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Disruptive Innovation: Lessons from Donald Trump’s Victory

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Donald Trump’s Victory over Hillary Clinton in the 2016 US Presidential elections is a politically and socially significant event in modern history.  This is not only true for USA but indeed the entire world and the established global order may face significant headwinds from the new political order.  However, another significant aspect of Donald Trump’s victory is the manner in which it has caused disruptive innovation to the entire political system in USA.  From the “establishment wings” of both the Republican and Democratic Parties, personified by the Bush and Clinton families, to the entire army of political pundits, pollsters and media, no one saw this happening and this election will be analyzed for years to understand why the vast majority of experts never predicted a Donald Trump victory.

Wikipedia defines Disruptive Innovation as “an innovation that creates a new market and value network and eventually disrupts an existing market and value network, displacing established market leading firms, products and alliances”.  Donald Trump did exactly that to the US political system.  Below are few insights which the practitioners of innovation can take away from this election result.

Job to be Done:  Innovation happens because someone comes along and redefines the “Job to be Done”.  Edison wasn’t just trying to improve candles but he defined the Job to Be Done as something which creates light.  In a similar manner, Donald Trump’s aim was not just to become the President of the United States of America.  He redefined the entire mission of his campaign to challenge the entire political establishment and in so doing created new ground realities.

Understand your (Potential) Customers Pain Points:  In order to “disrupt” a market, one needs to understand why the customers are not satisfied with the current offerings.  It’s not enough to know that the customers are unhappy with the current offerings but the real question is WHY.  To apply the question of “why” to the US political landscape prevailing in the years before the 2016 elections, why was a sizeable portion of the electorate unhappy with the traditional political establishment?  Why is it that the policies of both major parties in US were not good enough for the voters? Why are people so against traditional politicians?

Most traditional political candidates did not even appreciate that there was a sizeable number of voters angry enough at the establishment to vote for someone with a totally different message.  Other candidates such as Bernie Sanders and Ted Cruz did understood this phenomena but Donald Trump was the ultimate champion of disruption.

Communicate:    Communication is essential to drive innovation.  This is not only important to nurture the initiative but also to make everyone understand the brand’s new value proposition.   In this regard, whether we agree with Donald Trump’s message or not, his “messaging strategy” was very effective.  His simple message of “Make America Great Again” addressed his potential customer’s pain points and his use of free media began the process of acceptance and diffusion essential to any new offering i.e. a possible President Donald Trump.  Donald Trump understood that communication is essential to support rapid innovation based on the following three fundamental steps:

  • Communication as a way to test the coherence between the brand and the innovation;
  • Communication as an essential asset to develop innovation;
  • Communication as a tool to spread innovation.

New metrics to measure growth:  The day after the elections, on 9th November 2016, the question was how everyone could be so wrong? Why no one could correctly predict the elections results?  What went wrong with the polls? The answer is simple.  Disruptive Innovation needs new metrics

According to Clayton Christensen, the person who coined the term disruptive innovation, “the characteristics of disruptive businesses, at least in their initial stages, can include:  lower gross margins, smaller target markets, and simpler products and services that may not appear as attractive as existing solutions when compared against traditional performance metrics”.  This is precisely the reason that, such disruptive innovation models are unattractive to other entities operating in the same market. But most of these traditional entities are measuring metrics which do not matter anymore.

To use this analogy for the just concluded US Presidential elections, maybe a better measure would have been to measure voter issues rather than to ask them who would they vote for.  Measuring the impact of Job losses, loan defaults, mortgage delinquencies, etc. on voter behavior might have more accurately predicted the end result of the 2016 US Presidential elections.

KPIs for Growth: Effective Monitoring of Your Start-up’s Expansion

 

Key Performance Indicators (KPIs) are essential to monitor the success or failure of business in any phase of its life cycle.  However, KPIs are critical for measuring the growth of a start-up when the entire organization is in a flux and a baseline for the meaning of the organization’s success has not been established.  This need for regular and effective monitoring becomes even more acute when the start-up decides to grow further and enter a new market or launch a new product.

 

The KPI framework for a start-up also varies from that of a mature business.  This is inherent in the very nature of a start-up as the KPIs for a start-up need to focus on product-market fit for the whole team rather than in a mature business where different teams are responsible for different areas of business and thus, have different KPIs. The product-market fit is based on user behavior and acceptability of the product in that market rather than traditional KPIs.  This also implies that a product suitable in one market might not be successful in a new market due to different user behavior and product enhancement might be necessary to ensure long-term success in the new market.

 

An important area where KPIs can play an effective role is in measuring success in a new market that the start-up has decided to enter based on factors such as past leads, past sales, competitor behavior, trade shows, and requests from existing customers.  Although revenue might seem like the most important criteria to measure, there are a number of significant KPIs that can be more effective in ensuring start-up success at this early stage.  As a start-up needs to focus on a well-defined set of KPIs, below are the ten most important KPIs to measure while entering a new market.

 

  • Number of Customers: Customer data is an asset for any start-up and enables a start-up to understand consumer behavior and thus, have new insights into customer needs and requirements for its product. Product enhancement based on these insights from customers in a new market will lead to a better product-market fit and result in greater sales.
  • Consumer Perception: Consumer perception is a measure of the awareness and satisfaction of a product by its intended target consumers. KPIs such as Net Promotor Score (Do your customers promote your product to others?), degree of satisfaction with the product, brand comparison with competitors and measure of brand attributes are common indicators of consumer perception.
  • Price Response: Price is definitely a KPI to measure, especially when your start-up is entering a new market.  It is one of the main determinants of the buyer’s decision to purchase (or otherwise) your product or service and consumers in different market might value your product or service at different price points.  Therefore, it is imperative to measure the price response of the customer to determine whether price a factor that is limiting sales in this new market.
  • Cost per Lead: Cost per Lead is a measure of the effectiveness of your marketing campaign. When your company is entering a new market, a low CPL will show that the marketing campaigns of your company are successful in the market and is attracting potential customers to your start-up.
  • Conversion Rate: Of course, just getting the leads is not enough and you need to convert those leads into revenue-generating sales. Conversion rate measures the success of your sales efforts into converting the leads generated by your marketing efforts into actual sales.
  • Repeat Purchase Rate: The best sale is a repeat purchase from an existing customer. If your start-up is able to have a few customers who regularly purchase your product/service, these can be an important source of referrals and become champions of your start-up in that new market.
  • Net Profit: At the end of the day, business is about profit and Net Profit is the KPI that clearly expresses that profit in dollar figures. Net Profit is also a good measure of the impact of costs in any market to deliver the same products or services.
  • Return on Investment (RoI): RoI is one of the most common profitability ratios in business. However, it becomes even more vital to measure RoI when you are entering a new market as significant investment would have gone into enabling that new venture and RoI would be a key measure of that decision to invest in entering a new market.
  • Target vs. Actual Sales: One of the most important criteria while entering a new market is to set a realistic target for revenue and then measure it against the actual sales that the company achieves after it enters the market. This would help highlight the complete sales process and is invaluable for you to assess the performance of your start-up in this new market.
  • Month on Month (MoM) sales growth %: Larger companies usually measure YoY, QoQ and MoM sales growth percentage but for a start-up entering a new market, MoM sales growth percentage can be a key indicator of the direction of your start-ups efforts to grow and to build a baseline of the performance of your company.

Challenges Start-ups face in Global Growth

Challenges Start-ups face in Global Growth

Last month, I had a discussion with Futurpreneur on business expansion.  That discussion focused on evaluating some specific criteria for assessing whether your start-up is ready for expansion and which would be a probable target market for expansion. Based on this evaluation, you, the entrepreneur, might decide that it is indeed now time to grow your start-up and explore new global opportunities outside your local market.  At this point, you, the entrepreneur, need to look ahead and think of the potential challenges that an entrepreneur entering a new market might encounter.  Below are some of the potential challenges to consider that might doom your entry into a new market.

 

Is your Start-up ready to Go Global?

An entrepreneur needs to make sure that her start-up is absolutely ready for growth.  This means looking at four key areas of your start-up.  The first focal point should be management commitment i.e. are you and the investors of the company ready to put in the time, effort and resources required to succeed in a new market? The second important area to consider is the product offering i.e. whether you will have competitive advantage in that specific new market because of your superior product or service.  The third necessary condition for growth of your start-up is whether you have sufficient cash-flows to enter into a new market as this is an expensive endeavor.  Finally, the entrepreneur has to be realistic about the capacity and capability of their start-up to deliver the additional sales that may happen as a result of this expansion.  If a start-up enters a new market before these necessary conditions are met, the start-up can incur significant damage to its reputation.  This can lead to catastrophic result and even end in the failure of the expansion effort.

 

Market Entry Method and Partner Selection

One of the most significant challenges that start-ups need to overcome while entering a new market is to decide the ideal Market Entry Method.  This can have great consequences on future business to the company.   There are two possible options.  The first is to directly or indirectly export to this new market while the second option is to open a new sales and market office in that location.  This decision does not depend upon the size of the company but on the business strategy defined for the company’s expansion.  There are a number of factors which determine the strategy to employ including International experience requirement, management focus, speed to go-to-market, financial commitment and the risk profile of the company.

Whichever Market Entry Method is ultimately selected by the company, finding the correct partner(s) to enter a new market is another crucial step in this journey.  In order to do this, your start-up must clarify the requirements it has from the partner.  Questions such as which market(s) will the partner focus on?  Is the partner only a sales partner or would it also add value to the delivery of the products or services? What would be the revenue-share model for such partnerships?  These and many other questions need to be answered to build long-lasting relationships which are mutually beneficial for both entities.

 

Impact of culture

Culture has huge impact on business and it is imperative for an entrepreneur to immerse himself in the culture of any new market in order for his venture to succeed in that market.  A very simple example of culture impacting international business is language.  Any foray into a new market is defined by an entrepreneur’s ability to communicate in that market’s language and understand the nuances of the spoken and the written word.  Other differences between cultures could arise from factors such as economic philosophy, social mobility, religion, education system, and history.  These cultural differences have major impact on business functions such as customer support, advertisement, negotiations, public relations and consumer choices.  Understanding these cultural differences and their influence on business practices is always a significant challenge for any venture entering a new market.

 

Pricing Strategy

International pricing strategy is always a major challenge while entering new markets.  A start-up is focused on keeping it costs to a minimum while having maximum revenue.  However, the associated cost and pricing structure is based on its domestic market and the entrepreneur has to consider a number of additional variables in order to determine the best pricing model for a new international market.  These variables include additional costs to entering a new market, foreign exchange fluctuation, Tariffs, legal considerations, consumer affluence and local market conditions.

 

Legal

There are two major challenges when it comes to legal considerations while going global.  The first is to understand the extent that your product and service are protected under Intellectual Property Rights in the market that your start-up is planning to enter.  Your IP is usually applicable only in the country that you have obtained it in e.g. Patents and Trademarks issued by Canadian Intellectual Property Office are only valid in Canada.  You need to understand how vulnerable your IP is in the markets you are entering and what are the protections that can be obtained for your IP in those markets.

 

The second area to understand are the applicable laws of the country that you are entering and those of your home country.  Canadian laws that focus on foreign corrupt practices or restrictions on Export of Canadian products and services to certain countries must be studied before entering any new market.  Similarly, the entrepreneur must comprehend the impact of the laws of your target country on areas such as product liability and International contracts.

 

Tax and Accounting

Tax and accounting is another significant challenge for would be entrepreneur going global.  These cover a whole range of issues such as Transfer pricing, Duty Drawback, Foreign Trade Zones, Value Added Tax (VAT) and Tax incentives for exporters.  Again, these need to be looked at and it must be ensured that your company is meeting its tax obligations in all the markets where the company operates as a business.

 

 

 

 

Demand Generation is the new Sales for Start-ups

Building a dynamic and innovative demand generation model is imperative for the success of any organization but it is critical for the growth and indeed the survival of any Start-up. This is because the Start-up has many unique challenges for the marketer due to its very nature. The Start-up does not have specific market segments defined as its customers so the target market for the marketer would be multi-segmented. In addition, reach to these customers would have to be planned through multiple channels. Furthermore, traditionally various marketing activities are focussed on lead generation and it is essential to differentiate demand generation from lead generation and build KPIs around it that are applicable for Start-ups.

In order to evaluate, design, implement and manage a Demand Generation Model for Start-ups, a holistic approach must be taken. The foremost step would be to carry out a brand audit to verify the level of brand awareness and positioning relevance of the Start-ups products and services to its various targeted customers. As an example, a Start-up focused on an area where there is strong market demand can have greater brand awareness through viral campaigns focused on specific current market events to create buzz. This would ensure that the Start-up can leverage its strengths in that particular field to maximize the current opportunities in the market.

In addition, a successful Demand Generation Model for any Start-up must have all the required building blocks incorporated into it. The foremost among these would be the quality of the data being captured or available for the current or prospective customers of the start-ups. Furthermore, the resources available for each phase (awareness, consideration and preferences) of Demand Generation must be evaluated and their skillset and expertise determined. The engagement and content available for each phase must be determined in advance and the channels best suitable for such engagement defined.

The success of the Demand Generation Model for the start-up will rely on Predictive Analysis and marketing automation. Predictive Analysis will be used to evaluate “fit”, “engagement” and “intent” for all prospects and current accounts. By using marketing automation, integration between Demand Generation and Lead Generation will be assured. This shall lead to growth in revenue for the start-up by routing these higher quality leads to the sales team, the ultimate objective of any Demand Generation Model.

A holistic and dynamic Demand Generation Strategy that implements the above methodologies would lead to success for the start-up in its local market in the short-term. It would also ensure the growth of the start-up in new markets as more prospective customers become aware and interested in its offering and how it adds value to their daily lives.

 

Global Entrepreneurial Online (GEO) Networks Prosperity Model

Global Entrepreneurial Online (GEO) Networks:

A Global Entrepreneurial Online (GEO) Network is defined as an online platform which brings together the following:

  • A geographically diverse online community that focusses on start-ups
  • Collaboration and knowledge-sharing between community members that lead to the development of new and innovative products and services
  • Ability for members to connect, promote, distribute and sell their products and services to (potential) buyers
  • Ability for buyers to review, provide feedback, endorse and invest to enable further consumer insights and breakthrough
  • Continuous Growth of the community through promotion of the network / platform itself.

GEO Networks Prosperity Model

The GEO Networks Prosperity Model has been developed to crystallize the factors that ensure the success of GEO Networks. These include the enablers, the growth factors, the Eco-system and the benefits and opportunities that accrue from it. These are explained in greater detail below.

Geo Networks Prosperity Model

  • Enablers are the basic prerequisites for a GEO Network to establish itself as a source of economic activity. Government Regulations, ICT Infrastructure, Entrepreneurship Culture and Availability of Capital, all play a critical role in providing the environment for a GEO Network to be established in any society.
  • Growth Factors ensure that a GEO Network continues to grow and perpetuate after its initial establishment. These include awareness of the GEO Network itself and the awareness of its functionality among its members; Loyalty of its members to that particular GEO Network; the ability to network with other members of community (offline and online); and finally, the community population itself can enable the GEO Network to grow through word-of-mouth and self-perpetuation.
  • The GEO Network Eco-system plays an important role in ensuring members can benefit from opportunities available in the GEO Network. The eco-system should enable collaboration and knowledge sharing that lead to consumer insights which result in e-commerce in the form of products and service developed and offered by its members.
  • Finally, GEO Networks offer opportunities to its member, and indeed the wider population, to add value to society. Initiatives through such online platforms can lead to new innovations, ensure economic development and can lead to poverty alleviation.

It can safely be said that, in today’s world, GEO Networks need to be evaluated by policymakers as a major source of economic development and job creation. Policies should be enabled which ensure that GEO Networks are easily established in any market and thrive through the active participation of its community members.

Business Innovation Certification: The Key to overcoming the Corporate Innovation Challenge

In today’s dynamic and globalized economy, large Corporations continue to face threats from disruptive innovation from new and unknown start-ups in many diverse industries.   Corporations are facing disruption in market segments such as New Media, Technology, Green Energy, electric cars, or even more traditional and stable ones including banking, airlines, telecom, mining or transportation. Nimble start-ups have developed new products, services or business models to disrupt that market segment and become a dominant player in it. Corporations have recently focussed on building in-house corporate innovation sills in order to remain competitive. They have also tried to inculcate a spirit of entrepreneurship (intrapreneurship) across the company to aggressively combat those agile start-ups.

Despite these significant efforts, many Corporations continue to face significant challenges in enabling a corporate culture of innovation.  The primary challenge for most corporations continues to be the development of internal skills focused on innovation. Most courses on innovation focus only on the content and do not take into account the factors inhibiting corporate innovation. These include factors such as fear of cannibalization, structural obstacles to invention, desire for predictable and consistent results, personnel risk/reward incentives, and lack of team-based innovation learning and development. The last factor is especially critical as most often, individuals rather than cross-disciplinary teams are given innovation-oriented goals.

corporate innovation challenges

Corporations can overcome these challenges by focussing on a business focussed innovation certification. Such an innovation certification has more to offer to a corporate organization than just the actual content of the certification. A Business Innovation Certification should have corporate focus by answering questions such as how to sell your ideas in a corporate environment? It should also detail strategies for gaining adoption and sponsorship in a corporation by aligning ideas with overall business objectives. Another key to the success of such a business innovation certification is to enable an intrapreneurship culture in an organization where individuals learn to be persistent yet flexible. Such a certification should also have a team-based approach to certification projects with senior management as corporate mentors for the certification. Finally, the certification should lead to membership of global community of passionate innovators entrepreneurs who can add value to each others endeavors.

Top Tech Start-up Opportunities of 2016

 

Are you thinking of starting up your own tech ventures in 2015 but do not have an idea? Or, like most entrepreneurs, you have multiple ideas but don’t know which one has the most potential? The solution is simple. Explore where the tech world is focusing in 2016 and come up with your niche solution in one of these areas. The list below lists tech areas where venture funding will focus in 2015 and can be used by you, the entrepreneur, to focus your new tech start-up.

 

Cloud Computing

Cloud Computing continues to be a big area of growth. 2015 promises to be the year where the supremacy of AWS (Amazon Web Services) in the marketplace will be challenged by other players, with Google and Microsoft leading the charge. Microsoft’s new CEO, Satya Nadella has strongly focussed on the Cloud as the growth strategy for Microsoft and Google has a wide array of services which can help it grow its Cloud Platform. With other strong players also part of the race to be the premiere cloud services provider, any visionary tech start-up in this area is sure to succeed.

Big Data

Big Data, the analysis of extremely large data sets, will continue to rapidly expand in 2015. Already, there is a serious shortage of talent that understand, let alone are expert in, the “how-to” of Big Data. From unlocking the mysteries of the human brain to greater understanding of the universe, Big Data will continue to lead the human quest for more understanding and insights. Human activities in all spheres, such as retail shopping, traffic pattern analysis, healthcare, education, urban development and other human interactions will continue to evolve because of new start-ups disrupting these markets through insights gathered from Big Data.

Smart Machines

Look around you. Smart Machines are everywhere. From the ATM at the bank to the coffee maker in your house, everything is intelligent now. And will become even more “Smart” in 2015. And now you can connect to all these devices through your Smart Phones. This is the time to visualize your own smart machine and join the IoT revolution. Your tech start-up in this area is bound to succeed.

Internet of Things (IoT)

In 2015, all technologies IoT will continue to grow. The reasons for this growth are obvious. First, Big Data and Cloud Computing provide tremendous storage and analytical capabilities. Secondly, Smart Phones and other Smart Devices provide enhanced interconnectivity with increasingly Smart Machines. And finally, both of the above are leading to a number of applications connecting supply chains, partners and customers to add value to the end customer. Hence, if you have an awesome idea for a tech start-up in the IoT domain, just do it!!!

Tech Wearables

Tech Wearables are going big in 2015. From Google Glass to Smart Watches to even Smart Clothing, everything will go mainstream and we will see more and more integration of our everyday wearables with tech. The possibilities for a new tech start-up in this field are endless. Software, connectivity and data analysis are all ripe for new ideas and passionate entrepreneurs.

IT Security

Did you hear about the hack at Sony Pictures? Remember the hack at Target? With IoT becoming more and more pervasive, IT Security becomes an even more critical aspect for all things tech and provides new opportunities for innovative solutions. Managed Security Services have become huge in 2014 and will continue to grow in 2015. Management and Governance, Risk and Compliance (GRC) insights remain critical for the success of Governments and large enterprises. All this means there is enormous potential in this field for a new and innovative venture to grow and succeed.

 

Are you a Smart Creative

The traditional name given to people who work in the Information Technology field is “Knowledge Workers”.  These are those individual who earn their living by using the knowledge and expertise gathered in dealing with various aspects of Information Technology.  These individuals maybe data analysts, networking gurus, programmers, database administrators or might have knowledge and skills in some other niche of Information Technology.  However, the common factor for all these knowledge workers is that they are experts in some field of technology or other.

Eric Schmidt (Ex-CEO of Google) & Jonathan Rosenberg (Ex-VP of Products at Google) have identified a new breed of knowledge workers who not only have technology background but also have superior business skills.  In their book, Google, How Google Works, Eric and Jonathan call these individuals the “Smart Creatives”.

Some of the characteristics of Smart Creatives that the authors have identified are

  1. Smart Creatives have in-depth technical knowledge and hands-on experience.
  2. Smart Creatives are Analytically Smart.  They understand data and utilize it to make decisions.
  3. Smart Creatives are Business Smart and can drive business success through product excellence.
  4. Smart Creatives are Competitive Smart. They understand the value to hard work and have the passion to succeed.
  5. Smart Creatives are User Smart.  They understand the user requirements and focus on it to lead to product excellence.
  6. Smart Creatives are Innovators.  They always have new ideas to explore and are always willing to share ideas.
  7. Smart Creatives are Curious Creative.  They understand the power of “Why”.
  8. Smart Creatives are Risky Creative.  They are not afraid to fail and learn from failures.
  9. Smart Creatives are Self-Directed Smart.  They do not have to be told what to do but take initiatives on their own.
  10. Smart Creatives are Open Creative. They always collaborate freely to explore a new idea on its own merit.
  11. Smart Creatives are Thorough Creative.  They go into details as they know each detail is important for product excellence and user satisfaction.
  12. Smart Creatives are Communicative Creative.  They know how to communicate an idea or an opinion in a charismatic manner.

So if you are an aspiring entrepreneurs or someone stepping into the innovation world, Are you a Smart Creative? You dont have to be all of the above, but as Eric and Jonathan said, you should atleast have “business savvy, technical knowledge, creative energy and a hands-on approach to getting things done”.