What company does not want to grow its top line and find new markets for its offerings? We have seen throughout the COVID pandemic that companies can leverage radical innovation in times of crisis to find new routes to market or even to change product lines completely. So, what is the problem during normal times – why don’t more companies find ways to extend their markets and revenue streams?
Luckily, today’s technology advancements bring new opportunities for many companies to re-use their existing assets in adjacent segments. There are many ways on how and where the opportunity might arise – It can, for example, be driven by consumers wanting to extend their existing user experience with new devices. This happened in Automotive when consumers wanted to have similar / extended Infotainment experience as they were enjoying with their mobile phones. The change allowed Google to penetrate the automotive industry with its Android platform. Equally new opportunity might be driven by value chains being interrupted by technology like Uber or AirBnB have demonstrated.
So Where Is the Issue?
However, this new digitalization enabled promise of extra revenue has proven hard for many companies to realise.
Often the challenge is more internally than externally driven. Digitalization is not rocket science but to fully grasp its enablement, companies do need to change the way they operate and to drive this transition quickly in order for the benefits not to fade away. There are multiple challenges along the way, but some struggle to see the opportunity – even if new customers are asking for their products & services. A good example was how the music industry initially reacted to the growth of MP3 and digital downloads. However, many companies do see the opportunity but still struggle to make any headway. We, as an Executive Advisory, have witnessed many CXOs who see the growth potential but are not able to get their own teams to see the world the same way, let alone moving towards it. Every such situation is slightly different but in broad stroke one can categorize the reason either as a lack of ability – not being able to develop the idea further for example due to lack of new sector skills required or to lack of willingness – or not wanting to risk the existing business that has served well in the past.
Some companies manage to formulate the opportunity and to get a successful pilot completed with their new customers. This is often followed by several external and internal announcements lasting for an extended period. All good then at this stage? Unfortunately, this is where the real hard work starts and where most of the initiatives fail – when it becomes time to compete with incumbent business lines and to scale. This is the moment when all those boring, yet core internal processes and structures really start to work against your brilliant idea to grow in a new area.
Do Different
Not only do you need to continue to focus on building your presence in the new marketplace, you also need to start questioning if your operating model supports the new business requirements. Simply digitizing analogue processes does not work. By becoming digital you must know what you will do differently – otherwise don’t expect real change to happen. Further, how do you ensure targets and incentives are aligned to drive new business? How do you ensure sufficient budget allocation and leeway for your new business? This is on top of managing your overall business to its targets and expectations.
Often at this stage consultants are brought in to figure out a plan how to solve the problems. The problem with many mains stream consultants is that while they figure out the plan, that does not have the heart and soul of the organization behind it for the implementation of the plan. So, what should companies do to maximize their opportunities enabled by digitalization? In many ways the answer is like 15-20 year ago when company strategy started to be viewed as constant navigational management tool and not a periodic process being run once a year. Companies need to make Innovation & Market Insight a key strategic product management function that is constantly focused on informing what is happening in the market and how the changes can be monetized. Product Management is a vital function that joins the market to companies existing assets and lays out the compelling story to the market. No longer should it be an internally focused function with weak leadership of research and development insights.
Honest Decision Making
Once the opportunity is identified together with a viable business plan, the executive suite must step up and be brutally honest about the related decision making. Any change will need leadership that owns the company story 100% and are willing to put their personal objectives aside. It is only with a fully committed executive team that the company can tackle these large-scale challenges – i.e. how to get employees excited and to own the change. If the leadership is engaged, positively and celebrates the quick wins it will become infectious. It is all about creating the understanding with employees that change is positive not negative – this is not only about engaging teams but also to be able to share a plan that makes sense with the whole organization. It is surprising how often it is this lack of plan that is the sticking point. The reality is if companies are not changing, they are stagnating and that is the worst position to be in – and this is often a worry by people. On average people will accept even more ruthless decisions – often needed in transformations – and actions if they are explained the rational.
With the right direction and people onboard a company is well on its way to capture new revenue streams. The next key areas to focus on unblocking internal processes and structures that would hinder the required level of execution. This starts from budget allocation – to create new business you need to invest. It is amazing how often company budgeting process forces all businesses – old or new – to be treated the same way with often unintentionally killing any new initiatives. Another similar area is operating model where companies struggle to accept that the new business area might require a new way to organize and to manage.
Obviously entering a new market segment needs to include sales and other required go-to-market functions. However, based on our experience the sales area changes are more traditionally execution focused than the areas highlighted above. One area that is often underestimated is the value of ecosystems and partnerships. In todays digitalized world, it is difficult to build an effective and efficient go-to-market set up without an efficient ecosystem in play.
Q Advisors was created by executives who have been driving transformations as business owners for decades. Having gone through multiple transformations – both successes and failures – has made us firm believers that there are no short cuts for success. To be successful you need to combine technology foresight and hands-on P&L transformation experience with brutal honesty if you want to achieve sustainable results.
When your revenue growth needs a boost, we bring new perspectives and insights to identify market drivers and help maximize your assets and team capabilities to raise your game. Our approach is holistic – we look across market/customers, your products and internal organization. However, we are not there to create a PowerPoint deck but to work with your teams so any plan that is created is made by your people for your people. Our role is to guarantee progress and to bridge possible gaps in skills.
To engage with us is easy and we are all about fast progress. If you’d like to hear more, please contact us at info@qnetworks.eu.