Pandora's Sara Clemens' tips to achieving market disruptor status
Businesses wanting to disrupt a market need to do more than just innovate, says a kiwi working for a leading global technology company.
Sara Clemens, who is the chief strategy officer for music streaming service Pandora, said it was important for companies to understand the difference between sustaining innovation and disruptive innovation.
"Disruptive innovation is where you completely transform the market in which you're operating in, or create a new market," Clemens said.
In her keynote address at the 2016 New Zealand CFO Summit Clemens described three tiers businesses could choose to invest in: catch up research and development, sustaining innovation and disruptive innovation.
Catch up research and development was investment in replicating features which a competitor already had.
"That's not innovation, that's just maintaining the competitiveness of your product."
Sustaining innovation was investment in adding new features which competitors may not have.
"But you're still not really disrupting the market. You're not actually changing the nature of the way people are engaging."
Catch up research and development and sustaining innovation were important in defending and extending the core purpose of a business.
Disruptive innovation transformed a business in the long term and required riskier timelines and capital allocation.
"The mistake you see a lot of companies make is over-investment in the wrong thing," Clemens said.
Companies wanting to achieve disruptive innovation needed to invest in a minimum viable product (MVP).
MVP products have just enough core features that allow it to be rolled out to a small group of consumers, usually early adopters.
This reduces the cost of developing products and reduces the chance of creating a product consumers don't want.
"A successful MVP will help you get going," Clemens said
Deciding what to invest in and evolving a business first requires a clear company vision statement.
"It's impossible to decide what options are available to you to evolve your business if you don't understand the problem you're solving for your customers."
The consumer media and tech space would continue to grow. The global technology market was expected to be worth $2 trillion by 2020, largely driven by mobile, she said.
"We see capital continuing to pump into this space."
In 2010 mobile represented 12 per cent of all technology platform adoption. It was now more than 50 per cent, she said.
That was creating a world where the public had instant expectations about the availability of digital services.
"Urban millennials" in particular had an expectation that everything digital should be available immediately.
Shifts in consumer technology and the way it had penetrated enterprise created both opportunities and threats for small businesses.
Previously small businesses required a lot of capital to get a slice of the consumer technology market, but now they could use third party platforms to create entire business interfaces, Clemens said.
"They can massively reduce the cost of doing business. They can make you more dynamic and nimble."
It also allowed companies to compete in a global market.
The New Zealand CFO Summit is organised by Fairfax Media and Conferenz