LeadCrunch Blog

How New Technology Exploits Complacent Markets

Posted by AJ Agrawal on Aug 8, 2017 8:00:00 AM

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In our increasingly competitive business world, the reason some businesses thrive while others struggle to stay afloat can seem mysterious. However, the secret to surviving for these companies may be pretty simple: There are ways that entrepreneurs and venture capitalists can easily predict the next "grand slam" companies. As with other successful prediction strategies, you just need to follow a formula.

Here’s a detailed guide to using new technology to steal a slice of complacent, crowded markets.

Finding Your Competitive Advantage

High-performing organizations in a wide array of industries use certain strategies to find that perfect competitive advantage. As a result, they’re able to cement their positions as top performers in lucrative markets, contributing to their success. However, it’s important to avoid relying too much on affordability or branding as one of these competitive advantages – these usually aren’t quite innovative enough to keep struggling businesses alive.

So what’s the perfect formula to figure out your business’s competitive advantage and find a successful idea?

Some companies redefine entire markets – think about how Facebook, with its nearly 2 billion monthly active users, changed the landscape of social media, or how Uber reinvented the transportation industry. Others discover new channels to create a new slice of crowded markets, like Facebook advertising inside Messenger and WhatsApp, or Wrapify applying the busy market of advertising to a new channel: cars.

Among the most innovative ways to achieve a competitive advantage, however, is by using new technology to gain shares of complacent and overcrowded markets. If they analyze their focus market properly, both entrepreneurs and venture capitalists can follow a formula for future success and profitability.

Why Does It Works?

Using technology to take a piece of complacent markets tends to work better than redefining entire markets or discovering new channels in those markets. In fact, 72% of executives anticipate moderate or massive digital disruption of the media industry.

If you’re carving out a piece of an existing market, customers will already understand the market. This way, you’ll avoid the danger of trying to create a new channel and having it backfire, like when the creators of Google Home added audio ads and customers grew angry and swore off buying the device.

Certain complacent markets are ripe for disruption with technology. For instance, Wikipedia disrupted the encyclopedia market. This resulted in the previous industry leader, Encyclopedia Britannica, having to end its print editions after 244 years.

Who’s Doing It?

To master this strategy, it’s often helpful to take a look at other businesses that are already employing it.

Salesforce, for example, is a large company that regularly uses technology to carve out pieces of complacent, crowded markets. For example, the company disrupted a market previously dominated by vendors of large, installed CRM systems that relied on face-to-face meetings to close sales. Salesforce used phones and video conferencing to make contact and close deals, providing a level of convenience that ensured its eventual dominance: It currently holds nearly 20% if market share. 

Doft, a mid-growth company that calls itself the “first real Uber for trucks and freight,” has also employed this strategy by disrupting the trucking industry with new technology. It connects shippers with independent owner-operator truck drivers via mobile app, bypassing more traditional means of shipping goods. Some of the major contributors to its success include real-time access to trucks, GPS tracking of shipments and instant rate confirmation as well as the convenience that the mobile app provides.

Our company, LeadCrunch, which is in its post-seed stage, is another company that uses technology to enter complacent markets. For instance, we apply artificial intelligence (AI) to lead generation, scoring and verification. Although the business model isn't new, its usage of AI is innovative in the lead generation markets, which contributes to its burgeoning success.

How Can I Do It?

Luckily, it’s pretty easy to check whether your business model or startup idea will fit into this lucrative paradigm. The main trick is to recognize patterns between your idea and ones that have already seen success.

First, you’ll want to research which markets out there are ready for disruption. Fortunately, there are a ton of articles that pretty much take care of this for you. Here’s a good place to start: Global tech leaders predict cloud computing (11%), mobile platforms and apps (9%), Internet of Things (IoT)/M2M (9%) and data and analytics (9%) will be the most disruptive technologies over the next few years.

Once you’ve selected a market to disrupt, you should investigate how to disrupt it. Thought leaders in the entrepreneurial community have created specific strategies to do this. For instance, take a look at Peter Thiel’s Zero to One, Clay Christensen’s The Innovator’s Dilemma and The Innovator’s Solution and Eric Ries’s The Lean Startup.

When you figure out the strategy that works best for you and your idea, all you need to do is follow it. Businesses that follow the paradigm of introducing new technology into an old market are lucrative for both entrepreneurs and venture capitalists. Once you recognize the pattern, you can predict the future.

Have you given this paradigm a try? What did you discover?

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