When we look around us we can see there are limited resources at our disposal – limited natural resources, limited space, limited time, and limited human capital. However, creativity, ingenuity and innovation seem to know no bounds. Businesses based on sourcing more raw material are finding it increasingly difficult to grow at the pace they did in former decades. The new waves of growth unlock value in economies in a new way.
“Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate” Techcrunch.com March 2015
None of what these firms have done has built more cars or taxis, or built more accommodation. Rather, they have re-aligned a pool of resources that were hitherto untapped, or at least, had significant untapped potential.
There are some commonalities worth thinking about.
1. Make Connections
New connections allow new markets to be created and new value to be explored. Uber connects drivers and passengers in a way far more intuitive than any of its competitors, and in a way far easier and more intuitive than traditional taxi companies. Facebook and Twitter connect people and content, AirBnB connects travelers and accommodation, and Alibaba connects buyers and sellers on a scale not seen before.
This trait is common to other successful firms, including Amazon, and Google (which connects people with information). These connections unlock value that was not there before. If you consider the world before these innovations, we were largely happy with the status quo, when needing a taxi, or looking for a place to stay. Or rather, we were happy enough not to have enough drive to do anything about it. That leads to the next common trait they all have.
2. Challenge the status quo
There is a curiosity mixed with a bit of anarchy to reject the way the world works, and think of a new way, a better way. These businesses did not subscribe to the “if it’s not broken, don’t fix it” mentality. For an innovative mind, everything can be improved in one way or another. Many of the amazing innovations we see are obvious in hindsight, but are difficult to see from the other side. It helps to take a step back and to think from different perspectives about the problem – what’s wrong with the current way of doing things? It also helps to think more broadly than the current problem and to think of other industries where there has been innovation.
Challenging the status quo (with a pinch of anarchy) gets some of these firms into trouble – Uber and AirBnB have both had their fair share of controversial press coverage, but ask anyone who’s used their services and you’ll find overwhelming support. Many active users could not think of ‘going back to the old way of doings’.
3. Harness the power of consumers
By creating an intuitive engagement platform for your customers where they can give you feedback, firms can harness the mass power of the customer base. This serves a variety of purposes. On one hand you can get to know customers better, what they like and what they don’t like, which leads to more customer-centric products and services. It also allows the market to function optimally as information asymmetries are overcome – customers can see from earlier reviews and star ratings which is the better product.
In an adequately functioning market, the customer makes the decisions as to how to get what they need. This leads successful innovators to spend a lot of time thinking about design and the user experience (admittedly another buzzword). The key here is simplicity. While the technology and behind-the-scenes solutions required to deliver these innovative solutions may be complex, the customer interface is almost always very simple and very intuitive. Google’s home page is perhaps the best example. Arguable one of the most technologically advanced companies around, the interface is also one of the most simple – one bar of open space to type your question, whatever it is you are looking for. They could have tried to ‘make it easier’ for you by categorising information, or presenting their wide range of services for your upfront (they do lot more than provide a search engine) but instead they chose to provide the simplest, most intuitive user interface possible.
I believe this kind of thinking can be applied to almost any context – be it business, education, healthcare or other fields. It won’t always work the first time, it may take some resilience and determination, the timing may not be right immediately, but new ideas have a way of breaking through.
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