Startups 3.0 — How established companies can benefit the most from building digital products and ventures in 2020.
If you are an established company wanting to innovate you have, before now, almost always had to rely on two options.
- Do it internally with existing teams and staff (and hierarchy, bureaucracy and internal processes that slow things down).
- Acquire an existing company (takes a long time, and is complex and risky).
Eli5 have another way. We meet in the middle — working with companies to establish a startup team using existing staff alongside our experienced digital product builders. As more and more companies are losing out to fast-paced digitisation across all industries, we found our clients needed a better way to work. They often have to deal with legacy within an existing IT landscape; often a web of various tools, applications and services connected point-to-point rather than abstracted, which means decentralised data, implementation overhead and security flaws. The digital products we build with our clients solve all of these issues. You can read more about the setup of these here.
Why make a digital product?
The right digital products save you money and time and are an efficient investment compared to solutions that involve physical goods or services. Why put more pressure on staff to work longer hours, when a computer program or app can make the task easier? The reason digital products are so successful is that:
- They automate manual tasks. You can use natural language processing to sift through, sort and prioritise user feedback, or statistical algorithms to perform complex mathematics in seconds on huge amounts of data. An example is spam email filtering. Computers are fed millions of ‘normal’ emails along with those flagged as ‘spam’. It then uses natural language processing to learn which is which to improve the algorithm over time and become better at finding and filtering out the rogue messages. Much better than a team of people reading them and writing manual rules.
- They connect things. This could be people, so they can share information, collaborate or purchase goods. Or this could be connecting to other digital products, applications or services. An example would be a digital product that connected you (a customer) with a law firm so contracts can be signed digitally online and connect directly into the relevant institutions (like your bank for payment or credit checks).
We think established companies are the best place to form a digital product startup. And this is why.
Established companies have experience. Most have been around for several years, if not decades and have stable and deep-rooted practices to which they attribute their success. However, it does not make sense to drastically change their way of running a business, so innovation rarely works out the way you might hope. Our process encourages you to extract this knowledge by creating an innovation team with talented individuals and teams who already work for you but, by working outside of the company, will not be restricted by corporate structure and conventional modes of thinking.
Established companies have a wide pool from which to find ideas and creatives — you should empower the people closest to the problem to solve it. Your employees already know how everything works, what your ethos and goals are. And they will also know where there is room for improvement, so your digital product is completely bespoke to you rather than an out-of-the-box solution that all of your competitors also have access to. There is no better source than your own workforce (plus, an opportunity to be involved in innovative products also helps to retain and attract staff). The sweet spot is combining internal domain expertise and specific knowledge, then leveraging this to create highly scalable digital products with an external expert team. Then, when you have developed your idea for a new digital product, you also have an immediately available and reliable group of users that can test prototypes and provide feedback for improvements and iterations post-launch.
Established companies also have credibility. When you are choosing suppliers, it is very difficult to know if an external consultant or very new company you are acquiring will be the right choice. Choosing the wrong company to work with has massive costs of opportunity as well. Beside the fact you need to pay them, you’ll also head into a long during trajectory — meaning you can’t all of a sudden switch to another company if it isn’t working in the way you anticipated.
Established companies have capital. One of the key reasons startups fail is because they do not have enough money or investment. Building one as an established company means from the very start, you have a clear and stable financial plan.
Combine all of these things with fast-paced product development and venture building, and magic will happen. In 2019, we worked on projects to relieve pressure on internal company teams — by building digital products that made daily tasks much more efficient. These included the customer services team for an international energy company and the regulatory team for an international bank. Digital products are applicable to almost every industry — to find out more about how different sectors are approaching innovation read my last article, “Digital Venture Opportunities for 2020 — Which digital solution would most benefit your company?”.