There’s a saying – there is no time like now. The current health scare and the resultant economic crisis is worse than anything else in human memory. This is going to have serious repercussions for all businesses in the short term, but will also lead to significant fundamental shifts in the long run.
But, the winds of change are not new. There has been a virtual bloodbath going on in the global economy and the corporate world over the last two decades. Long-standing companies are fast going extinct. Digital technology is taking over everything.
I firmly believe that unless every business adopts a path to innovation and embraces digital technology, they shall not survive for long.
Innovation. Disruption. These are the most prominent buzzwords since the last few years. Earlier on, companies in high technology domains used to talk about innovation. Today almost every large corporation prides itself for its innovation programs. We see an endless stream of new products and services hitting the market.
There is an inherent advantage that small business, SMEs or startups have over large corporations when it comes to innovation. They are agile and flexible. Decision-making is usually more straightforward and quick, and their survival instinct inherently makes them sensitive to early results.
Innovation Challenges all Aspects of Business
#1 Business Model
Redefining what a company’s business model is, and what it ought to be, can make a significant difference to the future. Many new-age businesses work with asset-light, people light, low investment models that have reached large scale. It is important to view your business from a consumer perspective rather than a product perspective. A company that defines itself as a manufacturing company will always be driven by its focus on sourcing, manufacturing and supplies. But each of the manufactured goods happens to offer benefits to end customers – lifestyle, health, safety, comfort, luxury, travel, etc. If we define our business by what it means to customers, the model will automatically change.
#2 Revenue Streams
Look at how many more lines of revenue can be added to sale of products – service, AMCs, consumables, data, product extensions, branding and marketing (improves profitability), consulting etc. IBM, the largest computer manufacturer in the world, is now entirely a consulting company. Amazon earns its entire profit from AWS (Amazon Web Services) while the more popular eCommerce business provides it scale.
#3 Open Sourcing and Outsourcing
Traditional business models meant that a company would carry out all aspects of its business end to end. Many of these activities were not core to the company’s operations. As a result, they become a drag to the company’s bottom line and yet not help it become the best. Today it is possible to allow external partners to take over non-core aspects of business. Legal, finance, sales channels, marketing, supply chain, people, technology, etc. No telecom company owns any telecom towers or IT infrastructure; they are all leased.
#4 Business Processes
This is an area with scope for maximum optimisation. A better planned, technologically driven process can result in significant cost savings, and improve customer satisfaction. Also, it provides better oversight of management. Consider adopting ERP solutions. You can pick from modules available off-the-shelf from a company like Zoho. No need to install an expensive customised system.
This requires a change of mindset. Very often, we find that company operations require multiple levels of approvals and all decision-making gets highly centralised. This slows down the process and makes people unempowered, and therefore less loyal. What is needed is for companies to reduce red tape and believe more in data. Data will throw up any discrepancy very quickly.
#6 Data and Analytics
Whether we realise it or not, every business generates a considerable amount of data. It is a matter of being able to capture it and analyse it correctly to make better decisions. Examine what information you would really like. Then look at your process to see where you could get data about it. Any owner can find it as he has built the business. Next is a matter of putting in place a system to capture and evaluate that data. Again many simple tools are available off the shelf. Microsoft Excel itself provides a lot of tools for analytics. Other tools include SAS, rapid miner, R Programming, Python etc. A detailed list can be found here https://www.proschoolonline.com/blog/top-10-data-analytics-tools.
People are the most essential part of any company or business. But pause to think. “Do I have to hire every person I need to run my business, or can they be my partners instead.” Uber has millions of driver-partners, but none of them are employees. Similar is the case with sellers on Amazon or hosts on Air BnB. An entrepreneur as a business partner will be far more productive than an employee. The world is moving towards a gig economy – an economy where individual entrepreneurs drive their own business to collectively drive a larger business. Think of how you can have gig economy partners. They will deliver more for less and require no HR.
#8 Digital Tools
The world is moving rapidly towards digital existence. Internet is at the centre of all that we do. It is imperative for a business to leverage the Internet in every which it can. From a high-quality website to vendor management, employee engagement and customer engagement can all be driven a lot better with the Internet. Employees working together with email, Whatsapp, Skype, Zoom, Slack, Google Suite, Salesforce, Hubspot and many more tools get a lot more done. Almost free of cost.
Make a list of digital tools best for your business, empower all employees and partners with the tool (an employee forced to work from home should have access to a device to do so), train them and encourage them to use these tools. Far more effective.
#9 Digital Marketing/Communication
Whether you are a B2B or B2C or any other way you describe your business, you deal with customers. There is no business without customers. Digital marketing helps acquire, engage and respond to customers. It is an essential ingredient, as important as making your product or service. Unless people know, understand and appreciate what you produce, they will not buy, or not pay the right price. Digital marketing is measurable and very targeted. So, you can talk to your prospective customers and avoid wastage. It is an investment, not an expense.
#10 Insurance Policy
Investment in technology-led innovation is not just for business growth. It is an insurance policy for business survival. Every single industry is being turned upside down. Invest in innovation for long term health.
Alok Agrawal is founder of The Growth Labs and an innovation evangelist. An IITK, IIMB, Wharton alum, he spent his corporate career with advertising, marketing and media companies, encouraging ideas and innovation to build large brands in India. He has deep interests in emerging technologies and consumer applications and loves to develop innovation programs across industries.