Embracing a more competitive future
Regardless of how stable your business is, there is every chance a disruptive startup could hit it from the side and threaten your market share – but you can be prepared. Innovation is not just a buzzword for startups, but a vital part of any medium to large company that has its sights set on remaining relevant and retaining its hard-fought market share.
Failure to instil a culture of innovation could see an established business knocked from the side by a savvy and on-the-pulse new company that has taken risks and created a niche product or service.
Last year Australia ranked 17th on The Global Innovation Index, up from 19th in 2013. However, cofounder of large-scale transformation venture wheretofromhere? Josie Gibson says despite some improvement, Australian companies that remain internally focused could be at threat.
“This is a challenge… how do they keep an eye on the horizon and keep externally focused, as your competitors can come from leftfield? I am thinking of Amazon playing around with drone deliveries, and being in the food business.”
How to protect your company’s future from unknown competition
1. Examine your existing customers’ needs
Gibson proposes that one way to safeguard your company in the event of a disruptive startup challenging your product or service is to tap into the existing customer ecosystem.
“It is surprising how often some sort of obstacle arises that prevents you from being in touch with your customers and sensing how they are actually shifting. You have to build in the ability to adapt to how customers are changing.”
Gibson explains that while a business can have very efficient processes that they build on, they can miss the fact that their customer behaviour is shifting and that they suddenly want something different – this is why it’s so important to understand the needs and demands of tomorrow’s customer.
2. Encourage a culture of innovation
In addition to keeping an eye on clients, building an innovation strategy into the DNA of a company is vital. Amantha Imber, head ‘inventiologist’ at science-based innovation consultancy Inventium, advises that an innovation strategy must cater for incremental innovation as well as broader, sweeping disruptive changes to an industry.
“Incremental innovations relate to the existing set of products and services that an organisation offers and focuses on how those existing innovations can be improved. Some could be continuous improvement and speaking to your current customers about what they want. Disruptive innovation is more focused on what your customers are currently doing.”
Adopting a lean startup methodology of being more nimble, flexible and open to risk can help larger businesses in this respect, Imber suggests.
Applying small-scale product testing rather than long term, time-consuming experiments could enable a large business to find out what is viable. “The idea is to create an experiment with a minimum-viable product – which is a very basic version of an idea that you have – and to run the experiment with actual customers to see how that idea changes behaviour. Something like that won’t have to be a huge investment.”
This type of experiment could be done for as little as $5000 and could mean a business finds out if it is worth putting time and money into a deeper exploration.
3. It starts with leadership
Strategy is key, but leaders of bigger organisations also need to demonstrate that they are serious about implementing a culture of exploration and change. Leaders need to demonstrate that they are not averse to risk.
This is where the Silicon Valley startup idea of ‘fail fast, fail often’ as explored in Forbes could prove relevant, which is an inherent acceptance that innovation can mean that things can go wrong, but it is part of the journey to growth.
“Actually investing time and money into disruptive innovation signals to the employees that the leaders in a company are really serious about innovation,” says Imber.
PwC Australia head of innovation Kate Eriksson says that leaders need to show they are responsive to, and aware of, the landscape they are competing in. This means getting to know your competition and understanding the way they operate.
“There needs to be a mindset that your business is running as usual, but 10% of attention needs to be looking for ways to do better,” she says. “And ways to do better looks at what is emerging in the market, and ways to do customer feedback, and looking at what the ecosystems are.”
Another method is not just to watch and wonder what the new startups in your sector are doing, but to think about how you can actively tap into that innovation through sponsorship or research partnerships.
“That is the very best way to let the light in – to be connected and to have a finger on the pulse outside your organisation. We know from large organisations that those who collaborate externally experience three times the growth of those who don’t,” Erikkson says.
4. Don’t be afraid to collaborate
Collaboration can come in many forms, for example you could be co-creating with a community or scanning startups for innovations that complement your goals.
“… if you take the example of somebody who wants to offer a new internet app service, you might work with someone at a larger company to help with identification, perhaps some kind of biometric security, or some kind of image recognition”, says Eriksson.
She is keen to point out that there are several ways an established business can tap into fresh organisations and even generate new ideas for products and services without incurring the expense of research and development.
In this way, established businesses can generate what Eriksson calls ‘innovation portfolios’, which can be on the periphery of regular products and services offered.
“This can be a little bit of an industry side step or a clear view as to what might be an emerging market. [For example making it a goal to innovate ideas such as] How might we go to Asia?”
While many Australian businesses are already being proactive in their approach to potential threats, Eriksson thinks there is still an abundance of potential.
“Generally I think that Australia has a massive opportunity to be bolder – we look at threats instead of opportunities,” she says.
“Roll up sleeves, step into the market, test it – you should be toying with a lot of things and being aware of them and testing them.”
By taking initiative, exploring ecosystems, building a workplace culture that allows for exploration of ideas in a flexible way, and collaborating with forward thinking enterprises, medium and large businesses can have confidence in their future.
Written by: Melinda Oliver