[READ TIME: 5 mins] Over the last five years, industry after industry has seen disruption due to the combined forces of cloud, social, mobile, and big data. Each of these forces on their own is a powerful agent for change, but in combination, they’re deadly. As far back as 2011, Mark Andreessen summarized the current phenomenon with a simple phrase, “Software is eating the world.”
Andreessen argued that every business in every industry would feel disruption from technology, and the new entrants to the market would have a lasting effect. This was more than a bubble or a blip: “We believe that many of the prominent new Internet companies are building real, high-growth, high-margin, highly defensible businesses.”
It may have taken nearly five years to be apparent, but his predictions are coming true. Industries are being reshaped at a frightening pace, making it difficult for the established players to respond. The power is with the new entrants. They get to develop new business models without the baggage—people, premises, and processes—collected over the years. They’re able to innovate and iterate rapidly. It’s a frightening time to be a “major player.”
New business models
Global corporations have been created that are leveraging technology to drive whole new business models, profitably, and at scale. Uber is an obvious example. A huge part of Uber’s workforce—the drivers—aren’t employees (except in California). But Uber isn’t alone in tapping into the 53 million people in the US who work in the gig economy, as I highlighted in a recent TechBeacon article.
There are now companies addressing a huge range of services using crowdsourced workforces, and not all of them are delivering low paid, menial tasks. Industry analyst expertise, technology and design, video creation, couriers, domestic cleaning, snow removal, errands, roadside assistance, and more are now available.
Don’t assume that because you have a physical product, you’re immune. Think of the humble lightbulb: Philips and GE Lighting are reeling from the effect of startups offering Internet-connected LED bulbs. But it’s not just the technology that’s a headache for the established companies. LED bulbs last 22 years on average, which is killing the established business model. This means the revenue from the incumbents’ traditional bulb products is falling faster than their LED product revenue is taking off.
Technology delivery has never been easier
Technology is no longer an inhibitor to building and growing a business in the new world. Web and mobile development platforms, third-party components and services, and production hosting that scales with demand can all accelerate the development cycle. It’s never been easier to build a technology service and bring it to market.
A great example is Elements. We’re launching an application that allows customers to capture business operations visually as a hierarchy of process diagrams with links to supporting documents and video. This process knowledge is made available as the “operations manual” to end users, who are also able to collaborate to drive process improvement. It’s also the core documentation that the auditors and regulators want to see in place.
We’ve designed the UI and technical architecture and built the core user and data management. We’ve modified a third-party JS library that we purchased for the process modeling. We use FireBase, which was recently acquired by Google, to allow all users to see the continuous updates on a process diagram as it’s being edited. This has transformed the end-user experience for mapping workshops via video conference and is a differentiator in our market.
The JS library and Firebase have cut months out of the road map for development, which is important, because building an enterprise application isn’t a trivial task. The traditional image of Silicon Valley is of a few guys locked away in their dorm for two months, fueled by Red Bull and pizza, but this simply isn’t true. Building an enterprise application that’s secure, scalable from day one, and with sufficient functionality to be credible is a major engineering project – another of my TechBeacon articles.
The best is yet to come: context
While the current apps being launched are exciting, the best is yet to come. If you add “context” to “cloud, social, mobile, and data,” it drives even greater disruption. Context could be geography, who you’re with, what you’re trying to do, or previous history. An application can then surface just the information you need, exactly when you need it. To create a new future, we should be thinking like disruptors and challenging accepted norms, as many companies already have—Airbnb, Zipcar, Uber, and PayPal all spring to mind.
What these companies have in common is that they solve real-world problems, and they’re coming at them from a different perspective because they aren’t shackled by current industry thinking. In addition, they have a vision about how technology can help them deliver a better customer outcome and still deliver profitable results.
Process has never been more important
For new disruptive companies to be successful, they need to be lean. There’s less and less margin to work with, so profit comes from scale and a light touch. A company can’t afford to have expensive sales, support, and consulting staff helping to sell and onboard new customers, and then teach them to be effective using the app. This means starting with a clear understanding of the user journey i.e. “process”. That allows just the right level of help to be designed, delivered in context—”nudges”—and more complex functionality that exposes itself when the user is ready to accept it. It also means that the company needs to focus on its own operations and aim for process excellence; a great UX; integration of customer-facing apps; and the back office, insightful metrics, and tools to support a culture of innovation and continuous improvement.
I’ll leave the final quote to Marc Andreessen: “It’s basically prime-time now, and in the next five years, to think about every business, every industry and every field and say, how can we reinvent it?” And that means process.