Digital disruption has become an established part of all industries. The ebb and flow means businesses are shaping the wave of change or struggling for survival. When the next wave hits will your business be treading water?
Melissa Clark-Reynolds, former CEO and director of high-growth tech companies Softed, Looxie, Radio New Zealand and Creative HQ, has been involved in startup businesses for more than 25 years.
Currently working as a digital strategist, Melissa mentors widely in the startup community. At her Future of Business talk she offered poignant advice about surviving and thriving through digital disruption.
Here are Melissa’s top five tips:
1. Know the main types of disruption
Business owners can feel like there’s competition at every turn but there are three main disruptors to keep your eye on:
- Low market innovations: Cheap, low spec innovations that undercut existing business models by offering a simpler user experience or commercialise existing technology.
- Sustaining innovation within your existing company: Having a company culture that encourages building on and refining your commercial offerings.
- Creating customer categories - competing for non customers: These are customers that may not have used a service until a low market innovation was offered in its place e.g. people that haven’t used taxis but use Uber.
2. Not everyone needs a Rolls Royce
Take every challenge from a startup seriously and use those challenges as opportunities to innovate.
Too often corporates have a three-tiered response to startups which, as Melissa puts it, is to: “laugh at the competition, sue them and then run like hell”. This response fails to understand the opportunity startups present and so businesses are too slow to capitalise on them, at which point the startup has gained valuable ground.
Be aware that startups thrive in the area of your market that doesn’t need the “Rolls Royce” product. Offering low innovation solutions with less spec means startups undercut the high functioning corporate service by appealing to what the bulk of customers need. Less functionality at a lower spec and lower price will win almost every time.
3. Know your business’ restrictions and how to work around them
The DNA of your organisation, being the people and processes that are there, are designed to produce what you do now. Your organisation (unless you’re a startup) already has its own momentum, culture and process. If you want to disrupt your industry, Melissa says, “you can’t do it within your current company or brand”.
A culture of sustaining innovation is imperative to the core strategy of every business but first of all understand the gaps in your systems: which portion of your market are you innovating for? Are you leaving an area of your target market uncovered? Have you come into the market at the high end, leaving yourself to be undercut?
4. Think like a startup
Successful startups focus on an emergent strategy, rather than a deliberate one, and aren’t afraid to wander out into “the business model wilderness” to try things out.
Consider your business’ strategy and the opportunities you have to utilise a flexible and emerging strategy over a rigid and deliberate one. Best case scenario is a rogue team outside of the company that develops the emergent strategy and doesn’t answer to the CEO but to a single board member that champions the team’s independence and its ability to act as a startup, wandering the business model wilderness until it finds a model that works for it.
5. Advice in practice: how to make digital innovation work
Three components need to be perfectly aligned to make this work:
- Resources: Your people, money and IP
- Processes: Your company culture and how you get things done.
- Profit formula: Why you do what you do to make money.
Companies that only change one or two of these aspects tend to fail to transform themselves. Having these aligned, and knowing your place in the market are the first steps to changing your company’s DNA.
Innovation doesn’t need to begin with a brainstorm to collect the latest and greatest ideas. Instead of thinking up new ideas figure out a way to make the ideas you already have work for you. Figure out where you are in the market, are you entering a new market or sectioning off a segment of an existing market?
You’re much better to go to market with a low innovation and build on it than you are to be at the top end - almost everyone that enters at the top of the market goes broke.
Melissa has been active as an entrepreneur and involved in business startups for 25 years. She has been CEO and director of high-growth tech companies Softed, Looxie, Radio New Zealand, Creative HQ - Wellington's business incubator including creation of Lightning Lab - NZ's first accelerator for digital companies. Founder of Mini Monos a Virtual World for Children who care about the future of the planet and our communities. The site has more than 1.4 million registered members; it’s generating revenue through subscriptions and microtransactions from its target market of 8-12-year-old boys across UK, US, Australia, and New Zealand.