Finding A Better Place The New World Of Business Opportunities

B&E explores a new business world, where a new generation of brands and innovators are reshaping markets, and seizing the opportunities of change

1B&E explores a new business world, where a new generation of brands and innovators are reshaping markets, and seizing the opportunities of change.We live in a VUCA world – volatile, uncertain, complex and ambiguous – but at the same time vibrant, unreal, crazy and astounding. Whilst change and uncertainty can lead to fear and inertia, change is also the catalyst for new opportunities and the breeding ground of innovation.

Indeed your world might still feel turbulent… and if not because of economic crisis, then because of the relentless flow of technology and expectations. Yet change offers vibrant opportunities for new beginnings – culturally and commercially, and particularly for those with entrepreneurship in their blood. Everything has been shaken up. Everybody has had to change their mindsets. And now is the time to look forward not back.

As Pablo Picasso once said “Times of turbulence are the most exciting times, because everything changes” …and with change comes new ideas, and new opportunities.

Every part of the world is either struggling or thriving on change – from crisis-hit Athens to the beautiful wind-farms of Mexico, debt-ridden New York to digital-manic Hyderabad. However, it is the smaller companies, the entrepreneurs who are doing best.

Like any great innovator, they are seeing things differently, and thinking different things. The reality is that most large companies are unable to see or respond to the changes. Success for them was born in the old world, where western economies boomed, consumers were predictable, and digital was a cosmetic enhancement. They cling to the formulae which made them great, often oblivious to the speed and nature of change.

From Coke to Levi’s, Microsoft to GE, the old heroes are slow to rethink.

Newness occurs in the margins, not the mainstreams… with the niches, the upstarts, and survivors. The best ideas are often born out of adversity in developing markets – the trends for frugal innovation, discount shopping, and social marketing. Solutions often emerge through fusions of existing concepts, and particularly physical and digital.

2The new investment capitalists now cluster in Shenzhen (Southern China), the best web designers are in Mumbai, the creative fashion houses are in Buenos Aires, green technologies are strongest in Shanghai. Digital brands become physical, physical add digital. Mobile networks embrace banking and shopping. Economic and social change are the catalysts to think differently, whilst digital and green tech are the means to innovate and grow.

23andMe’s DNA profiling for just $99 transforms our attitudes towards wellbeing, how we live our lives, from diet to insurance, and where we come from. The business model that makes such a price possible, is more like Google, all about selling data for research.

Air Asia’s virtual business model enables it to be the world’s fastest growing and one of the most profitable airline, a fusion of luxury and low cost. The Virgin-backed outsourced model is a great example of focussed growth.

•  Beauty’in from Brazil is a great example of thinking differently, and the fusion of different categories. The skincare is embedded in yogurt drinks and tasty candies, making morning your morning make-up routine fast and fun.

•  Christian Audigier achieved high speed fashion leadership with brands like Ed Hardy through network-based licensing deals. No longer is making and distribution the heart of business. Ideas, design and partnerships are key.

•  Godrej’s Chotukool is a great example of “frugal innovation”, simple and cheap ideas that can transform markets. The low-cost mini refridgerator gives 80% of India’s who cannot chill food, the opportunity to shop and store food safely and efficiently.

• Xiaomi has inspired Chinese youth, with its Android-based Apple-imitating MiPhone, that creates smartphones at razor-thin margins, but makes much great profits from its apps. Most significantly, the brand is inspired by rockstar-like CEO Lei Jun.

•  Virgin Galactic seeks to innovate inter-continental travel, more than being a rich person’s alternative to Disneyland. With zero-emissions, Branson and team can take you to space, but have a more practical goal in mind too.

A new generation of market leaders is emerging in front of our eyes. Small companies, like speedboats, with the advantage of speed and agility, outthinking the big companies, supertankers who find it hard to change course. In the new world focusing on profitable niches, is much more successful than trying to achieve huge scale by developing average products for average people. The game has changed.

3So what is stopping us from exploiting these new worlds?

Why focus on your existing market, with concerns of more turbulence, uncertainty and zero growth, whilst other markets like Brazil and India, Mexico and Turkey are back up into double digit growth? Why tinker with your website and home delivery, when other companies are transforming their whole business models and customer experiences?

The real problem is mindset, not process. And in particular, leadership mindset.

The whole concept of “emerging” market is outdated. Ideas and ambition, demand and growth heads east and south. These markets are equal, and have many advantages over the old, faltering markets of the north and west. It also requires new thinking if you sit in Beijing or Mumbai. The old idea that “home” markets come first, and global markets come second, that doing what we do better, is better than change, looking west not east, believing in being big not small, driven by today not tomorrow.

Who can change this? You! Not the crest-fallen politicians, the devalued economists, or even the increasingly-uncomfortable big company leaders. You, with an open-minded, outside-in perspective… making sense of new landscapes, building a vision that inspires others, being bold in creating new ideas, and making them happen.

As Mahatma Gandhi said, don’t wait for others, “be the change”.

4Innovation not incrementalism. It’s time to think bigger

We become programmed into watching competitors more than consumers. And we fear doing anything, that somebody else hasn’t done before. We build brands and value propositions on being slightly different from others, rather than doing something in a better or more relevant way for consumers. We justify business cases based on competitor base cases, and how we can surely do better.

Innovation, as people like Leonardo da Vinci showed us, is much more than this. It is about newness, either in terms of invention or application, and in our world, ensuring that it can create a step change in value to consumers, as well as the bottom line. This requires “bigger thinking”.

We live in an ideas economy. We need to be the ideas agents – searching for them, shaping them, and applying them – looking beyond the current competitive set, learning from what works in adjacent categories and other geographies, teasing out insights about emerging consumer needs rather than those conditioned by current usage. These are the starting points to innovation.

5But beware new product development. This is slow, costly and largely incremental. Research shows that most innovation is still focused on the hard stuff. Despite our calls for customer-centricity, it usually results in a new product. Innovation applied to other areas, particularly applying the digital benefits of networks and interactivity, can have far more impact at a fraction of the cost. The top areas for ROI on innovation are:

•  Rethinking brands rethink the ambition of your brand – how can it make life better, how can it engage people – through sharing a richer, more relevant purpose. Brands are about consumer dreams not the products you sell.

•  Market strategies – the world is your oyster, your challenge is to focus on the best opportunities for you – sectors and categories, geographies and segments – think about this before you even contemplate your market ”ing” strategy.

•  Business model innovation – redesigning your revenue streams, costs and capabilities, and transaction models – like Amazon and Google did, and now Threadless to Zipcars and thereby creating the most engaging clothing and revolutionising car hire.

•  Customer experience – innovative channels, service and retail theatre, learning from Dell to Pret, or more recently Aberchrombie to Zappos, recognising that buying is more emotional than a click. And then enabling people to do more with what they buy.

•  Supply networks – more virtual supply networks, fast and responsive, sharing costs and risks, collaborating with new brand partners, enabled by the likes of Alibaba which is the eBay of suppliers, and Li & Fung now responsible for 40% of the world’s clothing.

•  Fast and frugal – ultimately, it’s about action – doing the right thing, doing it faster, and often doing it cheaper. That doesn’t mean slash your budgets, but think smarter and differently about how to do it… just like every one of today’s new market leaders.

6Digital technologies are at the heart of these innovations, but not simply as a physical extension or virtual pure play – instead it’s about a fundamental integration of how businesses work. And that starts with an inspiring purpose – how do we make life better for people, in some way – and then cascades through to value propositions and experiences, to products and services, operational structures and partnerships, and the bottom line.

Alibaba, Amazon, Ashmei… Zidisha, Zipcars, Zilok… these are true hybrid business (physical but digital, digital but physical), driving business innovation (innovative products, services, business models, experiences, channels, sales, pricing, communication, and much more) and driven by the vision, insight and determination of their people.

Of course many business innovators, from Jeff Bezos to Meg Whitman, Ratan Tata to Lei Jun, have succeeded with a marketing mindset, it requires marketers to fill the role, particularly in organisations led by people with financial or operational backgrounds.

7Love or hate ROI, innovation is the engine of value creation

Brands, marketing and innovation are at the heart of business – from purpose to performance – and there is no getting away from the fantastic richness of data analysis which we have available to us. Yet, due to lack of capability or confidence, or maybe even laziness, we see data as the adversary or creativity, rather than a supporter. We need both, and we need to learn to use them together.

Market analytics, building an in-depth understanding of market dynamics – from segment profiling to value drivers analysis, price elasticity to scenario modelling – enables us to focus our creativity where it can have most impact, both in terms of marketspaces and marketing actions. Focused creativity – understanding the real problem to solve, the best opportunity to seize – is likely to have far more success, than random intuition filtered by prejudice and convention.

Therefore data is essential at the start of the innovation process, but also at the end.

Being able to stand before investors or business leaders, and explain how a fantastic new innovation project will deliver $460m of economic value to the business is unbelievably powerful. Particularly when you can talk with logic and confidence about how it will be delivered. Combining consumer research, creative ideas and financial analysis becomes the real alchemy of a great marketing leader.

Investment analysts spend their careers trying to project the future profits of business, and CEOs and FDs understandably become preoccupied with this too. Therefore, if you can make your case in terms of five-year value impact, including revenues and costs, investments and risks, it is a far stronger conversation than trying to estimate revenues next year, or worse still, being seen as a risky cost.

Of course “value creation” can be misunderstood as shareholder greed, the bloated bonuses of bankers and narrow-minded hedge funds that destroy organisations. Yet smarter investors recognise that the best ideas, the best organisations, are worth investing in for the long-term. They don’t seek a quick buck, they don’t want to just pocket the profits and live for today. They see, like Better Place, that real value is created over time, and that finding a way to create a better world – socially and environmentally – is all part of creating a richer, more sustainable cycle of wealth.

Business needs bigger thinking, new ideas and fresh inspiration, to move forwards.

Everyone understands that real creativity and disciplined innovation are the lifeblood of organisations today. Therefore with focus and confidence, every organisation needs new “idea agents” – visionaries, catalysts, disruptors and facilitators – driving their businesses in in the right directions, shaping the world around them in a better way, reengaging people with hope and inspiration, seizing the opportunities of a VUCA