The second phase of the internet affluence over the past decade has delivered several innovations that are unsettling their respective industries i.e Apple, Uber, and Airbnb have all turned the tables in their respective industries.
Stefan Gross-Selbeck, a former eBay and Xing executive, and a Managing Director at BCG Digital Ventures is an expert in business transformation. In his Ted Talk, Business model innovation: beating yourself at your own game, he illustrates what big business corporations can learn from start-ups.
He claims that start-ups do not have a business model, rather they are under the process of development of a model. They are modifiable and can breakdown and redefine their worth in a manner that naturally ranks them best as a disruptive force in the marketplace. Larger companies, on the contrary, have their business models pre-determined and focus on their execution. Selbeck questions whether a balance between these can be maintained and suggests that big corporations adopt the mind-set of start-ups, in his talk. He enlists the unique abilities of the most successful start-ups at present and shares the approach to replicate this spirit of hyper-innovation and disruption in any corporate.
Selbeck Initially shares the strategy of addressing a small market niche. Disrupting a bigger market instinctively has greater potential, but it is the same as turning an aircraft carrier. It is time-consuming and requires huge effort to overcome existing momentum, and both investors and customers want to observe results on microscale in their lifetime before they prepare to join the movement.
He suggests picking a technology that somehow seems mediocre to the chief incumbents. The presenter explains how existing players typically think in terms of bigger, better, and faster, whereas the customer satisfaction my lie in smaller, cheaper, and simpler. He shows a comparison of personal computers to mainframes, and smartphone cameras to professional cameras.
Another strategy is targeting the moderate-growth but large segments. Usually, the reason behind their low-growth is some innovative technology. The price point could be a feasible trigger for a large opportunity. On the contrary, high-growth segments may seem attractive but are possible targets of the big players and various other competitors.
Selbeck clarifies how looking for sizable customer populations, such as people unable to afford or reach existing products is important as they seem unattractive to incumbents. He further explains it by giving an example of the explosion of cell phones globally when cheap versions were introduced.
Exploring industries as an outsider is important to him as the majority of the business advisors recommend sticking to the area you have inside knowledge about. Entrepreneurs often manage to think outside the box and bring disruptive change to less-known business domains. Ponder upon Apple’s move into the domains of music, telephones, and watches.
Selbeck concludes with his last point demonstrating how Facebook introduced the social media market before consumers even knew they needed it. He suggests that the most disruptive products are ones that are not known before. These are subprime efforts but do have infinite potential.
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