What are the hardest things a human can do?
Most people would come up with a list that looked like this:
- Competing in Olympic sports
- Battling a life-threatening disease
- Forgiving somebody who has done you a great wrong
To the benefit of entrepreneurial ego’s everywhere, I’d like to add one more to that list. Starting, scaling and managing a business is one of the most challenging things a human can do.
In many ways, successful entrepreneurs are like the Olympic athletes of the business world. A path that only a few dare to walk on, and even less survive.
And that’s a lot about what entrepreneurship is – surviving. Throughout all era’s, there have been tremendous challenges that business leaders had to face. Some of them fatal – there are countless case studies of failed ventures both large and small.
The challenges that entrepreneurs of the industrial era face are quite different from those in the digital age. Competition and disruption were more limited. Now, the knowledge explosion and democratization of access means there are threats coming from every angle.
Are you prepared?
Being blindsided by one of these threats could cost you your position in your market. Let’s cover all the bases so that you can identify your potential weak spots.
1. Competitive Pressures
You saw this one coming, so let’s get it out of the way.
The threat of somebody eating your lunch is one of the main fears that business leaders contend with. Naturally, competition in business has always existed. But due to digitization, things are a lot different – particularly so over the past 10 years.
There are two competitive pressures that are unique to the digital era:
- The Ursupers: Scrappy, disruptive upstarts – I’m not referring to the Mark Zuckerberg types either. It’s the renegades in your industry with domain expertise and something to prove that are deadly.
- Human Poaching: Shortage of technical talent – In marketing, there’s a saying we are all now part of media companies. It’s also true that we are all now part of technology companies.
The culture has changed. Talented students coming out of prestigious universities no longer want to work in Finance or the Big 4 consultancies. In fact, they don’t even want a paycheck and a retirement package. The generations coming up are seeking greater meaning in the work they do – and for many, this means starting a company that could change the world. This cultural shift towards being your own boss, in combination with the democratization of both knowledge and access, is leading to a new breed of competitors:
They are smart and hyper-ambitious.
If the large conglomerate in your space is what scares you, you should take a look at the companies coming up behind. They are the true threat, even though it’s not easy to see in the present.
All it takes is one well-executed idea by an all-star team. That’s enough to turn your whole market upside down – as has been the case with many industries.
Truly, no industry or business is safe. No matter how successful they have been in the past.
Why would somebody with an in-demand skill choose your company over the others? The way some companies conduct themselves, you would think that they have never asked themselves this question. Have you?
The traditional way that business leaders and hiring managers approach hiring is outdated. We no longer live in an era where companies are the only ones who ask ‘why should I hire you?’.
The question is now flipped, ‘why should I join you?’.
When it comes to digital skill sets, you are competing with every other company who has a stake in the digital world. Programming, IT and Design run across all industries and verticals, not just tech-focused companies.
Put your company toe to toe with the likes of Google, Facebook and trendy companies such as AirBnB. That’s who you are competing with for talent. You are competing intensely for those who can make your digital strategy come to life.
2. Customer Demands
Study how attitudes towards the customer have evolved over the decades and centuries. In the era of radio and television, it was all about influencing and changing people’s perspectives – both for good and bad.
A business culture evolved from a harsh, war-driven period – utilizing the concept of propaganda to tap into the human psyche and increase profit. Examples of this can be seen in the amplification of ideas around femininity in order to sell more products. You need to purchase this product to feel like a real woman, or so they were told.
Most recently, we have witnessed an era of more overt sales tactics. High-pressure salesmen cold calling prospects, spam email campaigns, and clickbait news titles. All in an effort to capture your attention and sell you something.
Now, we are entering an era of transparency and exceptional experience.
- Transparency– The internet has changed everything. There are two powerful effects that the internet has produced: the democratization of information and giving everybody a platform to speak. Both of these effects present challenges for business leaders. The former means that customers are well aware of the positioning your product has in the market before they even talk to a sales rep. The latter means that if you aren’t authentic and provide great service, everybody will know about it. True for both B2B and B2C companies.
- Exceptional experience– Not to be confused with adding value. This also links back into the competitive environment. If we are honest with ourselves, the chances are that a competitor may be doing the exact same thing we are. They may even be doing it better. In this case, everybody is providing value to the customer. But how many companies provide exceptional customer experiences? I don’t mean offering warranties or having helpful support teams. Go beyond that, make customers feel like they are doing something important by becoming a part of your brand. Be their strategic partners in business and educate, guide and teach them as opposed to just selling them products.
In light of the need to offer exceptional experiences, there has been a significant shift occurring in recent years. In this new competitive environment, some companies are reaching into the cookie jar and changing the way they think about their customers. The paradigm has changed. No longer are customers seen as a singular, uniform entity. Instead, customers are being treated as the individuals that they are.
We are leaving the era of mass marketing, and entering the era of personalization. This can be seen in a few ways:
- Personalization startups Mass produce a luxury item or create an artisan version of a commodity. There has been a boom in startups that are focused on the latter. They are taking products and ideas that are generic and making it relevant to individual customers. Take the rise in personalized children’s books for instance. Or the various nutrition startups like Habit that manage your diet according to your needs.
- Content marketing– With increased competition, it’s hard for customers to distinguish the value among businesses. Now, it’s becoming necessary to provide value to first in the form of content. This can be through solving problems, changing their way of thinking or simply entertaining them. Content is becoming key as it’s usually expected that there will be multiple touch points with a customer before they become a buyer. There is an emphasis towards building relationships as opposed to transactions. This is true even for products like Redbull, who deploy one of the most robust content strategies.
- Cookies, tracking, and data– As customers engage with a brand, businesses are able to collect data that can help tailor their service to them. For instance, Netflix and Spotify use algorithms to suggest content that you would like, based on your browsing history. Over time, they will be able to create a profile of what content you like best. This personalization ensures that you stay a loyal and happy customer.
Entrepreneurship is about finding what customers truly want.
If you ask a customer about what it is they want or need, they won’t be able to give you a straight answer. Naturally, if the problem is so obvious they would have likely already solved it.
This is why a key part of innovation involves uncovering the practices, problems, and psychology of the customer. It’s about discovering knowledge. We spoke about this in our article about why business leaders need to think like scientists.
But uncovering problems the customer faces doesn’t mean that they will automatically buy from you. The customer may be in denial that there is a legitimate problem. They may be happy with the status quo. They may realize there is a problem but aren’t convinced of the solution.
This is why educating your potential customers and becoming trusted partners is important. It links into the need for personalization and understanding the customer journey. They may not be ready now, but over time you have the ability to change how they think.
Confronting the challenges
Competitive pressures and customer demands are likely two challenges you already know about. Effectively navigating them is the real task. This is why we have set up coaching for entrepreneurs and business leaders so that you have the support to face these threats head-on.
But there are also many more besides what we discussed here. In the next part, we will cover the challenges of becoming new business models, cultural pressures and becoming a multi-faceted leader.