Well-funded tech entrepreneurs free of legacy technology, complex processes and last-century thinking are building businesses with multi-billion-dollar valuations in the blink of an eye, and in doing so are capturing an increasing market share from the incumbents.
Let’s look at the components of this. The first relates to technology. A combination of advances in technology, falling costs and ease of accessibility have dramatically lowered the barrier to entry. Cloud, open source and, more recently, platform and infrastructure as a service together, along with leaner ways of working, means these businesses can be up and running quickly.
One of the best examples is WhatsApp. At the time of their acquisition by Facebook, the company had more global users than Vodafone and the volume of messages sent via their platform had surpassed the total volume of SMS sent globally. At that time they had just 50 employees.
Another huge contributor to this fertile environment for startups is the change in customer expectations. These expectations impact the way in which customers both consume and interact with services. The fact that they are both renting and buying, they are as likely to create media as well as consume, all require a different approach. Customers expect the same standards and the same way of interacting with technology across everything they do, be it work or play.
One of the key trends driving this behaviour change is the adoption of mobile. Smartphones put a supercomputer in everyone’s pocket which, combined with ubiquitous connectivity, has created opportunities to rethink everything. The cost of distribution in this world is next to nothing, meaning that a small, smart outfit can build a company with a global reach from anywhere in the world.
No sector is immune to these threats. Let’s look at financial services, often considered a harder market to penetrate and across which there is an increasing number of new entrants. Greg Baxter, global head of digital strategy at Citi, commenting in a recent Financial Times article, said that around 15 per cent of consumer banking revenue would migrate to new business models by 2020.
At Adaptive Lab we believe there is a huge opportunity for corporates to learn from startups
To further underline this, Ralph Hamers, chief executive of ING, speaking at The Economist’s European Retail Banking Summit in 2014, repeated a Bill Gate’s quote that “banking is necessary, but banks are not”. He said the question that banks should be asking themselves is how they can stay relevant for their customers? He continued: “You should not wait for others to disrupt your business model, you should disrupt yourself.”
At Adaptive Lab we believe there is a huge opportunity for corporates to learn from startups.
This belief is based on two key drivers, firstly that speed is the new competitive advantage and secondly it is customer experience which will deliver the winners.
We have built a whole way of working which draws heavily from the world’s fastest-growing companies – startups – to help our clients adapt and change to make the most of opportunities.
Our experience with global leaders at world-class companies has demonstrated that this rethink of everything from strategy and research, through to delivery, can achieve dramatic results in drastically reduced time-frames.
Our radically customer-centred approach ensures initiatives are grounded in true needs, and concepts are validated early and often to derisk delivery and ensure brilliant results.
The leaders we partner with favour our highly collaborative engagements, not only because they deliver results, but also because they are designed to ensure knowledge transfer within their teams, enabling a cultural and mindset shift that better equips them and the wider business for their increasingly competitive future.
Change is nothing new, but its pace is only going to increase. Companies need to prepare their organisations to compete in these new times. They also need to think about the best partners to be on that journey with. Should it be partners who look and think like themselves, or those who look and think more like their new competitors?
