You run a business based on a simple principle – the market is ready for disruption. Your product/service squeezes into the gap the big players left, and you’re hoping to split the thing wide open by tapping an under-served market.
Sure, there are some challenges. You’ve only got $700,000 in working capital, you employ just 30 people, and your customers – spread throughout the entire country, of course – demand immediate, 24-hour service. Simple.
In this post, we’ll look at what disruption really entails and how you can make your life easier by employing a little automation. By the end of it, you’ll have a good idea of where you can look within your own business for automation opportunities.
What is disruption?
The Harvard Business Review has some very particular thoughts on just what counts as disruption. Maybe that’s not surprising, I imagine it also has very particular thoughts on what counts as pasta primavera – “Is that a red onion?” Anyways, its definition is, loosely, “a process whereby a smaller company with fewer resources is able to successfully challenge established incumbent businesses.”
There are a whole host of things wrapped up in that one sentence, but I want to focus in on one in particular. In order to truly disrupt an industry, you have to have fewer resources available. “Resources” is a loaded term here.
We tend to think of resources as the capital a business has available to spend on stuff and the assets sitting in its offices. The coffee shop around the corner from me has fewer resources than Folgers, by any financial measure. But maybe there’s another way of thinking about resources where financial constraints are less meaningful.
For instance, Folgers seems to be limited in at least one resource – skilled roasters – in such a way that its coffee tastes like the inevitable approach of death on a cold winter’s day. In this instance, my local shop has Folgers outgunned, because they have at least one competent roaster on staff.
So “a smaller company with fewer resources” just means that the company has to think about the resources it does have in a different way. If true disruption is about having the right resources to overcome your larger opponent in key areas – namely, the ones the behemoth is overlooking – then we need to start talking about automation.
Automation in disruption
Automation represents the ability to replicate a task or experience at a very low cost and with high efficiency. Another key to disruption, in the HBR sense, is that it focuses on an overlooked segment of the consumer base.
“Entrants that prove disruptive begin by successfully targeting those overlooked segments, gaining a foothold by delivering more-suitable functionality – frequently at a lower price.”
As the incumbents and massive businesses focus on the most profitable segments, they tend to outgrow the needs of the smaller segments.
Take mobile phones, for instance. Look at any major mobile carrier’s ads and you’ll see a focus on streaming, downloads, LTE, 5G, and all the other keywords that come with focusing on the upper end of the mobile market. These are ads targeted squarely at the iPhone-toting crowd.
If the mobile carrier industry is going to see true disruption, it’s going to have to start at the bottom. The users who don’t need all the bells and whistles packaged together.
Because the juiciest pieces of ham are being scarfed up by the entrenched, existing businesses, smaller, would-be disruptors have to run a lean machine. The scraps at the bottom may be plentiful, but each one can only give you so much sustenance.
Now I want a ham sandwich. Where’s ALF when you need him?
Making disruption possible
Let’s zoom back in, a bit. Your business might not be trying to shakeup anything nearly as big as the mobile market. Maybe you’re just trying to oust the large regional player in your area. If you’re working the bottom of the market, you need to do it on the cheap. Balancing the cost of acquiring and servicing a new customer against the customer’s lifetime value is the challenge of just about every startup.
If your customers are already going to be at the low end of the lifetime value scale, you need to push them down the acquisition cost scale, as well. Automation can make acquisition and servicing costs significantly lower, allowing you to focus on that demographic that’s been overlooked by the big guys.
To figure out where this is happening in your business, sit down and make a list of all the tasks that any individual in your business does repeatedly and that take more than ten total minutes. Some of these will be daily tasks, some less frequent. Now, replicate the list, but for things that people in your competitors’ businesses do.
These two lists probably have some overlap – entering receipts, making calls, fulfilling orders, etc. These are the easy automation wins. Areas where you can get a leg up simply by doing something that you both do, but better.
As an example, take payroll. Your competitor pays its employees using traditional payroll systems and methods. That requires a person to sit at a computer, read through lines of a spreadsheet or payroll, and then approve things manually.
If you were to start using a time tracking system that integrated with your payroll system, you could batch approve payments. If something went wrong, you would deal with it on a case by case basis – saving you time.
Finding more opportunities for cost saving
The overlap on the list is the easy stuff. By and large, you’ll be looking at things that both of your companies should probably have already set up. The established business may just be too slow at IT adoption or too unwieldy on the back end. Your business may just never have had the time or inclination to institute the system. Whatever the cause, this is the easy stuff.
The real wins come from the places where there is no overlap. These are the places your business is already working to gain an advantage or differentiate itself, and where a boost in efficiency can push you that extra mile.
Another baseline example. You and your big competitor both make sales off the back of personal contacts. They work through word of mouth and their impressive downtown office. You call people.
Implementing auto dialing software can turn your perceived shortcoming – an office in your uncle’s basement – into a strength. You’re taking the thing that makes you more efficient and turning it up to achieve an even greater efficiency disparity.
World shaping, not world changing
Changes like these aren’t the things that make your business win big – that’s where you need skill, a good team, and a strong offering. Automation is the step in the process that lets you focus on those defining factors. By cutting out as much of the mundane work as possible, you give yourself the chance to beat the bigger competition at their own game.
1) Disruption comes from businesses that have fewer resources, but that can use those resources more efficiently.
2) Automation across your business can help you pull level with your competition
3) Automation of your core differentiating features can push you ahead of the competition
4) No matter how efficient you are, no amount of automation is going to help your pager-that-looks-like-a-donut business beat Samsung
If you’ve found some awesome automation wins, I’d love to hear about them in the comments below. Drop me a line anytime.
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