Corporate innovation as fast as Airbnb, Uber and Amazon
Traditional companies are in for tough times. Businesses are falling like dominos. Look at the Dutch retail chains for examples: V&D. Perry Sport, MS Mode. And that was only last summer. Since its foundation 60 years ago, 88% of the Fortune 500 companies have either merged or died out. The average attendance on the list has dropped from 60 to 20 years and is going downward still. Paradoxically the list of unicorns (startups with a 1 billion+ market value) is growing steadily.
The world is changing faster than ever before
From a technological perspective, everything seems possible. After the explosion of the internet social media came along, then mobile, and with robotics, Artificial Intelligence (AI), Internet of Things (IoT) it’s the perfect storm.
Competition lures around every corner. Tesla forces old car manufacturers towards electrification, auto-pilot and IoT. At the same time Uber is attacking the car industry from a different angle. Transportation-as-a-service is a fact and the first autonomous car made by Uber is already in service in Pittsburgh . Who could have predicted this 10 years ago?
Consumer Expectations are transforming
Consumer expectations are changing constantly, and while incremental innovation was enough in an age of relative stability with reduced means, radical new ideas are holding all the cards now, and are reaching the market quicker now than ever before. Traditional companies are struggling to keep up.
Corporates can play the same game startup are playing
Startups have raised innovation to an art form and are reaping the spoils that come along with it. Accelerators like Y combinator (Airbnb, Dropbox, Zenefits) are working according to the Lean Startup Methodology. Why shouldn’t traditional companies use the Lean Startup Methodology to their advantage? It’s not a matter of why, but a matter of how. Here are 7 rules.
1. Build something people love
Mass production is a child of the industrial era. Mass is so yesterday. We buy them as commodities, buy 1 get 1 free. At the same time we empty our wallets for luxurious products like everything Apple puts out or the extra options in a Mercedes-Benz.
Not everyone wants the exact same, but in the end we all want the same: extremes. Extremely nice, useful, cheap, simple, luxurious etcetera. The traditional mass product doesn’t exist anymore and companies will have to make choices: Have you ever seen a car as cheap as a Dacia, as eco-friendly as a Tesla, as luxurious as a Mercedes and as fast as a Ferrari?
The smaller the better
Startups focus on niches with very specific problems and needs, the more specific the problem, the better the value proposition, the less competition and the more love by its users. Upscaling is always an option for later.
Do not underestimate the money to be made by starting in niches: Facebook started at Harvard, Apple with designers, Tesla with rich boy green fanatics and Airbnb in New York.
2. Think in terms of problems instead of markets
The result of a century of industrialization is tremendous: Billions of products are bought every day, or used, or changed or thrown out. Most are made by the established order. Entering a market and trying to fit in with the big boys is therefore incredibly difficult.
That’s why traditional startups don’t think in markets, but focus on problems instead. There’s plenty of those lying around! Innovation in healthcare may have increased our life span, the wellbeing of the elderly is becoming a serious problem. 100 years of automotive has brought us mobility, it has also brought us overly packed cities, pollution, traffic jams and accidents. Solutions bring more problems, which in turn require solutions. Startups don’t focus on claiming a certain market share. That is way too hard! They would rather focus on creating a new market or category.
3. Think 10x, not 10%
Incremental thinking leads to situations in which every year the product becomes 10% more efficient. Every year it becomes 10% cheaper, 10% better, 10% prettier. 10% the same really. This kind of thinking is designed to prevent the loss of customers you already have.
However, 10% is not enough to win new customers. Why? 10% better doesn’t stack up against the ‘cost of change’. Meaning, the cost a person or organization has to make to adopt a new product. Have you ever switched from PowerPoint to Prezi? Startups focus on 10x, not 10%.
4. Go outside!
If you ever called the bank, you have surely been confronted with customer surveys. After each call you hear the same recorded message. These can provide a quantitive, not a qualitative feedback. And they certainly give you no insights into where to innovate.
To really innovate, you have to go outside. That’s where your customers are. Not to ask them for solutions: customers don’t have them. Ask them about their problems. The solutions for these problems are embedded in the company. It’s up to the customers the say if these are the solutions they are looking for.
5. Don’t waste time chasing unimportant details.
The power of big companies is standardization. Customers know their data is safe this way, that a certain quality can be expected and service problems are fixed in a timely fashion. Standardization is the enemy of flexibility and improvisation. And that is where the power of startups lies.
Startups change products in a jif or create a new service altogether. They don’t waste time finding the right corporate colors, don’t have to go through dozens of approvals or the opinion of the big boss. Make sure you create an environment that stimulates flexibility.
Startups live to experiment: they keep on improving their product based on customer feedback in order to nail it. They would rather launch daily product updates than monthly or yearly upgrades, which is usually what corporates do.
It is of no use to launch a product once the creators think it is ‘perfect’. This is because ‘perfect’ is not defined by the makers but by the consumers.
7. Fire your storytellers
Storytelling is key in getting customer traction. It explains the “why” of your value proposition. In the course of the years however, traditional advertisers have started to massively abuse storytelling to make up for a mediocre product.
Startups focus all their time and energy in building a product that is so good that you only have to know of its existence. The product sells itself, and the story is still intrinsic, not a made up fantasy to sell it. Sites like Product Hunt and Kickstarter give a better indication of a good product rather than a good advertisement campaign. Accelerate & Innovate.
Bonus: A whitepaper on startup innovation for corporates with examples and nice graphics. Drop firstname.lastname@example.org a line and get it for free!