All too often as a startup investor, I hear the term “disruptive technology” from an entrepreneur, played like a trump card that should override any other potential business qualms. In fact, most investors avoid disruptive technologies as extremely risky, with long waits for a payback. They can point to the many examples of innovative technologies that have failed in the marketplace.
Even the best investors, when they hear the words disruptive technology, always look harder and deeper at all the other elements of the business model. While struggling to net out what they are looking for, I found help in a new book, “Wicked Strategies,” by John C. Camillus, who has studied this challenge for years at Harvard and with several Fortune 500 companies.
He outlines a set of guidelines, which resonate with me as having a high potential to transmute disruption and chaos into cash flow in an investor’s lifetime. With the key ones paraphrased here, a new startup has a great chance to complement a disruptive technology with an innovative business model, to gain a real competitive advantage and add new economic value:
1. Define extraordinarily ambitious goals. Real breakthroughs in business, as well as in technology, usually start with BHAGs (Big Hairy Audacious Goals). Achieving stretch business goals requires more than a disruptive technology. These normally require an innovative new business model, non-linear thinking for marketing, sales and distribution.
2. Build an entrepreneurial, risk-taking culture. Disruptive technologies sound so good on paper that they often attract risk-limiting managers and professionals rather than a culture of visionary leadership and thinking outside the box on all business elements. In mature companies, no one wants to risk the existing market share or sunk costs.
3. Relate emphatically to the customer. Advances in technology do not always translate directly to customer problems. Business success requires solutions which satisfy customer needs. Engineers relate best to the technology, while the rest of the business has to find customer value propositions. Investors want to see quantified customer value.
4. Integrate social responsibility into the business model. These days, prioritizing sustainability and social responsibility is an effective way to bridge from technology to customers and employees. It is the best way to uncover new markets driven by culture changes, underserved geographies and new economic realities around the world.
5. Utilize design thinking and data analytics. Design thinking seeks to build empathy with the client or customer and stimulate creative responses to the customer’s needs. With big data and analysis, businesses now are able to derive powerful insights about the customer that can support innovative value propositions from disruptive technologies.
6. Find disruptive opportunities along the entire value chain. Innovation across the entire value chain can be promoted by engaging other stakeholders in the creation of value to access untapped markets and strengthen competitive advantage. Key players in the value chain include suppliers, business partners, distributors and sales channels.
7. Add dynamically to the range of competencies in the venture. Eastman Kodak had a deep competency in film technology, but they were slow to expand their knowledge of digital imaging, displays, computing and medicine. Their technologists never found a market. Market experts tend to find breakthrough technologies, not the other way around.
In his book, Camillus argues that with these principles, disruptive technologies can be integrated into new and innovative business models to conquer the “wicked” challenges of increased complexity and global competition present in every market today. I would challenge every entrepreneur and every business executive to build wicked strategies to win these challenges.
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