A year of digital disruption
From micro lenders chipping away at loan markets to the rapidly expanding reign of Uber, 2015 was a year of accelerating innovation and disruption, bolstered by the increasingly democratised capabilities of technology.
Fintech hubs like Stone & Chalk and Tyro have been abuzz for the past 12 months. There’s a real sense in the air that many traditional service markets are on the brink of major disruption – and those who ignore it, rather than seizing new opportunities and riding the impetus, will fall behind.
So before we march into 2016, here’s a roundup of four of the key lessons we learned this year.
Lesson 1: David can beat Goliath
In every sector, technology is disrupting traditional markets – letting nimble smaller players sneak in with risky new approaches to rapidly change the landscape.
The key to what they’re doing is simple: offer a better customer experience than what is already out there. It’s the ethos behind start-ups like real estate communication platform followit, which takes social media best practice to turn the traditional home buying and renting journey upside down.
At their essence, disruptors are just engaged in good old-fashioned competition. But because they’re small, these entrepreneurial businesses can act quickly to seize opportunities. At this particular moment in history, the technological stars are aligned for them – they’re able to crowd source for funds, develop products in the cloud and then test them and rapidly push them out through social media.
That’s why established businesses of any size need to adapt or risk being overtaken.
Always ask how you can do things better for your customers. Look around at your adjacent markets – many disruptors emerge with expertise drawn from multiple sectors.
Lesson 2: Find the balance between agility and rigour
Small start-ups are naturally agile. But the bigger a business gets, the more it has to lose – which is why you tend to think more safely, process change more slowly, and get a bit complacent about the way the market operates.
So how do you create an entrepreneurial enterprise: one that strikes the right balance between taking risks for possible future return, and the accountability needs of a growing company?
Think back to the bigger picture: your overarching strategy and what makes your business so great. Keep one eye on all of that, and the other on new technologies and innovations – partner with industry experts, stay alert to change and empower your people to be more productive and engaged.
When you’re ready to implement new ideas and approaches, start incrementally – small and slow. Be disciplined with cost management – then, when you start to see ROI on new investments, you can gradually increase the pace.
At their essence, disruptors are just engaged in good old-fashioned competition.
Lesson 3: Get people talking about you
Taxi booking app goCatch put control back into the hands of the customer and forced the taxi industry to reassess its standards of service by having drivers and passengers rate each other. It added visibility, certainty and accountability to both sides of the relationship – solving multiple problems at once.
The success of goCatch’s new business model came not only from getting a great team on board, taking risks and lots of hard work – people had to get excited about it too. How to do that? Push your product out to your network and through to influencers on social media.
It’s similar to what’s happening with the current wave of fintech start-ups carving out their place in the market, and then raising millions of dollars in funding rounds. With all the talk around fintech at the moment, the businesses that can build excitement around them are perfectly positioned to catch on. If the product is that special, momentum builds naturally.
Lesson 4: If you can’t beat them, join them
It’s clear tech disruption poses both an opportunity and a threat to businesses. So how can you avoid being overtaken? Here are three things to think about for 2016:
- Take cues from start-ups and entrepreneurs. Work innovation into your strategy and culture, and invest in technology and empowering your people.
- Heed the cautionary tales of other industries. When business fails to take change seriously it fails. Imagine you ran Blockbuster when Netflix was emerging. What would you do to stop your business from crumbling? Imagine your own market in that situation and plan for it.
- Get more agile and customer-focused. Successful start-ups abandon traditional business models, instead going through a circular process of prototyping, testing on their target market, learning and relearning.
Then there’s the option of investing in new start-ups and potential competitors. This has the obvious benefit of equity – plus, as Macquarie Bank knows first-hand, by forming partnerships with agile new players you gain a better understanding of new technology applications, and get closer to the next big thing.
The pace of innovative change and disruption shows no sign of slowing in the new year. It’s an exciting time for businesses that heed the lessons of 2015 – look to disruptors to see how they’re transforming customer experience, get people talking about you, and embrace innovation and technological change.