The most exciting thing I’ve seen in the Australian business community this year is large companies – think ASX100 getting their startup on. Many are finally realising that this new tech, lean approach to innovation and change isn’t just a side show, it’s quickly becoming the main game. It’s a bit like a rock band that goes on tour as the support act and by the end of it becomes the main act. In response, a lot of large companies are now paying attention to startup methodology, and launching their own incubators and accelerator funds. Kudos to them. In many ways, this signals the end of the Harvard Industrial Mentality: read here the attitude of ‘We know what works in business and all the business models that exist have already been uncovered.’
There are some distinct things that startups and technology companies do which are the exact opposite of, or at least counter intuitive to, the traditional business approach. So here is a little summary of the Then vs Now, the Big Co vs Small Co, the Old Money vs Grow Money approach to business strategy.
Big Co (then) | Startup (now) |
Justify the business model before investing in an opportunity. | Invest in connecting audience, uncover business model later. |
Invest on technology’s current capability. | Invest in technology’s exponential possibilities of tomorrow. |
Serve the infrastructure we own, and control – even at expense of the consumer. | Serve the end consumer at all costs, even if it upsets the supply chain. |
Sell products and services to consumers. Separation of consumer & producer. | Create platforms for consumers to play on and innovate with us. Less delineation between consumer / producer. Pro-sumer. |
Never launch a product which cannibalizes our existing range with lower margins. | Self cannibalize our own range. Do it regardless of margin decline, because we know others will if we don’t. Understand the law of exponentials & technology cost deflation. |
Compete for market share, beat the competitors at all costs. Play hard in the rock n’ rolla cola wars. | Collaborate for ecosystem growth. Benefit from a more fertile and rich business system. Co-opt rather than compete. Compete instead against legacy industries. |
Own physical assets, use and create them as a barrier to entry. | Access others asset bases. Keep infrastructure costs low & remain nimble. View data & connection core assets, not physical things. |
Build a supply chain with a linear ‘down the line’ selling focus. Use intermediary sales channels. | Sell direct wherever possible. If a channel doesn’t exist, build it to avoid intermediaries. |
Research products with consumers to make sure it’s right. Refine based on contrived feedback in unrealistic research world. Launch Big. | Launch products into market as MVP and refine after we get real world feedback. Launch and iterate. |
Don’t let consumers mess with what we make, or mash it up. We design it, they buy it. | Launch malleable products into the market place. Know that our audience will probably make it better after they’ve messed with it. |
Maximise price point and margin from with consumers. | Configure a way for our audience to make money with us. Build a core of brand evangelists for being generous. |
Sure, this list could be longer, but you get the picture. The story for a Big Company, is that Kansas is goin’ bye byes. And the tricks of the new kids in town are no longer a secret. The real question for Big Co CEO is simple:
Have they got the courage and leadership chops to make operational changes they probably won’t be the beneficiaries of? Or will they just ride the decline and say, I’ll be gone before we get disrupted so why take the risk of radical change? That my friends, is the real question.