5 weeks — You've got another thing coming
“Culture eats strategy for breakfast” Peter Drucker allegedly said. Whoever said it; there is a lot of truth to that. I believe, that even though the San Francisco companies, start-ups and giants are all very different, they are joint by the culture, and the culture of the companies transcends the corporate boundaries.
Another thing coming, the digital transformation is perhaps the most eminent threat/opportunity businesses of old are facing. It is nothing new — but the surf is far from over. One must take care should you want to stay on the “wave of opportunity”.
One view is that most new companies create solutions by bundling products and services. However, in most cases they are actually doing the opposite. Unbundling traditional business offers is probably the most common methodology.
Today, many start-ups actually state what they are aiming to disrupt an existing industry, by unbundling this or that, which is bold. Sort of like cutting yourself before going in the water to let the sharks know you’re coming.
Out there is a fortune waiting to be had
Now if we take the 2 trillion (2000000000000) dollar market of on-road logistics. A market by its sheer size alone is quite intimidating. So a new company moving into this business would be shit out of luck right? Why would you bet against the existing large players, bankers surely wouldn’t.
Steve Blank, general start-up guru famous for several things, but especially the customer development model, explains how VCs generally think differently in terms of those market situations. See link below for his full article:
Every startup I see invariably puts up a competitive analysis slide that plots performance on a X/Y graph with their…steveblank.com
The general idea is that normally when companies try to separate themselves or a new product in an existing giant industry they plot how “we are different” in comparison to the incumbent actors, separating themselves in the existing industry. However, this doesn't hold true for startups who try to create new markets. In these cases, we probably need to visualize things in another way, since it’s not really fair to compare this startup with the actors and structure of an existing market.
Steve Blank suggests putting the startup in the middle, and drawing the adjacent markets as “leaves” around the startup. These markets could be viewed as competitors to some extent. And this sketch could spur the question “how big could this new market actually grow?”
What I think is so interesting about this model, is that these ‘leaves’ are not only competitors, they could also become potential customer segments. So if you’re creating a new product that doesn't completely fit in in an existing market:
Instead of putting your business aside of a big market and create something “on the side” — put yourself in the center of attention, trying to disrupt the industry. Be bold.
Disrupt, instead of complement.
Supply chain and logistics solutions are becoming a hot topic in San Francisco. According to CB insights the year on year increase in funding from VCs, private equities, and angels is 470%, this means that several actors are entering the market of logistics with the ambition to disrupt.
Now, far from all startups are successful, but the ample opportunity of being quick and small towards big and strong has never been greater than in the example of digital transformation.
I had a very interesting discussion with Darek Haftor, Professor of Informatics at Linneaus University, Sweden. What is interesting about all E-business is that it trumps or alters all previous management theories of the value chain, strategic alliances and the perspective of core competencies. Since it enables the redesign or revolution transactions mechanisms and information in general, by providing a platform from which the value chain turns into a value network of several actors.
Think of your own company, how many are just responsible for sending emails and communicating. They are in charge of transaction mechanisms, and are therefore in a way replaceable through digital transformation.
By understanding the underlying transaction mechanisms these new companies can unbundle old structures and generate a novel offer. Much like UBER is doing with taxis, what iTunes did to CD-albums or what Ryan Air did to the concept of classic aviation.
But getting that mentality, in terms of risk, is probably the most difficult, which is why culture is key. Rob Halford wrote in the Judas Priest song “You got another thing coming”;
“Out there is fortune waiting to be had, you think I’ll let it go your mad. You’ve got another thing coming!”
My guess is that Rob would have fitted right into the corporate culture of the Bay area.
Have a great week!