The words innovation and disruption have been bandied around the world of business in recent years. Much of the focus has been placed on the need for large enterprises to awake from their comfortable slumber and think differently, or on startups that are collectively raising billions to try to find new ways to deliver products and services in the new digital economy.
Both ends of this business spectrum are well catered for by service providers. There are plenty of incubators, consultants, innovation teams and funding sources available to startups and large enterprises.
But who's looking after digital innovation for the businesses in the middle?
There are thousands of successful mid-tier Australian businesses that are experts at what they do and perfectly positioned to build a new digital product, not just for their own company but for their entire industry. Real estate, medicine, accountancy, education, retail, transport and logistics are prime industries for digital innovation to create efficiencies in production and delivery as well as improving customer experience. However, owning the transformation space has largely been left to startups and big business.
But it doesn't always need to be that way, and one of our customers in Malaysia provides a great example of bold thinking in the digital space.
A Kuala Lumpur mid-sized accounting firm, eXtracc, approached Touchtech in 2015 with the intention of building an add-on for Xero, to help Malaysian companies prepare returns for the newly introduced Goods and Services Tax (GST). Instead of simply building a solution for their own use, they engaged us to build SmartTax as a SaaS product that could be used by all Malaysian Xero customers.
Today, SmartTax is a GST reporting tool used throughout Malaysia, which creators eXtracc now syndicates, providing access to a much larger market than they could provide themselves.
The arguments are compelling. Mid-sized businesses have significant advantages over startups and enterprises when it comes to delivering on digital innovation, in terms of:
Action: typically the owner is the project sponsor, and able to make decisions much quicker than in larger companies.
Funding: projects are typically self-funded, meaning there is no need to spend time and energy raising money externally.
Expertise: mid-tier businesses often know their industry better than anyone else, ensuring the problem being solved is a real need of that sector.
Traction: onboarding initial customers can be difficult for startups, while an already operational business will have plenty of customers to test its product on.
Incentive: for a large enterprise, the short-term financial gains from building a digital product may make the effort just not worth it, while for a smaller business they could be a game changer.
So why aren't we seeing more innovation coming from mid-tier companies? The answer simply comes down to awareness.
Keeping up with all the changes surfaced by mobile and cloud computing in recent years is hard enough. To build and adopt a digital solution that could upset your business model takes courage. But, the rewards are there.
A digital platform can be a great strategic asset for the balance sheet. Given how digital startups are valued, they can also provide an excellent investment for an owner of a traditional business.