How can you make the entrepreneurial economy work for you? Today, change occurs at an exponential rate, and the pace of innovation is unparalleled. The cost for an entrepreneur to jump into a market has dropped dramatically and is no longer a barrier to entry. The internet, mobile technologies and a virtual workforce have eliminated many of the advantages once held by big businesses with deep pockets.
This shift represents a big problem for big business. The deep-rooted cultures at most large companies make it difficult for them to keep up. If they remain inflexible and unwilling to change the way they approach today’s competitive world, they’ll die from the inside out.
But the change is good news for flexible entrepreneurs like you, who can move faster, get closer to customers, respond more quickly to changes in the marketplace, and run your businesses for a fraction of the cost. You don’t resist the pace of change. You embrace it. In the new world order, small is the new big.
Here’s how fast a small company can move in and disrupt an entire business:
Under the previous paradigm, a company created a product or service. It was a hit, and, over time, the company got bigger. They continued to add new features and started raising their prices. The company could do this because the demand was there, but they had little competition. Then one day a customer looks at his credit card bill and says, “I don’t want to pay all that money anymore.” He also realizes he needs only one thing, the original thing he signed up for. “I don’t need all this other stuff,” he says. “And I certainly don’t want to pay for what I don’t need.”
So, the customer decides to start his own company. He plans to strip out all the fancy features he doesn’t want to pay for and offer just one thing, the very same thing he currently likes about the big company’s product. He finds a free legal service online and incorporates; then he sets up an account with Google to get free email, contacts, calendar, office applications, and document storage. He gets free voice and video calling through Skype and free wifi at the corner coffee bar, and he syncs everything between his laptop and mobile phone.
The business is established — in an elapsed time of, say, 90 minutes.
Next, our entrepreneur goes online to do some research. A few internet searches produce market data and access to free reports. By poking around social media platforms like Facebook and Twitter, he can quickly find out if others think the idea has legs. Our founder logs onto LinkedIn to share the news of his new venture and seek some help. A developer who likes the idea and hates big companies volunteers to do a little coding. The new team collaborates on a business plan, using free software to write it.
To sum up, a customer of a big business identified a problem and established a company to solve that need in one afternoon. He has access to much of the same market information as the competition. Social media conversations led to the drafting of a business plan and the assistance of a developer, who’s already started building the product. These people are executing — remember, it’s still the first day — and they’ve spent zero dollars so far.
This new little company builds something basic, a minimum viable product with one feature and one benefit. What they release is pretty crude but they sell it for practically nothing. Other people who had the same problem with the big company’s product flock to the new business. The big company is slow to recognize what’s happening, so they fail to respond with an alternative solution. They bleed market share to the startup. And a new entrepreneur is launched, with a product and a team and a market — the building blocks of a multimillion-dollar business.
Our theoretical business happens to be a technology company, but the process is the same across the board. It starts with one unhappy customer with a laptop, mobile phone, internet connection, and social media account. One customer who decides to take matters into their own hands and find a better solution to a problem.
When big, entrenched industry leaders see this happening from their spacious headquarters, it’s terrifying because it’s proof that the scales have tipped. Even their best ideas may not work because they’ll take too long to execute.
That’s an opportunity for entrepreneurs, but it’s also the reason I consult with businesses, large and small, all over the world, teaching them how to create a more entrepreneurial culture. Does your business culture allow for the kind of fast action required to compete in the entrepreneur economy? If not, you’re in deep trouble. In business, nimble creatures adapt, while the dinosaurs die off.
Now it’s your turn. Use the advantages entrepreneurs have over big businesses. Create innovative products and services that have a positive and lasting impact. Make your dream a reality by bringing your idea to life.