The AFR Business Summit 2016 carries the thematic title ‘Risk Takers, Growth Makers’. Kate Eriksson muses on what this means for disruptive innovation.
This week, PwC is partnering with the Financial Review for the AFR Business Summit 2016. How the theme, ‘Risk Takers, Growth Makers’, plays out will be interesting because it feels as though Australia has reached a new level of alignment in terms of what the nation needs or is being done. We’re shifting our horizons as the next phase of change begins.
On the approach to Australia’s further innovation and growth, here’s a brief overview of what I believe risk-taking and growth-making will mean, as well as the business models that will most likely bear witness.
- Be bolder in their vision, showing leadership and a passion to address problems worth solving, issues of magnitude and impact. This will encourage innovation in terms of how to achieve those goals. In 1962, John F Kennedy announced to his citizens: “We choose to go to the Moon in this decade … that challenge is one that we are willing to accept, one we are unwilling to postpone, and one we intend to win.” (No talk of fuel consumption or regulation.)
- Collaborate and co-create. To stay on the curve, growth makers will form new and diverse partnerships and collaborations. (Almost two-thirds of companies that report stronger financial performance say they already actively engage with external sources to gather new ideas for applying emerging technologies.) It will be increasingly important to join with others to accelerate new markets and ecosystems. Four good examples include blockchain, the internet of things, health and identity.
- Address stakeholders in broader society. Globally, 82% of CEOs believe they will be measured on more than just financial performance and the highest valuation disruptors are already acting according to this. A sense of purpose not only attracts the best talent to your team, but can win over a whole customer base.
- Go global because we live in a globally connected world, because all the major problems to solve are experienced by vast numbers of people, and all our favourite and high-growth digital experiences are global in either their content or the platform that enable them, for example Facebook, eBay, Amazon, or WhatsApp.
- Give top talent meaning and flexibility to work in a range of roles, with flexible work hours or periods, and the opportunity to diversify their thinking and experiences.
- Measure and report to demonstrate where they are either taking managed risks, or trying new initiatives with the purposes of experimenting or exploring paths that are not well trodden. The word ‘risk’ could be misleading. The new risk is not to take risk alone.
- Pursue innovation with the customer at their heart, despite any regulatory uncertainty at the outset.
- Make decisions to stop or wind up areas of business, products or services as new ones emerge through innovation efforts. It’s not possible to move to new cost and service structures such as digital and leave existing cost structures in place. It’s like walking up the stairs with your arms full of boxes: could you keep hold of them all whilst adding more?
- More promptly phase out, switch off or replace legacy technology environments that constrain them.
- Leverage new and emerging technologies, startups and solutions to reduce the impact of their risk taking. For example leveraging robotics, cyber security, fraud management, pattern matching and data analytics to continuously watch, learn and report when exceptions occur.
Five new business models
New business models will be defined from the work of growth makers and risk takers, because growth will be realised when the multiple factors of experience, technology, channels, partnerships and revenue models combine.
Think of an innovation new proposition like a Rubik’s Cube: we can’t expect to have the changing faces of society, customer behaviours or technology and yet leave the business model side of the cube unchanged. Some examples are:
- Subscription models – in which customers pay a fee to access ongoing services. Examples include Netflix, Apple’s iCloud storage, or Dollar Shave Club.
- Marketplace, peer to peer – platforms provided by a business where parties can interact with each other, such as eBay, Amazon or Etsy.
- Shared economy / access instead of ownership – where customers can obtain the product as a service, without owning it, and where the business doesn’t need to invest in people in order to sell, or products in order to build or buy. Examples include Lyft, Zipcar and 99dresses.
- Unique customer experience – where people are willing to use companies because of the experience of interacting with them, even if the product or service is available through channels with the same or reduced price. An example is Tesla, which disrupted the traditional car showroom experience entirely and a subsequent survey showed that 99% of Tesla Model S owners said they would buy one again, the highest result of any car surveyed in years.
- The ecosystem – one of the most powerful business models in which a wide variety of customers, partners, products and services are generated around the company ecosystem. For example, Google search, ads, video, and Android devices; or Apple’s iTunes, apps, music, radio, devices, and accessories.
These lists are not meant to be exhaustive – new paradigms, ideas and behaviours are emerging all the time.
How would you define the risk takers and growth makers of the future?