Sizing the Advantages of Buying an Established Business (the Untapped Potential)

Incumbents in a market usually benefit from economies of scale that set high barriers to entry for new players and depreciated assets. Buying an established business (especially in uncertainty, volatility, ambiguity and flux) significantly reduces risk (from deep to shallow) to starting a business from scratch. Every Startup is in beta; it is a test, an experiment, a project in progress, a half-baked product and (according to global studies) nine out of ten fail to survive. So trust the modernized old because it has a shallow risk, a competitive advantage and has stood the test of time.

Established companies possess talent, funds, market insights, intellectual property, data, and other assets to give their new businesses a decisive edge over stand-alone Startups. In addition, established companies encounter valuable opportunities to innovate, grow and continuously generate revenue by developing the ability to integrate their assets with tech-enabled business models. So look for opportunities where you see challenges with criteria of sustainability, soft innovation and financial prudence.

The adaptability of established businesses to the new digital economy and network society brings multiple profits. In existing information systems, companies have a vast amount of data feeds. For the most part, this information remains locked and unused. Ramping up innovation and engagement, structural changes, and investing in Business Intelligence applications aim to unlock and analyses insights (hidden in databases), create business value and generate new sources of revenue. So invest in strategic foresight and embrace the new habits of both customers and employees to strengthen long-term competitiveness, built-in agility, and manage your data ecosystem effectively; information is power.

The business landscape of today is in constant flux and continually being disrupted by rapid change. In this environment, many profitable business activities are not enterprises by structural and operational terms. Now-ubiquitous technology has redrawn traditional market boundaries, enabling industries to converge. New business models are emerging, disrupting long-standing conventions about how value is creating. Facing the future, although the route to enterprising and growth is different for every business and sector, breaks down approaches to changing the business model, making bold investments in technology and capabilities, and adopting a holistic digital business transformation is the recipe for thriving. Digital power (what we call a company's technology endowment) is critical for growth and competitiveness. The future will belong to companies that put technology at the center of their outlook, capability, and leadership mandate. Think big. Grow smart.

Size is not a deterrent to business internationalization. Small and medium-sized enterprises (SMEs) contribute to the productivity problem. Within the same sector or countries of similar size, the productivity gap between large companies and SMEs can vary by a factor of two or more. However, technology has made geographical location increasingly irrelevant. Soaring flows of data and information now generate more economic value than the global goods trade. With the proper support, the small, austere, flexible and extroverted market-based business has a lasting competitive advantage in global connectivity. Given the challenges facing SMEs and the size of the opportunity, what every company needs are: specialization| (specialization in the product range, in product features, a field in quality and price), data-driven marketing, precise orientation, and a go-to-market model by using data to try to better target customers and search for opportunities in global market niches (nests) that it can serve uniquely. Devolutions that the big competitors are not easy to target or will not target because they have broader goals. That's creating both a massive challenge and a rare opportunity for bold players to accelerate growth.

The Coronavirus outbreak with its twin threats to lives and livelihoods had enormous implications for businesses because of operating in a recessionary economy, credit crunch and lack of liquidity. All this, combined with taxation, bureaucracy, corruption, kleptocracy, lawlessness, uncertainty and the impact of the financial crisis and the downturn that followed, compose the absolute chaos, a real minefield. Under such conditions, businesses sank, devalued and shrunk, as well as profitable activities, diamonds. Trapped interactions (attention to the gold mine inside the coal mine) with interventions of wide-enterprise transformations, restructurings (financial and administrative tidiness), and investment in the future can develop into natural treasures. COVID-19 has created a unique window to change our trajectory…If we are bold now, we will not only bounce back, but we will move forward and build a kinder, more empathetic, more innovative. Never let a good crisis go to waste.

The innovation commitment: We strongly argue that innovation refers not only to StartUps but also to established businesses. Innovation, at its heart, is a resource-allocation problem; it is not just about creativity and generating ideas. Yet too many leaders talk up the importance of innovation as a catalyst for growth and then fail to act when shifting people, assets, and management attention to support their best ideas. Focus on the existence of innovation's eight essentials (aspire, choose, discover, evolve, accelerate, scale, extend, and mobilize)—a collection of attributes and behaviours that appeared to underpin superior innovation performance. Mastering five or more innovation essentials seems to be correlated with strong financial results, and there is an even more significant uptick with seven or more. Simply put, the ability to develop, deliver, and scale new products, services, processes, and business models rapidly is a muscle that virtually every company needs to strengthen. The key is repetition.