path to disruption and the innovator's dilemma
TRANSCRIPT
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by Niro Nirmalan
@niroism
Me
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Startup Mentor
16 yearsworking in digital
Growth Hacker
Fintech Enthusiast
Love Cars
@niroism
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What is the Best Selling Car in the US?
GM Ford
Dodge?
Some other car
Toyota Camry
The Best Selling Car in the US is…
Jan 2016 US car sales
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How?
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Toyota’s entry into the US Market
Toyota Corolla 1968 (Sub-compact)
Typical 1968 Muscle Car
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Traditional Business Thinking of US Car Manufacturers
Focus on the best customers
Focus on the highest margin products
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Continued allocating Resources to build new features for these segments (Sustaining Innovation)
£
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Toyota knew that selling cheaper cars meant tighter margins for them
$$$Manufacturing cost
$$$$Car retail price
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So they re-engineered the car manufacturing process – Toyota production system
Just-In-Time Systems
Lean Manufacturing Kaizen teams(Continuous improvement)
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This lead to cheaper manufacturing costs and better margins for Toyota
$$Manufacturing cost
$$$$Car retail price
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And once they captured a significant stronghold over the lower end of the market, Toyota moved upmarket
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The incumbents could not compete with Toyota’s Lower cost, High Feature cars as their margins would not allow it
Toyota Car Sales Incumbent Car Sales
DisruptiveInnovation
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Path to Disruption
Enter low margin niche ignored by market incumbents
Innovate to make the niche market segment profitable
Move upmarket and compete with market incumbents
Become new market incumbent
Beat incumbents on price and service
Disruptive Innovation – Clay Christensen
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Disruptive innovation can hurt if you are not the one
doing the disrupting
- Clay Christensen
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Path to Disruption
Enter low margin niche ignored by market incumbents
Innovate to make the niche market segment profitable
Move upmarket and compete with market incumbents
Become new market incumbent
Beat incumbents on price and service
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Enter low margin niche ignored by market incumbents
International Payments
P2P Lending
Personal Finance Management
Cloud Accounting
Banking Disintermediation
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Path to Disruption
Enter low margin niche ignored by market incumbents
Innovate to make the niche market segment profitable
Move upmarket and compete with market incumbents
Become new market incumbent
Beat incumbents on price and service
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Innovate to make the niche market segment profitable
Onboarding - Automate form completion
Usage of Companies House API to autopopulate form
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Innovate to make the niche market segment profitable
Snap ID for real time KYC
Onboarding – Real time KYC
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Innovate to make the niche market segment profitable
Video call with live photo and ID capture for KYC
Onboarding – Real time KYC
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Innovate to make the niche market segment profitableSolution for thin credit file applications
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Path to Disruption
Enter low margin niche ignored by market incumbents
Innovate to make the niche market segment profitable
Move upmarket and compete with market incumbents
Become new market incumbent
Beat incumbents on price and service
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Move upmarket and compete with market incumbents
Banking re-intermediation - Marketplace bank?!?
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What should Banks do?
The Innovator’s Dilemma
Sustaining Innovation Disruptive Innovation
• Do new better things• Focus on niche segments and unproven
markets
• Do what we always did but better• Focus on high margin products
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What should Banks do?
The Solution – Do both
Sus
taining In
novatio
n
Disruptive In
novatio
n
Collaborate with startups
Enter adjacent or completely new marketsFast follower
Kaizen teams
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Any Questions?