Many years ago, Intel chief and sometime Stanford Business School lecturer Andy Grove wrote a book about why industry leaders should continue to worry about innovation happening in office parks and garages. Most start-ups are established to fill an unmet need or to take advantage of a disruptive change in market dynamics–and too often, big companies are too slow to take advantage of the change. Bootstrappers are often amazed that the industry leaders, who have what seem to be unlimited resources, so often fail to claim markets and opportunities for which they are best positioned. Big companies are simply too slow, too conservative and often too complacent to grab new markets, even when they see the new markets coming.
Lately, the disruptive players have been leveraging changes in business model as much as changes in technology, channel, or other traditional sources of competitive advantage.
To avoid the problems facing newspapers, dating services, software providers, energy companies and other established industries being reinvented by creative entrepreneurs, big companies should periodically consider the following questions:
1. What about my business strikes my customers as "unfair"?
2. Have we rejected a new business line for our business because it might cannibalize existing lines?
3. Is there a way to offer my product with a different payment model–instead of outright ownership maybe membership, subscription, pay-per-use, or even no payment at all?
4. Is my customer base worth more to someone else than to me? Do I really have a more lucrative product in my customer base or my database than in my official product?
5. Am I constantly testing new models, products, services, prices? And have I put the right infrastructure in place to enable my team to test and fail often, without risking any one failure sinking our ship?
6. When was the last time a CEO sat on the customer hotline, or made a cold call?
7. If my customer wanted a cheaper (or more luxurious) alternative to what I offer, where would they go? What would it mean to my business if they left?
Bootstrapped businesses have no extra resources. They have to use their money and people to quickly test and identify opportunities. They know that they will make mistakes, and set systems in place to ensure that these mistakes are managed and learned from. It is interesting to me that as all of the large corporates are cutting spending, hundreds of small, private and bootstrapped businesses are placing bets on the future. While logic would say that the leaders have momentum on their side, sometimes the momentum steers them off course, and prevents them from seeing and taking advantage of new opportunities.
