Disrupt or die may sound dramatic, but the competition is fierce. The number of private startup companies and unicorns is rapidly growing. If there isn’t a start-up disruptor in your industry today, there soon will be.
Formulate works with many market disrupters and has found the common secrets behind their success that they share. Our top 5 factors for disrupter success:
What is a disrupter?
To understand what a disrupter is, we must first look at the idea of disruptive innovation. To be a disrupter is to create a product, service, or way of doing things which displaces the existing market leaders and eventually replaces them at the helm of the sector.
Disruptors are generally entrepreneurs, outsiders, and idealists rather than industry insiders or market specialists. Disruptors are often linked to the fast-moving technology industry but can be found in almost any area of business.
HOW DOES A DISRUPTOR SUCCEED?
You’d be forgiven for thinking that a disruptive idea takes the existing market by storm almost instantly, making dramatic changes overnight. The reality is that that disrupters and disruptive technology is successful over a significant period of time. First, the disruptor must gain a foothold in the market from where to progress.
Once the disrupter has a foothold, they seek to penetrate the medium and higher quality portion to increase profit margins. Eventually, the disrupter will challenge the most profitable part of the sector by offering a new alternative to the established market favourite.
4 Common Traits of a Disrupter
Purpose Obsessed - All disrupters have a purpose and are obsessed with it.
Unique Customer Experience - Often customer experience is their biggest differentiator.
Entrepreneurial Culture -They all have an entrepreneurial culture and practice what they preach.
Dynamic and Agile – Able to review, react and implement change quickly.
5 FACTORS FOR SUCCESS
Formulate works with many market disrupters and has found the common secrets behind their success that they share. Our top 5 factors for success include:
1: Highly Customer-Centric
The most disruptive businesses are highly customer-centric. This means that instead of simply integrating customer thinking into product development and marketing, they also find ways to bring this to life in the culture of the organisation.
This way of thinking is also known as ‘being a day one company’ (treat every day like it’s the company’s first) – a phrase that comes from Amazon founder Jeff Bezos, and his mission to “start with the customer and work backward”.
2: Designing Exceptional Customer Interactions
Service design (or service design-thinking) can be defined as a discipline involving consideration if the whole scope of a customer’s interactions with your business.
Breaking the concept down further there are many elements which make good service design. Some of these include creating services that are easily accessible and that require the minimum steps to complete ‘Tap the App’.
Until recently, one of the major challenges for businesses was to come up with great customer insights. Today four key steps are commonly used to help, which include: observation of customer behaviour, pain points, reflection, and experimentation.
The customer pain, for example, could be wanting to eat great food at home from a restaurant that does not offer a traditional delivery service. Until recently with was not possible, step forward Deliveroo, who using a mobile app was able to bridge this gap.
3: Focused on Customer Insights
Many of today’s disruptors have no less than redrawn entire industry boundaries by focusing on consumer insights.
Today, thanks to big data, it’s easier than it used to be to scientifically identify trends and spot new consumer behaviour. Big data has been at the core of web marketing and the success of most modern-day disruptors.
You may think of disrupters being new tech start-up’s which many of them are, however not to be outgunned by the new kids on the block, established companies are now trying desperately to hold on to their top spots by creating their own disruptive sub-brands or through the acquisition of cash-hungry start-ups.
4: Attracting the right finance team
In addition to technology, to be a successful disruptor, businesses need employees who can think and act for themselves and can be trusted to do a good job.
No matter how great the idea, it is people that make the change. Disrupters are all about challenging convention and a team that look beyond the status quo and push for better is essential. By having the right team and empowering them will pay dividends back.
When provided with the right tools your finance team will elevate your business to new heights by delivering business insights, reports, forecasts and recommendations without being asked. Most ideas for change don’t come from the leadership, but from the workers who are dealing directly with customers or finances.
5: Cloud-based Business Planning Software
With most disrupters being ‘born in the cloud’ meaning that their foundations have been built on modern technology that resides in datacentres rather than a physical location enabling the rapid rollout of customer services on a global level.
This cloud-based approach also provides a dynamic and collaborative approach to working for all employees using sales and marketing platforms such as HubSpot.
Traditionally finance departments have been the poor relation when it comes to taking advantage of Cloud-based technology platforms by continuing to utilise manual spreadsheets.
Finance teams are rapidly discovering the limitations of Excel to deliver plans, models, budgets and forecasts in the timeframes expected by market disrupters. In addition, frustrations caused by spreadsheet errors and multiple revisions creates uncertainty and lack of confidence in the numbers.
To keep pace in a dynamic and agile environment, finance teams are being revolutionised with Adaptive Insights, the modern cloud-based business planning software that is built for business agility.
Customer Example: LendInvest
Once such disrupter that Formulate worked with and implemented Adaptive Insights for, is online property lender LendInvent, who in June 2019 reported an 82 per cent jump in core earnings as it looks to disrupt the UK mortgage market. LendInvest posted core earnings of £4m for the year ended 31 March 2019, up from £2.2m the previous year.
The firm, which is considering a stock market flotation, said that platform assets rose by 69 per cent to £788.3m over the same period, while revenue rose by 36 per cent to £72.7m.
Christian Faes, co-founder and chief executive of LendInvest, said that the results showed that fast growth fintech businesses can invest in technology while also making a profit.
“The UK mortgage market is dominated by banks which are slow moving, suffocated by ever-changing regulation, legacy processes, and technology from the 80s,”
“This £300bn market represents a significant opportunity and it is LendInvest’s mission to disrupt it.
“These results show that we are well on our way to building a business that is going to be a substantial player in the UK mortgage market in the years ahead.”
THE FUTURE OF DISRUPTION
Understanding these five principles is a good start to getting ready to disrupt whether you’re a startup or an established company. This is the new way of doing business and it’s not going anywhere anytime soon.
As modern technology advances at a staggering rate, the opportunities for disruptive innovation continue to increase.
Disrupt or die may sound dramatic, but the competition is fierce. The number of unicorns – start-ups valued at over $1 billion – is rapidly growing. If there isn’t a start-up disruptor in your industry today, there soon will be.