by Lucas Sproesser, Founders Intelligence

Starting my career in traditional consulting I realised how fulfilling it is to work with clients on solving challenging problems and discovered that I wanted it to be a constant in my professional journey. Still, I found myself searching for something that was missing: the incentive to think outside of the box. The next chapter of my life took place in a Brazilian healthtech, where I was able to experience the dynamics of a startup; where I could question assumptions and build new things. I first found out about Founders Intelligence in November 2020 and the proposition immediately drew me in. I saw an opportunity to mix the challenges and structure of traditional consulting with the creativity and entrepreneurial mindset of a startup. On my first official day, I was asked to answer the question:

What are the patterns in digital behaviour exhibited by top-performing Bovespa companies?

The first question I set out to answer was: who are these top performers? I began by selecting the top-150 companies from Bovespa and filtering them by:

  1. Operational for at least 30 years

  2. Market Cap of at least R$20 billion

  3. Revenue growth (2019-2021) of at least 100%

  4. Publicly stated digital transformation initiatives, among others.

The results are shown in the table below:

How top-performing brazilian companies are playing in the digital revolution

Once I shortlisted the eight companies above, I continued my research by analysing them through a portfolio lens. We define the digital portfolio through four growth levers: M&A, Partner, Invest and Venture Build.

Looking at a company's digital portfolio provides a full picture of how a business is leveraging different initiatives to reach a growth goal and how these mechanisms, when pooled, can accelerate ambitious objectives. Some might demand greater resources and longer implementation time, while others are simpler to implement and generate incremental results.

The most interesting initiatives are highlighted in the table below:

What are the patterns in digital behaviour exhibited by top-performing Bovespa companies

Regardless of industry, every company analysed above has set ambitious growth goals, channelling resources to both reinforce and expand their core business. It’s important to point out that growth can’t be solely attributed to the initiatives outlined above. Given the limited data available, I did not seek to prove a causal or correlating relationship between growth and degree of innovation, and rather focused on identifying innovation patterns across these industry leaders:

  • Venture Build - 50% of the companies engage in venture building. Magazine Luiza and Localiza have set up specific venture building structures in-house: Luiza Labs and Localiza Labs

  • Partner - All 7 companies analysed above are exploring partnerships to develop and identify digital solutions, with a holistic and structured focus across the entire value chain to reinforce the core business

  • Invest - 50% of the companies invest in startups, although strategies differ. Natura has taken a fund of funds approach, others set up an in-house CVC fund (CSN) or even invest directly (Magazine Luiza)

  • M&A - 50% of the companies have acquired at least one startup. Magazine Luiza is a clear highlight: on top of presenting the highest growth, it acquired 16 companies since 2020, including fintechs, foodtechs, logtechs, among others⁴

  • Outlier - Grupo NotreDame Intermédica is a clear example of traditional companies being top-performers through a solid business model and sustainable financials. Yet, the pattern remains the same: commitment to growth. GNDI acquired over 20 companies since 2019, mainly traditional regional players, expanding its geographical coverage

A big lesson from the digital revolution of the past two decades is that all companies and industries will experience unexpected challenges that require agility. This study, along with my first month at Founders Intelligence, accurately reflect three key learnings about corporate innovation:

  1. There’s no pre-set framework for any problem, there are multiple ways to deliver growth;

  2. Incremental initiatives will only get you so far, boldly innovating is paramount;

  3. Experiments never result in failure, but always in lessons and discoveries.

For those who are interested in innovation, but are yet to match the pace of their competition, there is still time to catch up - although the clock is ticking. Fortunately, there is a playbook to follow.

In part two of this post, I’ll be sharing recommendations on why a portfolio approach is important and how to optimise this type of work within your organisation.

Finally, please email me at lucas@foundersintelligence.com if you have any feedback or examples of cases that can complement the analysis.

⁴: SmartHint, Hub Fintech, Canaltech, Inloco, VipCommerce, Netshoes, ComSchool, AiQFome, Hubsales, Estante Virtual, Stoq Tecnologia, GFL Logística, Steal the Look, Jovem Nerd, ToNoLucro, GrandChef