7 Lessons While Navigating Through Unchartered Business Territory
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Every business wants to stand apart. It is all about being the biggest, the strongest, the fastest, the first. Disruptive innovation – that inspiring, desirable thought of creating never-before products and newer markets – is the name of the game. There are innumerable start-ups but few succeed in pioneering a trend and sustaining their business in an unchartered uncharted business territory.
There are always advantages and disadvantages associated with being a first mover in any market. Here are seven things that can help a disruptive startup change disadvantages to opportunities to build a presence and grow.
Make sure you are armed to the teeth
As a first mover, you have the task of developing your market. This requires an extra push. But, at the same time, you have the opportunity to define the boundary conditions and make those entry barriers for the industry strong. This opportunity should be well utilized because you will never come back to the situation again. You need to develop technological advantage, automate your systems, and make your intellectual property your real estate, so that it gives you an irreplaceable cost advantage. Protect and conserve it well through patents so that you have the long-term power to influence the overall industry outcome.
There are no benchmarks for you, so whatever benchmarks you choose will set the bar for those to who follow. Keeping these high will be a constant inspiration for you to keep moving ahead and a difficult challenge for those who follow.
However, only a truly innovative product that the customers need can win you brownie points. A well-researched product offering which is significantly differentiated in terms of features and services and genuinely fills a gap in the market is the base for sustainable competitive advantage.
Lead the march
Being the first mover gives you the privilege of mapping the market and understanding how big the pie can be over a period of time. The estimation of your share within that pie should play an important role in strategizing your future business plan. This estimation will require you to consider new entrances as competitors. A small number of players in a fast-growing pie does not invite disruption whereas having more players doesrequire influential factors to increase their market shares. Also,having a smaller number of big players avoidsa self-killing price war. On the other hand, havingtoo many players within growing pie puts the ROI at stake to gain market share – again a self-killing strategy.
Hence, you need to lead the march by establishing the right strategy to grab the maximum market share.
Make it hard to leave
You may have seen many new players mushrooming within some specific industries very quickly. Unlike manufacturing, which has high fixed cost, today’s Internet-enabled service companies appear to perpetrate a myth that they can not only be instantly established but can exit anytime with least or no irreversible resource commitment. While this may be true to an extent for a specific industry, as a first-mover, you have the opportunity of building high exit barriers to control this explosion. Raise the exit bar with optimization, integration with partners, automation, and user experience. Create those durable resources – those sticky resources – that become necessary for sustaining the within-industry profit difference.
Communicate it right
Top of the mind recall!Brand name synonymous to the product/service!Loyal customers!Returning customers!
Your business will be sustainable only if you have the ear of your customers. You may have a differentiated product that gives value to your customers, but unless you communicate it right, you won’t be able to leave a mark in the customer’s mind. Your communication should help the customer differentiate your business from others, even closely related industry and businesses. Package the product or service with the right connect and then built credibility with consistent delivery. Your customers’ experience is above all, and gives you long-term benefits. Again,cost-based differentiation may not find its place in a price sensitive market like India. The customers notice it, remember it, and compare it and, hence, a fluctuating price strategy may hamper the brand image and sustainability.
There is no ‘I’ in the market, but only a ‘We’. No man is an island and neither is a business. Every business exists in an ecosystem of enablers, competitors, and complementors. In our rush to keep enablers close and competitors closer, we often tend to leave complementors – who have the ability to give an unexpected boost to not just our business but the ecosystem in which we conduct our business – out of the loop. As a first mover, you have the luxury of identifying and selecting your complementors and working out a mutually beneficial relationship with them. Two examples for this can be mobile phone companies and network providers supporting each other and Google using SEO/SEM to help e-commerce companies gain more traction.
We live in a free country, and we can do so because there are rules and regulations in place that keep our freedom safe. These rules and regulations provide a sense of security and a chance of redressal. This is even more so in case of a business. On one hand, they protect you from unfair practices and on the other hand, they identify you as a trustworthy business in the eyes of your customers. So abide by them as they give you the mandate you need to stand in front of your entire business ecosystem – including your customers, suppliers, complementors, and competitors – and take your business to newer heights.
Prepare for the inevitable
Despite the best intentions, planning, and execution, every business is at the mercy of market forces to a certain extent. Understand this truth and learn to adapt. Prepare for highs and lows, and figure out how to overcome them. For instance, if there is a lull in the real estate market, the demands for home loans would automatically go down. If you were a bank, this might be as simple as shifting your focus from home loans to, say, other types of secured loans. Or you may want to look at expanding your unsecured loan market. Or it might be an entirely different plan altogether. On the other hand, the drop in interest rates might see a sudden revival in home loan applications. So the current resources at hand may be insufficient and you may be left short-handed. The changing trends do not matter beyond a certain extent. The point is to anticipate the trend and ready yourself for it. While you may not be able to change the market, you will always be able to work around it. Be prepared for the unexpected and plan for contingencies.
Being a first mover as a disruptive innovator to create an entirely new market is fraught with challenges. However, it brings its own advantages that can be converted into phenomenal opportunities if planned well and dealt the right way.