What are those traits that make one business leader see new opportunities, while others either complacently function in the shrinking market, or worry about their declining share in the market?
Is it that most business leaders are stricken by the tendency to conform to how a given industry function? Or is it that the innovators have a different perspective as compared to most existing market-competing logic.
To know if you think like an innovator does, ask yourself the following questions. Examine if each of these guidelines help you see where the opportunities lie, rather than constraints based on your usual market wisdom.
1. Do you Conform? Or do you just Deconstruct or Restructure?
Are you one of those business leaders who start with the analysis of the industry as is? Do you begin with estimating whether the industry is shrinking or growing? Do you begin with the structure first and conform to the conventional methods of devising a strategy?
Or, do you remind yourself that benchmarks exist only because someone created them. Hence structures can be changed, benchmarks broken, industries reshaped and businesses increased, even by individual firms. Professionals who innovate realize that conforming to shared industry logic, restricts creative thinking of possibilities and profits.
As a writer, when I started writing, I couldn’t think beyond books. I still have a mental block around writing fiction for instance. Simply because the industry logic for the longest time was that no writer can write both fiction and non-fiction equally well. So, do I simply accept the assumed norms of the writing and stifle my creativity as well as potential revenue? Or instead, do I hone my skill in the craft of of anecdotal non-fiction or creative non-fiction as a style?
If I’m an innovator, I will do the latter.
2. Do you compete or do you create?
Most organizations try to compete for the market share. Because they accept industry structure as it is, they forget that nobody can constantly outperform others. It also means that trying constantly to compete will lead to almost copying what your competitors are doing. On the other hand, the white spaces, or the untapped markets where you can easily expand to, are not even being considered because no one’s looking at them.
Competitive advantage is dead because it makes a business complacent about it. It drives insecurity and reduces the ability to take risk and create something new. In an attempt to secure the competitive edge, managers will often start looking at what are the other players in the market doing, rather than what’s the buyer looking for, or which other kinds of buyers can be catered to.
Think of Uber stepping into UberEats. From a cab aggregator, they are expanding also into food delivery. The day may not be far before they also start helping people move and pack.
If and when that happens, Uber will have carved an entirely new niche. They will have a business model around helping people who don’t have a truck load of belongings when they move houses. Students for instance, will usually not want to do multiple trips, nor rent a large transport vehicle when they don’t have that much stuff to transport. Sharing a transportation vehicle randomly also has its problems. If they can uber with all their stuff in a single trip, I promise you, they won’t stop raving about it.
Creative innovators, create. They use the existing competitive advantage to get into and build markets or products that are needed. They focus on trenching new niches and thereby making competition irrelevant. They focus on creating world class products and services and everyone who looks at what they’ve made, just can’t stop talking about it.
3. Do you try to hog the larger share of the pie, or do you simply bake a bigger pie?
Since we’re talking pies and cakes, let me tell you something about my mum and her cakes too. Markets and cakes are not much different after all. We all want a share, you see.
At home, we kids really love, the cakes my mum bakes. When we were growing up, we often had friends over at our place. Sometimes we would bicker (we were children, we were allowed to bicker you see :P), about who got the largest piece. My mom, in response would bake a larger cake the next time we anticipated friends. At one point, my mum had to start doing it professionally because so many of us wanted her cakes.
Are you like us kids, who just want to keep fighting over your existing customers and market shares? Or are you someone who sees opportunities like my mum? Someone who simply increases the size of the market, by discovering other potential buyers who may not originally have fitted into the ‘definition’ of customers.
Does your business only bother about CSAT scores or do you look at problems of the non-customers which you may be able to solve. Read up more about it in Chetan Walia’s “White Space Business Model” to see how a JV of the Krishna Group and Maruti Suzuki, shot up from 60 m USD to 1 b USD within a decade. All they did was convert non-customers to customers.
4. Do you create and trench new niche even if it costs you slightly more? Do you also continue to focus on the reduction of the cost?
Let’s revisit my mum’s cakes. When she began baking them professionally, she started with the regular fine, white flour, till one of these days one of my friends asked if she had a healthier option for white flour. Mum experimented with whole wheat flour. Next came diabetic options like ‘sugar free’ and other non-carb sweeteners. ‘Eggless’ cakes are anyway a big thing in India.
Result? Mum’s cakes were getting differentiated. Also, because she was using whole-wheat flour (cheaper in India), no eggs, no sugar, the cost went down. She wasn’t trading one off for the other. Her differentiation strategy was not about just changing the icing, or the design etc. It wasn’t about just adding some frills and bells and whistles, but actually driving the value without trading it off for the low cost.
Mum, focussed much on what to reduce and eliminate, what to create and raise and how to make it customer-centric like a white-space pro. Is your business doing it?
How does it work in your organization? Does your business, your leaders or you believe that you will need to spend more in order to differentiate? If yes, then have you considered that it may not be the case? Have you operated on assumptions about this trade-off or have you actually tested them without feeling insecure?
We’d love to hear from you about your stories and experiences related to innovation, creating growth, new businesses, market segments or customer experiences for non-customers. We’d be happy to brainstorm with you about any questions that you may have.