SINCE MY company SEAC started working with the Stanford Centre for Professional Development I’ve been lucky enough to make a number of trips to Silicon Valley.
One of the first things you realise when you get there is that while it is a long way away physically, it’s actually a whole world away where it matters – in its culture of innovation.
It’s not just the visual cues like the airport body scanners and automated immigration process or the Uber ride in a Tesla (yes really!) down to my Airbnb accommodation in Palo Alto; you can get that experience all over the world, but the point is that they were all created here. This place is changing the world; this is where you come to see the future being created.
I spent a week with a group of Thai business leaders learning from Stanford University Faculty and industry gurus to understand more about this future world and what we should be doing to survive, let alone thrive, in it.
Several takeaways stand out for me. The first two are the power are customer motivation and market innovation. Where these two ideas meet is where true disruption occurs and where the future is born.
The key point about customer motivation is that power has shifted to the customers, where it should always have been. Until recently customers have been poorly served by many industries; forced to pay for things they don’t want to get something they do want, faced with limited choice and no personalisation. That is all changing very quickly now. It requires a shift in mindset from ‘what can/do we deliver?’ to ‘what should we deliver?’ What does the customer actually value? Customers will pay for what they value but they will not tolerate being taken advantage of anymore.
This power shift to the customers is being enabled by remarkable Market Innovation in the shape of incredible technological innovation and the new business models. To use the obvious examples of Uber, the technology of mobile devices and Google Maps combined with underutilised resources (cars and drivers) to create a new platform business model – a ride service that owns no vehicles and employs no drivers.
Furthermore, it coincided with changing consumer preferences for a sharing economy. This intersection of consumer motivation and market innovation accounts for the extraordinary growth of Uber and other sharing platforms.
Let’s take a look at another story. What will your company do when what you currently sell is available free? Remember when you used to have to pay for Wi-Fi, and when you had to pay to phone your friends or send them a message? The ubiquity of Wi-Fi and the emergence of social apps took billions of dollars of revenue from the telecoms companies and gave it back to the consumer. In its place emerged a whole new industry called Apps and most of these are free too.
What will happen when electricity is free? Almost everything is being commoditised and is becoming virtually, or actually, free. Established businesses need to get creative in finding ways to find value for customers in services around their former core. This brings me to my final big learning point. At the close of the programme we heard from innovation guru Geoffrey Moore on why established companies are so bad at innovation. Companies that are still making money, that are still growing, have a vested interest in the status quo. Executing innovation means moving resources from money-making areas and putting them into an innovation that may lose money for up to two years.
It means the company’s stock price taking a hit and missing performance targets, whilst you go through transformation. Boards and investors don’t like that and it’s hard to see the disruption coming until it’s too late.
On the other hand startups thrive in this environment. They have no established business, just the relentless search to find the fit between their product and the market before they run out of money. This is why startups keep disrupting huge, established industries and businesses. They deliver what customers really value, they leverage platform models with technology, and they are 100 per cent focused on finding product-market fit.
Silicon Valley is inventing a bold new future. It’s one we all want as customers, there’s no stopping it, so we all have to rethink “what” and “how” we deliver to create true value and stay relevant in the future.
ARINYA TALERNGSRI is chief capability officer and managing director at SEAC (formerly APMGroup) Southeast Asia’s leading executive, leadership and innovation capability development centre.
She can be reached at firstname.lastname@example.org or https://www.linkedin.com/in/arinya-talerngsri-53b81aa
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