11 Jul Startup’s shake up the industry – Paul Broadfoot
Paul Broadfoot is an entrepreneurial strategist and author of a book called Xcelerate. The book looks at how startups like Airbnb are shaking up and transforming industries and is a guide on how businesses can ensure they stay relevant in a time of massive change.
Kevin:In our industry, in the real estate industry – and in many industries around the world – there’s one thing that most people are talking about right now and that is disruption. Modern businesses have never faced so much disruption.
Technology is evolving so rapidly that it’s driving new business models, bringing with it new market innovation opportunities with start-ups like Uber, who we’ve discussed on the show before, and Airbnb also we’ve talked about, shaking up and transforming industries.
How can leaders ensure that their own organizations stay relevant? I’m referring now to a book that’s been written by my next guest,Paul Broadfoot, and it is called Xcelerate.
Paul, thank you very much for joining us in the show. I’m keen to talk to you about this because it relates very, very strongly to our industry. The two examples that we gave there are two classic examples of what we’ve talked about in the real estate industry for what seems like a year or two now.
Paul, welcome to the show.
Paul:Thanks, Kevin. Glad to be here.
Kevin: Firstly, the book is a great read. I’m just curious to know why current innovation efforts aren’t working for businesses.We’ve been very aware of disruption, but why isn’t it working in all instances, Paul?
Paul: I think there are a couple of reasons for that. Certainly, as organizations get larger, we know that they’re harder to change. Something like 70% of change initiatives fail according to studies in the Harvard Business Review and things like that. Change is harder the bigger you get; that’s one reason.
But I think there’s also a lack of application at the moment. There’s not enough time spent scanning at the market level. There’s a bit going on looking internally at your own organization and there’s a fair bit going on looking at customers, but you have to go up another level to disruption. You have to go up to the market level, and there’s not enough time being spent on that.
Kevin: Of course, when we talk about ways to combat this, we look very much at just our own products and our services because we think that’s the weak point. But I think one of the points you make in the book is that we need to innovate the way we work. Could you talk a little bit about that?
Paul: Yes. For example, you mentioned Uber and Airbnb, and they’re poster children for the disruption that we see. There are two interesting things about both of those. The first is theyhave different business models. You would find that they’re often mentioned together as having the same one, as in the sharing economy. But if you flip them, if you change them, you don’t get any choice of the ride that turns up for Uber but you can get on Airbnb and you can choose from a selection.
If you flip them, if you press the button, if you are late out of a meeting – in Sydney, for example – you miss the last flight out, you hadn’t booked accommodation for that night, and you just hit a button and you got “Request Airbnb now,” you’d have a close by hotel room booked for you and off you go.
That’s one thing. People need some frameworks to look at disruption and see how to go about it. That’s very important.
And Uber and Airbnb also didn’t invent anything. The cars and the passengers were already there for Uber. They didn’t invent the technology of location-based technology on phones. It’s the same thing with Airbnb; it’s just bookings over the Internet.But they changed the way the market operated.
Kevin: In the book, there’s a huge amount of research, obviously. I believe you’ve looked at about 5000 businesses and looked at the average life span of those. What did you learn about what they do in terms of developing new growth?
Paul: At the moment, with disruption, new growth is about creating some new demand. There are two things. You have to worry about what’s happening to your current market share, what’s happening to your current pie, what’s happening to your slice of that pie, but a lot of disruption can actually unlock new demand and can expand markets.
More people have entered the ride-sharing industry. The actual taxi industry has increased in size because if people are running late for work and it’s raining, they’ll grab an Uber because it’s cheaper, whereas in the past they would have just been late to work. One way to generate new growth is to expand the size of the market – have your disruption change how people buy.
Kevin: It’s identifying a need, too, and then catering to that need.
Paul: Yes, that’s one way of looking at it and that’s the customer innovation side of things. The market innovation side of things is leading people to something new. If you ask them, they may not know – that old adage of you ask the customer what they want and in the old days they would have said a faster horse; they wouldn’t have said a car.
The frameworks that are in the book actually show people how to disrupt markets and create some new demand, not just ask customers for what they want.
Kevin: Could that lead to a lot more business failure because maybe what you perceive they need is not what they really want?
Paul: Yes.Or someone could be doing something else that could change the game on you. That’s the danger of disruption. You can’t always see where things are coming from.
There was a study done in South America about why the car-wash industry had declined by half over 10 years. They went through everything – competition, pricing, types of cars, economy, and all that sort of stuff – and they actually found better weather forecasting was the reason for the decline. So, it is hard to see disruption coming sometimes.
Kevin: You know how we go through the process of doing research to find out what our customers will think about us but also what they need, trying to determine what direction we should take a business in. Is that a mistake that we ask those sorts of questions in this new age?
Paul: It’s never a mistake to engage with customers; that can only be a good thing. But if it’s not done in conjunction with looking at potential changes of business models in your market, then you’re still going to be prone to disruption. It’s a very important thing to do, but it can’t be done to the exclusion of looking at what’s happening.
Kevin: The book is called Xcelerate. The author is Paul Broadfoot. It’s available, I guess, at all good bookstores, Paul, is it?
Paul: Yes, it certainly is – all the good bookstores that are still around that haven’t been disrupted by Amazon. Yes, it’s on all the online bookstores as well.
Kevin: It is on Amazon, is it?
Paul: It is on Amazon, yes.
Kevin: Paul, thank you so much for joining us. I wish I could spend more time with you because it’s a fascinating subject. Read more about it – as I certainly will – in the book called Xcelerate.
Paul, thank you so much for your time.
Paul: Thanks, Kevin. Great questions. Thanks.