Corporate Entrepreneurship: An Analysis Of Atlassian’s Business Model And Innovation Strategies

Innovation as a driving force

Question 1

The case study explores the competitiveness and style of operation of Atlassian which is an Australian collaboration software company. The organization is dependent on various frameworks that describe and establish the organizational, industry, and general business drivers employed within the organization. To begin with, we have innovation. As the tech industry is undergoing a rapid change due to the continuous new demands of customers, more organizations are in the process of reexamining their structures in order to seek better financial performance. This includes new improvements through innovation in high growth areas. Atlassian developed a business model that revolves around subscription fees rather than having a sales force.

The company builds great products and then lets the customer, and the market do the selling. Through this strategy, the company has built a huge customer base that acts as an advocate for the brand within different corporate organizations. Besides, the company is reliant on new technological infrastructure such as cloud computing and delivers their products easily through internet downloads. I believe this approach is a game changer and the company can continue employing the no sales philosophy only if they can continue bringing in more innovation since that’s what more customers are after.

Secondly, we have risk-taking. In this context, risk-taking refers to the willingness to pursue projects or opportunities that have a likelihood of losses in order to achieve set objectives (Sefalafala, 2013). Scoot Farquhar and Mike Cannon-Brookes, the founders of Atlassian, developed the company on the premise that if a great software was made, priced right, and made available through the internet for anyone to download, customers would come. To add on this, the company was built without a sales force since the founders believed that as customers liked their product, they would tell friends and associates hence gaining a customer base. This is an anomaly in the world of business software since Atlassian took this risk without having proof it would work (Bass, 2016).

According to Scott Farquhar, customers may not desire to call a salesperson if they don’t have to. They’d rather be able to find answers on the website. This connected model has allowed Atlassian to improve the customers buying experience hence remaining competitive. The company has embraced the continuous innovation to risk type of innovation hence being able to strike a balance between the connected model strategy as well as adapting to changes in the market.

Lastly, we have proactiveness. Proactiveness is more action-oriented in relation to future wants and needs of a market. Proactive organizations shape the environments they operate in as a means of exploiting opportunities (Sefalafala, 2013). To begin with, Atlassian focusses heavily on the wellbeing of their staff. It differs from other tech companies since it is driven by a set of values. The company understands that employees are a crucial component of success and innovation. Therefore, the Atlassian has been able to attract more opportunities around the world from renown companies such as Facebook, BMW, Netflix, Coca-Cola, Nasa, and Netflix. In a two-year row between 2014 and 2015, Atlassian topped BRW’s best places to work (Mahroum, 2016, pg. 221). In addition, the company has tipped millions of dollars to local startups as well as making acquisitions as a means of adding more customers, developing new products and expanding in existing customers.

Risk-taking as a part of Atlassian’s core operations

Question 2

Atlassian faces different corporate innovation challenges as it continues to grow and expand its business operations. To begin with, we have the scale of innovation. Small startups are generally disrupting more established tech companies due to the scale of innovation they bring on board (Garvin, and Levesque, 2006). Since Atlassian is not a verily established company although it is in the category of big companies, it faces challenges in managing its growth. For example, Cannon-Brookes and Farquhar have to manage managers who manage managers who manage people. Atlassian’s growth has been slow over the years since it has managed to strike a balance between adapting to changes and the company’s overall strategy. However, the rate of competition in terms of growth is accelerating, and Atlassian will need to make more long-term investments to act as buffers.

In addition, as Atlassian is making more acquisitions primarily with startups, the type of business model to be employed may have challenges. This is because of the difference in business strategy (Torstensen, 2015). Finding a perfect match in terms of an appropriate business strategy can be challenging for Atlassian, and therefore, the company should rather develop the business models or strategies with time due to the changing environment.

Lastly, on the challenges, we have unclear key performance indicators. Since Atlassian went public in 2015, challenges in short-term performance are inevitable. Besides, investors are interested in quarterly reporting cycles, therefore, managers are often under pressure to deliver since they are under short-to-medium contracts (Hamel, 2007). The performance indicators are majorly profit and revenue driven, and this may portray challenges in terms of long-term growth of the company. By focusing more on short-term profits, securing huge investments may be impossible and may require the company to make adjustments in line with the business strategies employed within the business. This may impact the innovation capacity of the company since more technological companies are making huge technological investments so as to ensure they capture the market needs and wants effectively.

However, Atlassian has an opportunity that may last for decades if managed professionally although it’s risky. The no sales force philosophy is a promising competitive advantage that may propel Atlassian to greater heights. Since no expense is used in the sales force unit, the company can channel all the proceeds allocated for the sales team to R&D hence bringing more innovation. I believe innovative products and services is what clients are after and if Atlassian can maintain that balance, they will automatically ensure the strategy remains a competitive advantage to them.

Question 3

Atlassian also faces risks/issues that inhibit the potential performance within the organization. To begin with, Atlassian is divided on whether to continue to innovate as it grows into having a high number of staffs (Mahroum, 2016, pg. 224). Atlassian’s growth has been slow, and therefore, the disruption brought forth by startups may affect its innovation strategies. In addition, due to the changing market environment, adopting strategies that are not in line with the needs of the market, may affect the company’s future growth. The implication of this will be the loss of market share due to clients migrating to the best and innovative companies. Besides, the lack of proper management of the staff may slow down innovative ideas hence productivity may be affected due to the rapid change in the tech industry.

Secondly, Atlassian is divided on whether to adopt a long-term thinking strategy or long-term investing as a public company. Since the company began trading publicly in 2015, the pressure to ensure short-term revenues may impact the company’s profitability in the long-term. However, since Atlassian was dependent on profits to fund expansion for some time before going public or raising money through venture capitalists, it may become an issue for the company to remain competitive since other tech companies are depending on their long-term investments to promote competitiveness. One implication that may arise due to lack of adopting long-term thinking strategy or investments is failure of achieving long-term objectives. Secondly, lack of long-term investments may cause less returns on the company since much emphasis is put on immediate revenue.

In conclusion, adopting a long-term strategy will be crucial in combating new challenges that are disrupting the tech industry. I believe Atlassian is in a better position to grow further. However, better management strategies will be essential hence the company will have to invest further on better personnel and strategies to ensure long-term access.

References

Bass, D. (2016). This $5 Billion Software Company Has No Sales Staff. [online] Available at: https://www.bloomberg.com/news/articles/2016-05-18/this-5-billion-software-company-has-no-sales-staff [Accessed 28 Nov. 2018].

Garvin, D. and Levesque, L. (2006). Meeting the Challenge of Corporate Entrepreneurship. [online] Harvard Business Review. Available at: https://hbr.org/2006/10/meeting-the-challenge-of-corporate-entrepreneurship [Accessed 28 Nov. 2018].

Hamel, G., 2007. Management Innovation in Action: Atlassian. Management Innovation Lab, [online] Available at: https://blogs.hbr.org/hbr/hamel/flatmm/atlassian/ [Accessed 28 Nov. 2018].

Mahroum, S., 2016. Atlassian in Sydney: Beating the Tyranny of Distance. In Black Swan Start-ups (pp. 215-231). Palgrave Macmillan, London.

Sefalafala, M. (2013). Dimensions of entrepreneurship: Explained | UJUH. [online] Ujuh.co.za. Available at: https://www.ujuh.co.za/dimensions-of-entrepreneurship-explained/ [Accessed 28 Nov. 2018].

Torstensen, P. (2015). The 5 Corporate Entrepreneurship Challenges. [online] Creating Startup Winners. Available at: https://acceleraceblog.wordpress.com/2015/05/22/the-5-corporate-entrepreneurship-challenges/ [Accessed 28 Nov. 2018].