested to know, we provide deep tech innovation services, radical innovation services to clients all over the world. And the biggest competitor we face actually is that clients choose not to innovate. They choose not to innovate at all. And so one of the things we're interested to understand was why is that? Is it because they don't believe in innovation or is it because there are other obstacles that they struggle to get over? What are they thinking was what we wanted to know. And of course, there's lots of reports you can see that talk about the rate of innovation, how much money's being invested, how many patents are being generated, who's doing what. But what we couldn't find was a report that actually looked into what were the people who allocate budget to these types of programs, what were they thinking? What was the picture? So that was the reason for doing it. But one of the things we were also interested to know is how's that change over time? Clearly the big tech businesses are engaged in that type of innovation regularly and often end up winning by lots of measures. And large parts of industry is running in a situation where they're in marginal gains position. They run an effective business, delivers high value, but high competition means that their returns are marginal. And so, was this just something that we believed in? We obviously have a perspective, but what we wanted to understand is what did other people think?
[Speaker 3]: You're not distinguishing between companies that might be not sourcing their innovation capability to having it internally, it's just that need to innovate, recognising the value of innovating.
[Speaker 4]: Yeah, it was that exact...
[Speaker 3]: Okay, perfect. And it might be surprising, our audience is obviously very much a tech audience and the ecosystem around tech. So to hear you say that some companies are just not innovating at all might take people aback slightly. Does you perceive
[Speaker 4]: It's not that they're not innovating at all, it's that they're not innovating in a way which stands to change the dynamics of their market. So a lot of organizations innovate, but it's slightly better version of the thing they used to have. It used to be said that the innovation trends are there's a moment of revolution and then steady moments of incremental improvement, if you like. And we're interested in that because disruption obviously comes from those more shifting parts. Yes, people can win ground by making a better version of a product and fighting it out, but it's still usually marginal. What generally shifts markets is when something more significant changes. And those are clearly the things that again, somewhere like Cambridge where we're immersed in this all the time, everyone's looking for that thing that's going to disrupt. They're not looking for a slightly better version of something.
[Speaker 3]: And you were specifically looking at radical innovation, you know, opposed to incremental innovation, where innovation creates disruptions to the company's own existing business models and or its product offerings.
[Speaker 4]: Yeah And I think the the reason we described it as radical innovation is, I think most people in the industry would understand what deep tech means, but it's still not a sufficiently well understood term that definitely everyone would understand it. So we chose to ask some questions about radical innovation in order that people have more of an understanding of something that was significantly changing what they're doing rather than subtly changing what they're doing.
[Speaker 3]: Yeah, interesting. At the heart of the report is the phrase the radical disconnect because leadership scored their desire for radical innovation at 5.33 out of seven. So clearly the appetite for radical innovation is there, but they also expressed the frustration that they're surrounded by systems that prevent it. What insights did you uncover there?
[Speaker 4]: So I think the first surprise, as I say, is that we weren't necessarily convinced in that first finding that everyone would go, yeah, of course, radical innovation is important. When you actually look at where radical innovation does happen, it tends to be concentrated in certain either certain organizations or certain clusters where that happens. And so you might end up in a situation where you think maybe there's a lack of belief that it could have an impact. When people are looking, where do I apply my capital in order to improve the success of my business, they might assume they can put it into other areas, better marketing, better quality, better a whole range of things that end up potentially making them winners, but and not radical innovation as a choice. it's a strategic option to put some of your capital into that zone. So we were interested to know how much were they fundamentally interested in. And of course, the first thing that is surprising is that's quite a high score when you look across industry in general. You can't see that in the output, if you like. You can't see that industry is producing that high level of innovation. So yes, one of the things then is to understand is if that's true, what are they what are they seeing as the blockers? And there's a whole range of a whole range of characteristics from behavior, what I referred to as psyche, the sort of thinking that goes into some of these things, but also then organizational challenges that they face. And that's what we tried to explore.
[Speaker 1]: I think the thing for me that I took away from the results was there is this high desire and this understanding that in order to be successful, we have to be disruptive. But then that very disruptive thing that you're doing disrupts your own business and that makes it very challenging to continue to pursue a particular path. Often what you'll see is radical ideas getting squashed because they create this they create this disruption. and if it happens in a small way to start with, that kind of that small squashing of a quite good idea that created a a radical disruption to the business model because it would have yielded a small return, but if maybe the idea wasn't as great as as you would have thought, means that the next one, the next radical innovation that the company has, the the corporate has created a kind of corporate memory that means that that they're less bold the next time. And that and that process kind of self-reinforces. And so the the will is there. The understanding is there that this is absolutely necessary, but the machinery of the corporation has inoculated itself against taking big risks.
[Speaker 3]: Yeah Building on that point, the report has a quote that said the most effective way to kill an innovation is to ask for a five-year return on investment forecast at gate one. So what kind of culture do you need to build inside a company to foster radical innovation? And how do boards learn to fund something that by definition doesn't yet have a traditional return on investment profile?
[Speaker 1]: The thing that helps is picking a strategic direction and having faith in that strategic direction. Really understanding how this is going to change the underlying business model, but then not nickel and diming the projects on the details. Principle is the thing that you need to follow, and in order to do that, you have to be quite bold, and that takes a certain kind of leadership. And so we've, through the work that we've been doing, the thing that normally makes a project successful or unsuccessful isn't actually the underlying technology itself. Oftentimes you'll find that there is a successful technology, but the thing that's really needed to make it go is that unstoppable force within the company who's going to push that thing all the way through to the end. And so it really is those individual leaders with the boldness to understand the strategic imperative and then really push that through. The technology is really just a lever to do that, but it's not the critical factor in in driving through to success.
[Speaker 3]: Tim, you mentioned your telco experience in your introductions. I too spent a number of years in telco and they faced this exact challenge with the advent of 3G and 5G and devices like iPhone. You know, they really lost their gatekeeper position controlling the customer experience as, you know, customers finally had access to the open internet. And telcos were clearly concerned that they would be relegated to a utility provider rather than, let's say, a media company with higher valuations.
In my experience, there were periods of inspirational leadership for sure, but the challenge of large organizations is the reorganization cycle every two to three years where strategy, structure, leadership all change, which makes consistent investment in innovation super challenging.
Did you see that come out in conversations you had around the report?
[Speaker 4]: I think corporate structure is definitely a challenge. We didn't necessarily get responses that specifically said it was the continual change, but I think you can infer the same sort of things exist. And I think because of the mature business that already is successful, if you like, it's turning capital into shareholder return. For the leadership of those organizations, the visibility with which you can see an upward trajectory is tough to go, I'm going to double the size of this business. It's quite a hard call for someone in a mature organization. The the telcos in the UK's turnover isn't significantly different to what it was 10 or 20 years ago. It's a similar sort of level of turnover. They've had to re-engineer their organizations in order to keep their costs under control in order to get a return. But they haven't significantly shifted. ARPU's aren't significantly different. But the idea that you might do something and it would destroy value is a fear they all experience. And that fear is inside the organization, it's culturally learned behavior. So everywhere you look inside the organization are people who think, I'm already doing the best I can. I can't see a route to it being better than this. And so therefore, innovation just becomes culturally hard, if you like.
[Speaker 3]: Just going back to your comment about doubling the size of the business, that really does feel like radical innovation is necessary. And the first company that springs to mind that's been a world leader in achieving those kinds of leaps is Apple. You know, for example, they went from zero to being the world's largest manufacturer in new product categories not once, but twice in both watches and headphones.
[Speaker 4]: So I think the the example of Apple is really good because they have done radical innovation. Clearly the smartphone revolution was largely driven by them getting to market first. You can look at all manner of different books written about how they ended up with the iPhone, but the the reality is that the mobile phone industry prior to the iPhone coming along had built a belief system around phones had to have a particular length of battery life, they had to be a particular volume in cubic centimeters. There were certain set of characteristics that were believed to be the next competitive future phone. And when the iPhone came along, it failed on all of those measures. It only had a battery life of eight hours. It was only 2G, it wasn't even a 3G phone in the middle of the 3G boom. It was novel and it had several novel inventions in it that made it difficult to compete with. And of course, in the first few years of the iPhone launching, they were able to establish a dominant position. More importantly, they created an entire ecosystem of what people got, if you like, connected to. So that anchor product of the iPhone is what's enabled them to then grow a business in headphones and watches and everything else because they relate to the experience you get from the phone.
No, I doubt many people buy Apple headphones if they don't have other Apple products. I doubt people buy Apple watches if they don't have an Apple phone. It's not the sort of thing you'd buy in isolation. They managed to create a platform play from an innovative product. And of course, the innovative product stemmed from the work they'd already done in desktop computing and went on to do in things like the iPad. So, there are some neat innovations in there, but a lot of what they've done subsequently is more iteration, but smart iteration on extending a platform. So they're no longer, you may remember not long after the iPhone was launched, they were continuing suing people who had products that breached the IP that was in the iPhone in order to defend that position. You don't see those fights going on anymore. They're able to defend their positions through other things. But they have created value in the mind of their buyers which enables particular buyers to choose them beyond others and they don't, people don't see them just as a commodity. They don't see their products as exactly the same as others. And that's what you're after through some innovation is to get some advantage that others can't easily replicate. you don't end up in a commodity position where your price is effectively determined whether you win or not.
[Speaker 3]: You could argue that Apple is actually rarely first to market with new technologies, but they out-execute their competition when they decide to make a move.
[Speaker 4]: The whole point of doing radical innovation is to be chosen. You can't demand your customers buy from you. So you want to be in a position where you are chosen for one reason or another over others, and the reason people choose you is not just because you've managed to squeeze your margin down to the minimum.
[Speaker 2]: Technology moves fast, and now so can you. Discover Polestar, the all-electric performance brand vehicles redefining how we drive. Precision engineering, minimalist design, and software that evolves with you. Experience it at Holden Group in Norwich and Bury St Edmunds, or let us bring the test drive to your door. Proud sponsors of the Cambridge Tech Podcast. Polestar Electric performance redefined. Discover at holdengroup.co.uk/polestar.
[Speaker 3]: Hasn't the issue that large companies get complacent and are slow to make decisions because they have too much to lose always been there? Isn't that the space that allows startups to come in and disrupt industries?
[Speaker 1]: startups are motivated differently because in a sense they don't they don't have any choice but to innovate, which is one of the reasons it's such a galvanizing thing for the team if you're inside a startup to think about how are we going to win in a particular space. Now, for the startups that I've worked for, we both of them we picked a strategy where we would try to push state of the art in a particular domain. One of them in biomarkers, one of them in in initially insurance. But what we found particularly in the in the insurance market is the market was quite slow to adopt technology. we met quite a lot of resistance going into that, so we had to pivot. We had to pivot because of that slowness, because our runway was was running out, and we had a belief in our strategy. And so instead we went to we went to finance houses and then we talked to them about what their needs were and we built a lot of support inside those organizations. It took a little while to do that. And we found all the customers for a nascent product that we had, but we didn't yet have a set of requirements from that. We gathered those requirements from different parts of the organization and then demonstrated that we met all of the different needs so we could build this this support from within that organization. And in in the fintech space, they were a lot faster to respond to that and they could see the benefit of the kind of thing that we were doing. So they were ready to take a small chance on a startup like us and we demonstrated that we returned a massive advantage to that company. And then having done that, we were then able to go back to the insurance market and show exactly what we'd done for the fintechs. the the corporates, they don't have they don't have that same impetus that we had as a startup. It's not so easy to make a very difficult decision because in a sense you've got quite a lot to lose by innovating. The challenge with that sort of thinking though is that you you the startups will come and they will eat your lunch. The innovators in the space will come and eat your lunch. So standing still really isn't an option. you really have to innovate radically as if you were a startup in order to create disruptive value and to transform the the fortune of a of a corporate. And we've seen this again and again that corporates that fail to pivot their their technology successfully, they get overtaken by others and it's either on on cost or simply by product market fit, they get outpaced by the technology.
[Speaker 3]: Did you gather data around investing in or acquiring startups to fill any internal innovation gaps?
[Speaker 4]: Certainly we didn't get anything out of this report that explored that, but the there's huge amount of literature on how well companies do in returning shareholder value from acquisitions. And some of them are excellent and some of them are less good. To your example of asking about Apple earlier, Apple acquired quite a large amount of the the headset brand expertise that they got and it's been very positive for them. They've managed to add to the value of those organizations. There was good synergy in the acquisitions they made. I think it's very hard though to say that there's a definite outcome, there's a spread. some acquisitions turn out to be a disaster and some acquisitions turn out to look like they were a genius move. Often, the acquisitions are made not necessarily for the direct positive upside but as a defensive move to prevent the the risk of decline. And so, what's difficult to see in the numbers necessarily is is the absent of a absence of decline, if you like. You can't necessarily see that in numbers. The fact that an organization might continue might look like they absorbed that and they didn't get any value. But it could be that their own internal analysis predicted a much larger scale decline without that defensive move. So clearly one of the one of the strategic options open to a board of a large corporate is to make those acquisitions when they see it necessary. And of course, startups don't all succeed. The success rate on startups is moderate. The returns from the high-performing startups is good enough to keep the venture industry running, but everybody knows that a lot of what happens in startups needs to be recycled. It doesn't necessarily turn out to be full value return. The advantage a corporate has is they can play the survivor bias game. they can pick the organizations that are successful. Yes, they'll pay a premium, but typically they can make a judgment on the value of that. Of course, if the startup actually get to scale where they're beyond the reach of the corporates, then they may simply get taken over. And we see that more in the tech industry probably than elsewhere, in that a lot of tech organizations are able to scale what they do through their startup path rapidly in order to get to the point where they're beyond acquisition and then can go and fight. If you are a if you are a startup with a highly novel technology, it's quite possible there is good market demand for your technology. It's also quite possible that you've made a good job of it and you're taking it to market well. but the competitive weapons that an incumbent has against you from price control, channel control, market dominance, brand reputation, a whole range of other things they can wield means that you might have a perfectly valid technology and still struggle to succeed in the marketplace. Our perspective is that if you want to be a winner in a market, you need something that gives you a winning position. And often that requires you to be able to do something either the offering the same offer to your marketplace but you're delivering it differently or doing something that the market sees as genuinely different. that difference might be because it's a performance, you just have better performance in the in the market you're operating in, or you can deliver it at a cost point which is just beyond what anyone else is able to match. And so getting into that winning position is important. And as a corporate, there's a difference between not losing and winning. There's a lot of people want to play, if you like, and in many mature markets, you can see examples of people playing in the market. They may some years do well and some years not do too badly or do less well, but they're not what you'd call winning. They're not reaping the rewards. And of course, if you go back to the Apple example from earlier, After Apple had launched the iPhone, they were earning more than 100% of the profits from handset sales. More than 100% of the profits. Meaning the rest of the competition added together were loss-making. And that is a that's a scale of winning which is has put them on the path they're on today. They were doing well with their Mac products, but they weren't at the level where they were collecting more than 100% of the profits. And I don't know of any other, I don't know any other product launch that where somebody was able to sweep up all of the value quite quite dominantly, if you like. But that's what winning, that's what winning means. It's not just doing something that's valuable, but it's coming away with the prizes.
[Speaker 3]: Interesting. The other finding that caught my attention in the report was that organizations often struggle more with stopping weak projects than starting ambitious ones. So why is killing something so politically hard? And what does the report tell you about organizations that are good at it?
[Speaker 1]: The real challenge here is that you have a lot of investments inside a company which build up a momentum and they might not have a good alignment with the strategy of the company, but they might be a solid technical innovation. And so you end up with you end up with misaligned incentives between how the organization can exploit the technology and the fact that the technology is in fact successful in some way and just requires a bit of further development. But being unable to exploit that technology means that actually the technology to that business doesn't have any value and that should be reviewed and those those technologies should be paused or shelved if they're not going to deliver commercial advantage for that particular organization. It's quite hard to make those decisions when you have these misaligned incentives if you do not surface those misaligned incentives. So it's a lot to do with being able to measure the way that the innovation is happening within the organization and then figuring out how it aligns with what you're trying to achieve with the particular strategic play that you're making.
[Speaker 3]: Is there also an element of hedging your bets by having multiple horses in the race?
[Speaker 1]: So then that does happen. that is true that there's a certain amount of of unknown unknowns in the way that you develop technology. So you do have to push several things forward at once. But once you have a a radical innovation that is working in the lab to a level, that's the time. That's the time then to think about how to pivot and put all resources behind that to commercialize that, to commercialize that technology.
[Speaker 3]: And the other classic innovation issue that surfaced in the report is customer or market readiness. You know, can you be truly radical if you only build what your customers want? Surely when it comes to radical leaps in innovation, customers can't possibly know what they want. It's the old adage of people wanting a faster horse, not a car.
[Speaker 4]: It is a crucial challenge. Again, it depends on the level of radical innovation. If you're solving a problem that no one knew they needed solving, then of course you have a market education challenge, if you like. The for technologies that emerge where there hadn't been something, if you like, available to them prior, there's a an interesting model that came out of MIT which suggests a lot of people think that you have you have R&D, you create this thing and then you go out and market it. And MIT recognizes this in-between phase called establishment where you have to get this thing established. and what's interesting if you look around at new things that have emerged is the different ways people have managed to get them established. and particularly where they are novel. That establishment phase has a number of things you're trying to do. One, your customers may not know they need this thing. So you need So you need to pick some customers who are going to be those early adopters, people who are going to learn about it, understand the value and then be positive about it. But equally, you're going to face competition at that point. Because up until the point when you start to establish it, you've been secret, you've been hidden. Your competition really don't throw up much of a resistance to you. But the minute you hit the market, the competitors, the people who see this as a threat don't just sit back and applaud you going, "Well done, you've come up with something really radical there that'll kill me." They fight back and it's the sort of it's the moment where you then find yourself both trying to convince your new customers that you have something of value at the same time you're in hand-to-hand combat with the people who don't want you to succeed. And so that establishment phase is a really important part of the strategy. The organizations that are familiar with a product launch cycle because they have a mature market, they produce new products on a regular basis, you push those products into the market and people understand them sufficiently well, they understand your brand, they understand the product, they understand the alignment. So buying a new thing is not that difficult for them. and in fact, in in some markets, there's an expectation of a new thing every so often to come along. But if you do something radical where the customers don't know about it, you have to have a strategy for determining how you're going to get established. Probably one of the easiest ones to follow is the path followed by Facebook where they tried to keep the keep the early users quite constrained to small handful of universities in in America where they made it available to cohorts of people at university before they launched this thing out more widely. And that they may not have been thinking about it in the model that MIT suggests, but certainly it was an approach to get something that they could test, use, validate, see the value before they expand it more widely. But also then create a sort of word of mouth that got them to be got them to be interesting, if you like.
[Speaker 3]: Moving on to the technology, the report shows that unsurprisingly, AI is the top of every frontier technology priority list. But you argue in the report that radical innovation comes from convergence. So what technology intersections are you most excited about right now?
[Speaker 5]: There's two things to say about that. So you're right that AI is at the top of everyone's frontier technology priority list, but every single thing underneath that is physical. So whilst a lot of the money has been going into into the frontier labs, if you look at investments over the last year, it's all been going into deep tech and hard tech, anything that's physical. And that's biology in the lab, that's wireless technology that can't be simulated. There's a very broad range of hard science that AI can't touch. But if we take AI, the reason it shows up in so many people's first choice is because it's an enabler for so many other parts of business. It really transforms the way that we work with in innovation. It's the way that we work with data. But it also allows us to work with other languages that we're less familiar with, such as CAD or or CFD or or code. And we've seen great inroads into into being able to deliver high quality code if you set up the AI with the right tools. So it it can deliver if it's pointed in the right direction. People are still struggling to get their hands around exactly how much value it can deliver for their organizations. And I think that this is probably universally true that there have been fairly large scale AI rollouts with our clients, but they're still struggling to figure out how to transform the value of their business with it. The way that we think about it is that AI as in LLMs at the center of them, but essentially taking a frontier model that really only provides the interface. All of the the technical innovation still stands either in the deep tech, so the the physical labs, or in the way that you use AI itself to steer the large language models. So it's possible to write tools around those large language models which may be AI-based tools, they may be just data acquisition tools. But with that, it means that you can significantly improve the quality of the output, which means that in a particular in a particular domain, the results that you get are an order of magnitude better, if not several orders of magnitude better than you could do using a traditional computational approach with no AI. in that process, or even a computation plus human approach. When we start to move towards agentic systems, it gets even more powerful again, but I think that probably answers the question.
[Speaker 3]: The report highlights that most organizations now favor a balanced build-buy partner approach, so that actually could be encouraging news for startups. But how should startups seek to engage with corporate opportunities? As we know, the time spent navigating corporate procurement processes can burn a startup's runway.
[Speaker 5]: the procurement process. There's different parts of the procurement process. Part of the thing that you need to do when engaging with an organization of that scale is really trying to understand what the value is that you're creating for them and to help them understand that value is unique and sometimes going through the procurement process might not be the best way to get the thing that they want done. And in order to do that, you need to engage fairly broadly within a decision-making part of that organization. You need to engage with a number of different stakeholders, whether they're the technical buyer or the economic buyer, and make sure that all of them have needs met. Typically that means actually circumventing the procurement process entirely and building up a groundswell of support for the thing, for the innovation that you're delivering within that organization. Sometimes they have innovation leads who will will help you. Sometimes those innovation leads are actually a hindrance to to working with you. So it's great that they have them that you have this initial point of contact, but what you should be doing is figuring out how to reach out broadly within the organization using that person or finding other ways in order to figure out who the main stakeholders for this kind of innovation are and then getting them all behind you so that when it comes to the procurement person's desk, there is absolutely no way that they can say no or wait a bit.
[Speaker 3]: And as we bring the conversation to a close, let's think locally for a second. Cambridge is producing a growing list of radical innovation success stories like Arm, Raspberry Pi, Riverlane, Cusp AI, and many, many more. Is the Cambridge recipe replicable in other locations, or are there conditions specific to Cambridge that are genuinely hard to recreate?
[Speaker 4]: I think for me it's a mindset. So there's a huge amount of talent needed to make this stuff work, but I think it goes beyond just the talent. There is a particular mindset involved in in engaging in radical innovation because of the uncertainty. You're inherently engaging with process that has a whole range of uncertainties. Uncertainty about exactly how the monetization will work later, exactly how the technology program will go, exactly how the competitive environment will build. You don't know a lot of this stuff when you start. And so being able to understand the the fundamentals and have the the process is an experience to know what to expect is something that evolves. So that's part of the reason why clusters build up. If you look at where high levels of innovation occur, they occur in clusters. They're not evenly spread throughout the globe. And that's partly because you get this experience, you can draw on expertise. Doing things that have the type of risks that you face, the uncertainty you face, is not unusual. If your neighbors are engaged in that same sort of thing, then it doesn't feel so strange to make similar decisions yourself. If you're in an environment where everybody else is risk-averse, it becomes quite difficult for you then to make those risky judgments.
is it possible to replicate more widely?
Of course it is, but it does come down to a set of to a mindset that is really important to enable people to be successful. It's more than just the mindset though, you also have to have the experience. You have to you can't just be gung ho in the approach and hope that you end up with a a good result you need to be methodical. You need to have the the fundamental understanding both of the market and the strategic position you find yourself in and the technology. There's a mixture of things you need to be able to do. There's nothing to say that can't happen in any any environment, anywhere if people are interested in that innovation. What you can do of course is then draw upon that expertise that already exists. Cambridge has grown its expertise in startup business. It hasn't always been a startup center. It's grown that expertise, it's grown that knowledge. it has built that culture where you know you can draw on draw on others for guidance, whether that be other startups or people you might hire into your startup. There is a desire clearly to be able to generate a larger proportion of winners in Europe, I would say. Europe has a huge amount of academic output, but far less of that converts into winning businesses than, say, is true in California. And so, wanting to be able to improve that probably also requires a set of incentives, whether that be government incentives or personal incentives that help people then be willing to take those sorts of risks. It can be for individuals, it can be more than just the definition of their career. It's personal risks that people take, whether they will end up earning a large amount of money or whether they'll end up losing a large amount of money. It is dependent on some of these things. So having incentives that help people make those decisions, take those risks is quite important. I think a lot of people make the assumption that that startups are all founded by very young people who have nothing to lose. They're early stage of their career, so they have nothing to lose. But I don't think that's necessarily true. We see quite a few startups that have people with families and mortgages to pay and all this sort of stuff entering into that startup environment and being quite crucial to the direction of travel that those organizations take.
[Speaker 5]: That's certainly true. In the startups that I've helped and in the acquisitions that that I've been part of, that really the most successful ones are where the startup has had some fairly experienced leadership. So they've been through the process either in a corporate or or in another startup, but they've been through the process of bringing innovation all the way through to market and demonstrated that they can execute on the technology promise. And that really isn't something a first-time founder can do without help. Occasionally people are credible, bright talent. actually when you look at how they've managed to achieve that, they've built a personal network of mentors and contacts around them who've provided that that support as a sort of a virtual assistant around them. But yeah, the most successful startups are those who've got that experience somewhere in their in their leadership by some means.
[Speaker 3]: Joe, Tim, it's been a fascinating conversation. Where can people find the report?
[Speaker 4]: It's available on our website, so cambridgeconsultants.com.
[Speaker 3]: Thanks so much for making the time to come on today. It's very much appreciated.
[Speaker 5]: Thank you very much.
[Speaker 4]: Nice talking to you.
[Speaker 2]: Today's show was produced by Joe Donaghy of Cambridge TV and supported by our media partner Business Weekly. The Cambridge Tech Podcast is available on all major podcast platforms and on cambridge tech podcast dot com. If you've enjoyed this podcast, please give it a five star review. It'll really help others discover the show.
To listen and subscribe, search for ‘Cambridge Tech Podcast’ on your favourite podcasting platform or visit cambridgetechpodcast.com.
