Many successful businesses were started by entrepreneurs with an ability to see a trend before everyone else. They were able to take their insight and capitalise on it in a new and creative way.
Businesses from Uber and Lyft to Airbnb and HomeAway are just some of the most recent examples of entrepreneurs benefiting from emerging trends. But just because it’s been done before doesn’t mean it is easy to see trends first and find ways to capitalise on them.
Smart entrepreneurs are always looking for an edge. They want to know how they can identify trends and how they can use that skill to build and grow a business. Fortunately, there are steps you can take develop this skill yourself.
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Here are five keys to spotting trends and capitalising on them before your competition does.
1. Anticipate change
I frequently remind coaching clients that the only constant is change. Believe it. Assume that change is coming and look for it.
Change can be either social – as in the rise of socially responsible business – or technological, as exemplified by the growth of mobile commerce. Sometimes change can be both. Social media is a great example of that.
Don’t forget the cyclical, up-and-down, back-and-forth nature of business while you are looking.
Change doesn’t have to be permanent to provide a viable opportunity for business creation and growth.
When the real estate crisis hit in 2008, construction activity shrank, and many people were forced to make do with what they had. But trend-spotting entrepreneurs were able to adjust their plans depending on the market.
For example, savvy interior designers marketed their services to those who wanted something new but couldn’t find or afford a new home.
2. See it coming
The basic tools of the trend tracker are seeing, hearing, smell, taste and touch. In other words, every sense that can be used to get information about the world should be employed in looking for upcoming changes.
Start by reading and watching everything you can. That should include general interest news outlets, trade publications, blogs, government reports and casual conversations overheard in elevators. Be especially alert for problems people are talking about.
Consider using trend-tracking tools like Google Trends, Topsy and Trendhunter to help you zero-in on trends that are worth investigating further. You won’t be the only entrepreneur looking for business ideas on these platforms, but you can use them to dig deeper to validate hunches.
3. Distinguish between short-lived fads and long-term trends
Strive to identify big changes that create lasting problems that lots of customers will be happy to pay to solve.
The idea is to wind up with a business model in which revenues are much larger than costs for a long period, not one that limps by on slender profit margins before competitors take even that away.
To filter out fads, talk to the potential buyers of the solution to the problem. The more frustrated they are, the more likely they are to pay for a solution.
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In extreme cases, potential customers may be willing to fund the development of solutions. Also talk to experts. While they may not be able to write checks, they can provide insights and point to possible solutions that customers could not even imagine.
4. Make sure your solutions are realistic
An online retailer that aims to beat Amazon at its own game is unlikely to show up on top of any fast-growing startup lists very soon.
Make sure the solution you envision is one you can realistically provide with features and costs that will compare favourably to established alternatives.
Again, it’s vital to talk to potential customers. Don’t just brainstorm in-house. What you can do conveniently and inexpensively may be of little value to customers. The sweet spot for a trend-exploiting startup is at the intersection of business capability and customer need.
5. Create a competitive advantage
To get the biggest benefit, be the first mover. It is rare for any single entrepreneur to be the only one who sees an opportunity. Most will hesitate and not move at all. Many others will not move swiftly enough.
Lasting competitive advantage usually goes to the first entrant to stake a market out and capture customer loyalty. Those who come later usually have to settle for slimmer profits and more competition.
Being first is not enough, of course. Business history is littered with well-financed startups directed by well-regarded leaders who committed too much, too early and in the wrong place. So test before committing. Again, look for revenues that overwhelm costs and customers who are overjoyed.
For every trend that supports a future startup star, any number go ignored, leaving potential customers searching for solutions and opportunities for established companies to fill their needs. But it only takes timely identification of one trend to get a startup in flight, and these techniques can point you to the one you need.
This article was originally posted here on Entrepreneur.com.
How Netflix Is Now Disrupting The Film Industry By Embracing Short-Term Chaos
One wrong move and Netflix could have been nothing more than a footnote in the history of entertainment. But by staying ahead of the curve and embracing disruption, the company is threatening some very entrenched competitors.
Attendees of the annual Cannes Film Festival are typically not afraid to be vocal in their dislike of a new film — booing and hissing are both surprisingly common — but the recent film Okja possibly set some sort of record. The crowd was booing and jeering before the film had even properly begun. In fact, all it took was the name of the studio behind the film: Netflix.
Why the animosity? Netflix is disrupting the film industry, and the traditionalists aren’t happy. After debuting at Cannes, Okja wasn’t released in cinemas. No, instead it was released right to Netflix, free to stream as long as you have an account.
Of course, few would have guessed a few years ago that Netflix would ever get into the business of making its own television shows and movies. According to industry lore, entrepreneur Reed Hastings launched Netflix because he was annoyed with the exorbitant late fees of video/DVD store Blockbuster.
Instead of having to return a movie once you’ve watched it, he conceived of a business that would ship DVDs right to your door through the mail.
It was a clever idea, but not one that seemed terribly disruptive. The whole process could be a bit of a hassle, and it required you to schedule your entertainment well ahead of time. Blockbuster even had a chance to buy Netflix, but decided that it wasn’t worth it.
The rise of streaming
Even as Netflix was hitting its stride in the early-2000s, the tide was already turning. It was becoming increasingly clear that the Internet was going to be an incredibly disruptive force, but many companies failed to notice. Or, if they did notice, they failed to take adequate action.
By 2007, the potential of streaming TV shows, films, music and books online was clear, but the DVD business was still doing well. However, Netflix decided to prepare for the future (and disrupt its own operations) by launching a streaming service. It did this by going to the traditional movie studios and television networks, and asking to licence their old content.
In the view of these studios and networks, old pieces of entertainment had run their course, so they were pleased with the new revenue stream.
This brings us back to Okja. Netflix has been creating its own content for the last few years because it realised that studios and networks would eventually catch on. At some point, they would understand that they were giving Netflix the ammunition needed to disrupt the industry. Why have Netflix stream your content if you could create your own streaming service?
“The goal is to become HBO faster than HBO can become us,” Hastings said of one of the most popular American cable channels back in 2013.
In a mere 20 years, Netflix has gone from a low-tech operation that sends DVDs through the mail to one that not only streams content online, but is also producing its own content — content from some of the most respected actors, producers and directors in the world. All of this is costing Netflix hundreds of millions of dollars, and it remains to be seen if this strategy will ultimately pay off, but betting against Netflix is risky.
Netflix has shown itself to be uniquely capable in drastically shifting its business model. Here is how Hastings explains it: “Short-term optimisation about being efficient is the death of long-term success and innovation. Building Netflix, we created a company that tolerated some short-term chaos, and we manage right at the edge of chaos. The value of that is keeping and stimulating the amazing thinkers, so when the market shifts, like DVD to streaming, or licence to original content, we have in Netflix all kinds of original thinkers, and that is the long-term optimisation that all of us in organisations want.”
SME Leaders: How You Can Manage Growth
Fresh growth is all around us this Spring – find out how you can powerfully manage growth as you provide leadership to your SME.
In the transition from start-up to scale-up, a critical factor for a growing business is the quality and strength of its leadership team.
Learning to trust and empower staff is a crucial step for SME leaders who wants to grow their business upwards.
As a business grows, one of the biggest challenges for the business founder and leader is the hand-over of an idea from the founder to the people who work there, The brand moves from being one person’s idea to being the professional focus of a whole group of people.
Without effective leadership, small businesses will be held back, more than three-quarters of SMEs provide no leadership development for their staff. What does this mean for you?
If you lead your business with vision and clarity, you set yourself apart from your competition. Here’s how.
Lead the pack
A growing business creates more work than a leader can handle alone.
As the team grows, founders often react by micromanaging the details of their business. In trying to take on everyone else’s job, the founder often leaves the most critical position vacant: strategist and vision-setting.
Learn to trust and empower others in the organisation and you will find you have room to innovate, which is critical for business growth.
Steady the ship
An effective leader will also engage others in the business to embrace and adapt to change as growth continues.
- Vision: First, plot the course for where the business should go in the short term, and the long term.
- Change: Understand what needs to be put in place to grow the business. You might need to source better business operating systems to streamline this growth, or change a few internal business processes, or rethink how you calculate your hourly rates.
- People: Growth equals change, and change equals pain, so if you want growth, budget for pain. Understand that you will need to guide and coach the staff into changing their mindset and adapting to these growth changes.
We Went up Against A Highly Regulated, Entrenched Industry. Here Are 4 Tips For Getting Your Foot In The Door
Focus on creating value, not disruption.
Multibillion-dollar legacy industries don’t make it easy for entrepreneurs to step in and create value. There are huge barriers to entry – licensing, pricing, regulations, and cultural/brand significance – that come with being around for a century or more.
However, those barriers shouldn’t stop you from innovating.
Take the utility sector for example, which is perhaps most frightening of all: A trillion-dollar taxpayer subsidized network of poles and wires set up through franchised municipal monopolies. Otherwise known as, our power and energy industry. It’s a mouthful of protection, and as a result, utilities make for a great investment (just ask Warren Buffet), since the likelihood of disruption is tough to even think about. To most reasonable entrepreneurs, the regulated utility sector, similar to the financial and healthcare industries, is tantamount to a “NO TRESPASSING” sign.
But, that is exactly what makes the effort so worthwhile. If you can successfully work with or alongside a monolith industry and produce value, instead of being focused on “disruption,” you’ll be able to achieve massive results.
When we first started trying to provide consumers cleaner and better energy options, getting to market proved difficult as we were trying to break into a utility-customer relationship (paying a power bill) that hasn’t really changed for the last half-century. But, with a clear mission in mind and the understanding that we would have to work in unison with utility providers, we were able to start making our mark.
Here are a few tips for getting your foot in the door:
1Create value, not disruption
There are some industries where the Silicon Valley catchphrase “disruption” falls flat. Some industries just aren’t meant to be disrupted in the way that people in the tech community are used to. Nearly our entire economy depends on the power grid and we couldn’t come in and totally upheave that. When you’re going after a big industry, you first need to provide value to the customer or the provider.
Show instead of tell that you have a strong customer base and that people need what you’re offering. And build relationships – working together with the big players in the space will get you much faster and better results for your company and your customers.
2Focus on the customer experience
When you’re a startup, you already have the advantage of being years ahead in your digital experience compared to traditional companies in your space. Own that and hone in on it to make it the best customer experience possible. We looked across sectors to bring modern design, UX and data elements to the home energy experience.
Traditional companies aren’t necessarily thinking that way, and you’ll win people over by offering self-service customer tools, easy payment options and notifications they actually understand. Good communication with your customers goes a long way.
3Start small, build toward the vision
A lot of start-ups begin with very lofty goals – disrupting whole industries and changing the entire way a process is done. We certainly had a broad vision to be the trusted home energy advisor for everything from solar to batteries. But, you’ll never be able to achieve anything if you try to tackle everything all at once in a highly regulated and old-fashioned industry. Instead, to get started, focus on one thing.
For us, it was offering clean energy via renewable energy certificates (REC). By starting small, you’ll be able to learn about and understand the space you’re going into, and will be able to see if there’s a market for what you’re offering. As you learn, you can slowly expand step by step and tackle more complex products in the industry.
4Use best practices from other innovative industries.
No industry has a monopoly on good ideas, and the boom in direct-to-consumer brands across apparel, food, finance and healthcare provides a great roadmap for how to build a modern customer experience. Look to other industries that have been there and done it. For example, Mint.com has created an innovation through the consumer interface – in their case to manage finances – while leaving the existing banking and credit card infrastructure in place.
While the thought of breaking into an established industry is definitely intimidating, in today’s entrepreneurial environment it is definitely possible and innovation is desperately needed. Success depends on the ability to shed your typical idea of disruption, and stay patient and persistent.
This article was originally posted here on Entrepreneur.com.
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