Originally posted on Linkedin
“Every single industry is going through a major business model and technology oriented disruption.” – Aaron Levie Box.com
The current level and pace of business model disruption that we’re experiencing is unprecedented, everything from online subscription (Dollar Shave Club) to the way we get around (Uber), where we stay when we travel (AirBnB) and how we receive packages ordered online (Click & Collect, Parcel Motels, Drones, etc)
“I don’t think 80% of those public tech companies are going to survive the disruption that’s going to happen.” – Dave McClure of 500 startups
That’s a bold statement, however just look at what Dollar Shave Club has managed to achieve since launch, with its slogan “Our Blades Are F—ing Great,” it just got valued at over $615 million and is less than five years old.
Launching in 2012, with laser focus on disrupting the shaving market, stealing market share from the dominant players like Gillette, CEO Michael Dublin went with a quality product at a better price point only available online and created a tongue in cheek viral video to support the launch which has amassed over 20 million views on youtube so far.
Historically Men typically got exposed to their first shaving system by “borrowing” their fathers razor during their early teenage years then over time how your stubble grows, what your friends are using, whether you prefer a wet versus a dry shave or which advert you thought was cooler at the time. Once within a shaving system you were typically locked in and a sitting duck for the relentless efforts by brands constantly trying and upsell you to the next big thing in shaving like the Quintippio razor below with 15 blades!! 🙂
The online shaving subscription business is now getting very busy with a ready stream of new contenders like Harry’s, King of Shaves entering the subscription business and established players like Gillette and Wilkinson Sword not standing still also launching their own subscription businesses. Large established companies like P&G have deep pockets so time will tell how much market share they shall lose, retain or gain over time. One thing for sure, the nice and predictable lifetime value of a shaving customer is no longer assured.
“Mondelez International is an 800-pound gorilla living in a unicorn world.” – Dana Anderson, Senior VP Chief Marketing Officer at Mondelez International
Large CPG companies like Unilever, Procter & Gamble, Nestle and Mondelez are no strangers to innovation, they release a steady stream of innovations every year from new product formulations, manufacturing methods, packaging materials, routes to market, sustainability programs, media formats, financial models.
Up until very recently they all tended to follow a rigid, repeatable and scalable corporate structure that had served them well for nearly a hundred years. Big companies typically leaned on M&A as their growth engine, following a very consistent pattern (Aquire > Restructure > Scale & Repeat) backing the brands or platforms that hit the magic $1 billion in revenues and either selling, merging or winding down those that don’t make the grade.
Image source: fortune.com Are we in a tech bubble? Unicorn CEOs respond
Wait a minute! I thought that tech startups had a monopoly on creating $1 billion dollar (and beyond) unicorns?! not surprisingly it turns out that companies have been churning out unicorns for years this is not a new phenomenon, what’s different is that today’s unicorns are being created in a fraction of the time that it traditionally took big business to create them in the past. With that comes a whole new playing field and playbook on how to create, and profitably sustain a $1 billion dollar businesses in today’s world beyond over hyped typically short-lived valuations.
The problem is that big businesses are well ‘Big’ and while this worked well for a very long time, now it leaves them exposed to threats from new nimble startups who are not burdened by rigid structures, sluggish bureaucracy, slow decision-making, risk aversion or short-term financial performance; in fact a number of these new unicorns are not even expected to turn a profit at all and potentially for many years. They are simply tearing up the business rule book, challenging everything that has gone before and irreverent to expected norms on how to do business.
Image Credit: Yiying Lu
“Founders go wrong when they start to believe their business plan will materialize as written. I advise entrepreneurs to burn their business plan – it’s simply too dangerous to the health of your business.” – Alexander Osterwalder of Strategyzer
In big business everything is about the plan, it takes a long time to think about the plan, discuss the plan, dissect the plan, agree on the plan, get approval from above on the plan and ultimately execute the plan. In a number of cases this is completely normal, expected and necessary when talking about certain types of projects, however, more and more its being effectively challenged by a new breed of entrepreneurs, intrapreneurs or simply anyone who thinks there is a better way forward than what has gone before.
The hallmarks of these companies are they typically have a ‘can do’ mentality, are solution oriented, are not afraid to fail and don’t consider anything precious and challenge everything. They challenge themselves, established business models, routes to market, customer perceptions and expectations.
“Large companies who ignore disruptive business models will continue to lose large chuncks of revenue to companies that didn’t exist
tenfive years ago.” – Niall O’Gorman of [insert disruptive project here]
Clearly big business is not sitting still and there are many great examples of companies realising its time to change their approach in order to face head on the associated challenges from top to toe within their organisations. Everything from the corporate structure, business models, decision making, internal talent, external agencies, ways of working and right to win are under review.
One thing that’s often frustrating when operating within large organisations is the apparent dependency on external agencies to “tell you what to do” versus “help inform and validate” your own internal decision-making capabilities. Don’t get me wrong there is massive benefit in taking ‘the outside in’ and leveraging knowledge from all manner of sources whether they be competitors, industry bodies, universities, external R&D hubs, innovation labs, etc, but sometimes it feels like companies use external parties as an insurance policy or excuse for when things go wrong.
This is exceedingly frustrating for young talent within any organisation (clearly I’m excluding myself from that group given my greying locks and cranky nature) and this is evidenced by a quick trip to Glassdoor.com or any similar company review site.
The talent coming up through the ranks today expects to contribute from day one, for that contribution to be taken seriously and have a real measurable impact on your business. They challenge every norm, break every nonsensical rule, bypass your outdated tech with their own, won’t take no lightly for an answer, are incredibly resourceful, pay attention to true leadership, not a hierarchy, thriving in an environment of open and transparent communication.
The next generation is simply fearless, give them the right conditions to work under, unfettered lines of communication to the top of your organisation and they will help transform your business.
Header image: “Kingsman: The Secret Service”
Also by Niall O’Gorman