VOL. 133 | NO. 7 | Tuesday, January 9, 2018
Predicting the Turn
A Back End of Innovation 2017 Conference keynote presentation by author Dave Knox. By living in two worlds at once – both the corporate and startup worlds – Dave sees the fruitful interplay between the two and the spaces in between.
He sees the way startups seek to disrupt large organizations, and how big companies attempt to build moats around their products and services. Increasingly, he is noticing how these moats do not defend products and brands as well as they have in the past.
Venture Capital as Research & Development (RND). The internet has proven to be “a dramatic leveling of the playing field,” he says. “The turn” is a poker term used to describe when an additional community card is put into play. The irony here is that the corporations are at “the turn” without realizing the game has changed. This is blinding them from being able to see the fierce competition for what it is, a viable threat.
“The companies that annually get ranked as most innovative spend three to four times more on RND than marketing, the reverse of most consumer product goods companies,” he claims as a telltale sign of this change. “These days, venture capital is serving as the funding agent of RND.”
Like Dominos. What dominos will knock you down? “The speed of change is always accelerating, and the dominos will continue to fall closer and closer to your bottom line.”
Here are some questions to ask about your organization: What dominos will fall on your category? Can you see them coming? Are there blinders on? Denial? Or do you name and face these threats proactively?
Total Available Market. “If we were innovators 100 years ago, we would be in the horse business. How do you fast-forward 100 years? What are both the creative and destructive forces? If you looked at the market as it was – which was agriculture, which was most of culture at that time – you’d see a million tractors, but miss all of the cars of those who use them for transportation in cities.”
Market Intelligence. “Look at your monthly bills,” he encourages. “Think about [it] – how many monthly subscriptions are you paying?” Subscriptions are rising at record rates. Venture capitalists have brought about this change.
Market intelligence is the “ability to see the future of your business before it happens,” and is what venture capitalists have been doing for some time. “They bet on the probable future they are helping to create.”
Given these forces, here’s what business leaders can do:
1. Make innovation-driven acquisitions.
2. Invest in change.
3. Make partnerships as innovations.
4. Disrupt the disruptor.
While there is no magic bullet, these four forces can empower large companies to outcompete the nimble startups.
Michael Graber, managing partner of the Southern Growth Studio, can be reached at southerngrowthstudio.com.