How startups can compete with century-old industry giants, and win
The business world is changing at a fast pace. In this climate, industry giants are forced to quickly re-evaluate how they work and to be able to face the new challenges in their markets: startups.
As shareholders task century-old businesses to either find new ways of generating revenues or protect existing ones, they are also forced to fully transform the way they operate to face new competition. This is a clear sign that not all the well-established industry giants will be able to maintain their positions in their respective markets, as the startups who are built around the idea of agility, accessibility, and automation are quickly taking market share.
So, what is the recipe for an industry disruptor? The answer is a company that combines a focus on strong execution with the right partnership choices and the understanding of clients’ problems developed through years of industry experience. By building new models of operation across a number of industries, startups are entering the battle with the industry Goliaths. The key to this challenge is combining customer-centricity with new technologies, and the majority of startups are very successful at it.
A great example is the finance industry: in just a few years young companies were able to fully transform how the industry operates by bringing innovations to the fingertips of their customers, who never thought banking or investing could be this easy, agile and understandable.
What’s special about fast-growing technology companies is the way they operate. The key element of this is their ability to respond to challenges in a truly agile way. This key way of operating means that startups can deploy tech to deliver a strong customer-centric approach to operations.
However, this comes with its own challenges. When it comes to industry and potential clients, startups must build trust from scratch, and this normally takes time and comes with big responsibilities, especially in markets such as financial services and bankingTrust is rarely an issue for companies that are over a century old, while it’s a key challenge for the newcomers.
When addressing this challenge, focus on execution and delivery is critical. It’s a fact that “disruptive” ideas are almost never-ending. However, the biggest challenge is the lack of resources and ability to execute these ideas in an effective and impactful way.
At the same time, industry giants rarely lack resources, but often lack the focus on expanding the product offerings and applying innovation to the execution and delivery of their services, as they typically face issues around shareholder demands and wider inherent challenges.
My advice for startups facing these challenges would be - pick your battles carefully. In my experience, one of the most effective ways to succeed is to focus on your niche and deploy all of your limited resources into that niche with the singular goal of offering a much better product than your customers’ next best alternative. This probably sounds much less exciting than the wider attraction of “disrupting an industry” but it is definitely a much more realistic and successful way of carrying out operations.
If your startup is focusing on a strong delivery in a niche market, you can start building trust and recognition. At the same time, you should prioritise a strong feedback loop from the key customers and explore additional opportunities that come with this. This way of working means you can beat your competitors at their own game, whilst setting the foundation for doing much more on the condition that your company continues strong execution and delivery.
In addition, always keep in mind that being “disruptive” is challenging, especially within the B2B market. Established companies are often a big part of the wider industry ecosystem, and by default, have strong and established customer relationships that they will protect at all costs.
Getting back to the fintech and commotech revolution happening today, it’s undeniable, yet the penetration for new technologies within the wider landscape will take a lot longer due to the existing structure of the banking and financial landscape. Current industry players, and not always for bad reasons, have a real incentive to limit the speed of adoption unless they are the ones behind the innovation. Therefore, it is important to recognise technology’s ability to provide efficiency and unlock value rather than simply focusing on disruption. This distinction is especially important in more established industries.
To conclude, for a startup to be successful, execution and a real understanding of market dynamics are essential. If implemented successfully, any business, no matter how small, has the ability to take on the industry Goliaths. As the finance and banking industry shows, startups at the very beginning of their journey can feel like a David surrounded by multiple Goliaths. However, with the right approach, fast-growing companies - who focus on execution and their customers - can truly challenge even the biggest Goliath.