Disrupting Market Incumbents

One of the most fascinating business phenomena is the way that powerful market incumbents can be rapidly displaced by new market entrants.

Take the case of BlackBerry’s demise. Once a market untouchable, BlackBerry first hit the market in 1998 with a fully operational QWERTY keyboard. It was a massive success with corporates, primarily because of its secure networks and ease of use. By 2006 they’d released 15 models, the latest featuring things like chat networks, cameras and navigation. It effectively marked the birth of the smartphone. By 2007 they’d doubled their user base to 10 million and were seen as invincible.

Then Apple decided to launch the iPhone, totally revolutionary in that it used a touch screen as opposed to a keyboard. BlackBerry thought nothing of it, contending that no businessperson in their right mind would go for it. But Apple thought that things would change in terms of what people wanted to do on their phones. As such, their first model had an average antenna, a substandard camera and no native apps. Understandably, it was viewed by BlackBerry as totally substandard.

This is where we begin to see the idea of new market disruption as put forward by Clay Christensen come into play. According to Christensen, this is when a substandard product generates a new customer base and pulls some lower end users away from the incumbent. Sustained innovation then leads it to dominate that market and draw in the mainstream and upper end. This is exactly what happened. Because Apple started off with a substandard product they were able to rapidly innovate. In contrast, BlackBerry became the late movers and were left scrambling to catch up. They failed to recognise emerging market trends and nullify the threat of a new market entrant. The market disintegrated beneath them.

Amazingly, BlackBerry went from being the market dominator to near bankruptcy, while Apple acquired 205 million buyers within four years. It was the ultimate proof of Christensen’s assertion that in this type of scenario, the new entrant will always win.

Author: Seamus Tardif – Master of Management student

Why Great Remote Community Outcomes Are Anything But RARE

Why am I passionate about The University of Sydney’s Remote and Rural Enterprise (RARE) Program?

It’s a placement initiative offering students a fantastic opportunity to gain real world experience by assisting remote and rural entrepreneurs in solving pressing business problems. These enterprises operate in isolated markets with limited access to resources, presenting a unique and challenging environment to develop and grow a business venture. The RARE Program provides students the chance to take theoretical and academic frameworks gleaned from their postgraduate studies and apply them in a setting where their efforts directly impact enterprise owners in need of assistance.

By combining these two groups – entrepreneurs and students with an interest in social ventures - we get this great synergy. Remote and rural entrepreneurs get fresh new ideas, free consulting advice and capacity development while students earn real life experience and the opportunity to make a valuable social contribution. A few weeks into each semester, the RARE Program funds student travel to the remote enterprise for a week of on-site learning and consultation. Then it’s up to both parties to continue working together to complete the final deliverable over the course of the semester.

The RARE program is now on offer every semester including summer and winter session, with projects existing in seven different units of study across the International Business Discipline. Having expanded the program, we now work with the Architecture Faculty and the Masters of Sustainability Program with further expansion planned for the MBA Program and Engineering Faculty. Having the ability to send a multi-disciplinary team of students from various backgrounds will enhance the quality of final outcomes and provide remote entrepreneurs with an even greater breadth of options in solving their specific challenges.

At the end of the day, RARE is all about building long-term relationships with remote communities and providing a service that mutually benefits all parties involved. We’re not a consultancy that flies into a community, does some work, gets paid and disappears. We’re not motivated by money, but rather the opportunity to promote research and shared learnings while making a real difference in the communities we operate. It’s a lot of fun and we’re excited to grow the RARE Program further in 2014 and beyond.

Author: Noah Stewart – Remote and Rural Enterprise (RARE) Coordinator Discipline of International Business

Business start-ups: Why small sometimes trumps big

 

Being a member of the Sydney University Business School team that won last semester’s Deloitte Fastrack Innovation Challenge was an invaluable experience for a number of reasons.

Apart from the chance to develop a business idea with solid market potential, my involvement also offered a new perspective on two different business approaches - entrepreneurship and intrapreneurship. While the former refers to building a business external to other companies, the latter involves building something within the constraints of a pre-existing company structure. (For the record, we approached our task more from the entrepreneurial side, essentially creating a start-up relevant to Deloitte.)

It all got me thinking about the idea of small companies versus large, and the way that large organisations can try to compete with smaller entities. This can be harder than it sounds. True, small companies don’t have many resources, many people, much money, or even any connections. But if they have a great team, a great idea and have identified a market opportunity, they can make decisions quickly, expand rapidly and fill that gap potentially faster than a large organisation. Having some large organisation experience, I know that many can’t move as fast. For example, one business I worked for took six weeks to approve an update to one paragraph on the company website.

Interestingly, some larger companies are trying to overcome their inherent limitations in order to remain ahead of the curve. Deloitte themselves are a classic example, promoting a culture of innovation and trying to remain flexible and mobile. The fact that after we won the innovation challenge they entered into negotiations with us around incorporating our business idea into their existing framework, is highly indicative of this strategy.

We've now decided to take our idea to market for real. This is a hugely exciting opportunity as we’ll potentially be competing with other larger organisations that perhaps aren’t as flexible. But regardless of what happens from here, the experience of competing in the innovation challenge has been fantastic. Being involved in every facet of building a business - from finance to marketing and strategy - was a really steep learning curve. Nonetheless, it was an incredible experience that complemented my degree perfectly.

Author: Rory Aston James – Master of Management student

Mobile Commerce And The Satisfied Customer

The recipe for business success has changed irrevocably and profoundly in just the last few years. If you don’t believe, consider these recent research findings:

For starters, here are two findings from the recent American Express Global Customer Barometer:
• 86% of customers across all purchase categories are willing to pay more for a better customer experience.
• 60% of them would make the jump from their preferred brands in search of that experience.

This creates a very new challenge for business. After all, one of the key tenets of success has centred on the power of a strong brand promise to hold customers over time. But it now appears that in the 21st Century, forgiving customer loyalty is evaporating, with consumers moving away from brand promise and brand memories in search of a better customer experience.

Let’s consider some recent SAP-commissioned global research focused on mobile commerce expectations. Interestingly, the study highlights a consumer shift from a mobile-centric world to a mobile-commerce-centric mindset. This basically means there is an increasing demand for mobile commerce capability. People want to complete more transactions on their phones. Currently, 63% of consumers around the world are already using their phones for that very purpose, with one third of mobile phone uses devoted to purchasing products and services. The reasons? Respondents identified benefits like the ability to do it at any time of day, the ability to do it on the go, anywhere, as well as speed and convenience.  In short, mobile commerce offered them a better customer experience. Interestingly, emerging countries expressed the most demand for mobile commerce. This means that Australian businesses planning on gaining a strong foothold in these key growth markets need to start with a mobile commerce platform to have any chance.

Demand for more mobile services in both emerging and mature markets is an opportunity for both domestic and international brands.  One example: Based on SAP Sybase technology, South Africa’s Standard Bank now brings mobile banking to the “unbanked". Watch this short video below:

There’s plenty of requirement in Australia as well. Two-thirds of respondents want to increase their mobile transactions with banks, telcos, retailers and other businesses, but lack of Internet access is preventing many from doing so. Thirty eight percent of Australian respondents cited unreliable Internet as a barrier – more than any other mature market surveyed. The message is clear. Local companies who can get in first with powerful mobile commerce offerings and telcos who can ensure high availability of mobile devices will be strongly positioned to offer the superior customer experiences people are looking for. In a nutshell, they’ll be the winners as customers are now more likely to shift to the better experience in the 21st Century.

Author: Ray Kloss - Head of Marketing, SAP Australia and New Zealand

Data Exchange In The City Of Light

Q: What’s better than a recent stint in Paris working for the OECD as part of the Business School’s Industry Placement Program?

A: Being invited back last month to attend an important SDMX conference and deliver a presentation on a paper I wrote on that very subject.

For those who may not be aware, SDMX stands for Statistical Data-Metadata Exchange. It’s a relatively new global initiative, by large global organisations and government statistical offices from all around the world, that’s designed to standardise the exchange of data and metadata, reduce global work duplication, and ensure ease of comparability across all industries. It deals with all the statistics they collect, analyse and disseminate, ranging from information on national accounts to trade and economics. The implementation of standardisation of such data will help economists and policy-makers arrive at informed decisions and more accurate policies quicker.

In my paper I examined two key aspects, the first being the business case for SDMX. As a Business School student, I looked at the benefits and impacts of things like reduced work duplication, reduced costs, reduced organisational complexity, and ease of data transfers for both organisations and countries. Secondly, I looked at the openness of data that SDMX can facilitate. This type of global transparency could make data more easily interchangeable between different organisations and render it easily accessible for everyone to utilise. It’s a far more beneficial system than the common approach of having everything housed behind closed doors.

September’s conference was a collaborative opportunity for global organisations to come together and share their experiences thus far with SDMX. It was a chance for countries to showcase what they’ve done and how they’re implementing this standard, as well as to discuss the challenges they’ve encountered. Representing Sydney University at this important event and also being one of the only Australians in attendance was very exciting. 

Author: Mitchell Green, current Bachelor of Commerce (Major in Business Information Systems) student at the University of Sydney Business School

The power of mentors

Mentors are invaluable.

They can offer you different perspectives, critical analysis, and invaluable, practical advice based on their years of industry and life experience. So far, I’ve been fortunate enough to benefit from the wisdom of three mentors. All have had experiences in different areas and vocations, which has been great for harnessing diverse opinions and ideas. For example, my current mentor is an amazing woman in her 50s. She works for a publishing company and is an expert on career development for women. With my own background being science-based, she’s intimated knowledge I would not normally have access to.

In a way, a mentor fills in the gaps that a university course can’t. While an academic approach might focus on the best way to do things, a mentor can help you when you’ve applied best practice and it hasn’t worked. The relationship is informal and far more personable, and far more specific to each person and situation. The key to it all is this: you need to be open to drawing on the expertise of older people. You need to be open to the possibilities and be aware of what they can offer. Most importantly, you need to be motivated to act on what they tell you. You’ve got to be willing to change for any relationship to succeed.

Linking up with the right mentor is also critical. I think the basic premise needs to be someone who’s more experienced in a particular area and who’s extremely passionate about passing on their knowledge to someone ready and eager to learn. Of course, they also need to feel they’re benefiting in some way from the association. This could be as simple as the satisfaction gained from passing on their expertise and wisdom.

As a Master of Management student approaching the end of my course, I feel my mentoring relationships have definitely given me an edge, particularly around the process of transitioning from uni to work. Next year I commence a graduate program at Deloitte, which I’m really excited about. Thanks to all the amazing advice and guidance I’ve received, I feel extremely ready to take this next big step in my career.

Author: Lucia Robson, current Master of Management student at the University of Sydney Business School