The words innovation and disruption are frequently bandied about in the business world. Much of the focus has been on the need for large enterprises to awaken from their comfortable slumber and think differently. Or, on startups that are collectively raising billions 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 incubators, consultants, innovation teams, and funding sources.
But who's looking after digital innovation for businesses in the middle?
Missed opportunities in the mid-tier
In Australia, there are thousands of successful mid-tier businesses that are perfectly positioned to build a new digital product. Not just for their own company but for their entire industry.
Real estate, health care, finance, education, retail, transport and logistics are prime industries for digital innovation. There's opportunity 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. One of our customers in Malaysia provides a great example of bold thinking in the digital space.
The add-on solution
eXtracc is a mid-sized accounting firm based in Kuala Lumpur. They wanted to help Malaysian companies prepare returns for the newly introduced Goods and Services Tax (GST). So, they approached Touchtech with the intention of building an add-on for Xero. Instead of simply building a solution for their own use, they engaged us to build SmartTax, a GST-reporting tool, as a SaaS product that could be used by all Malaysian Xero customers.
Today, SmartTax is used throughout Malaysia, providing access to a much larger market than they could provide themselves.
The advantage of being a mid-sized business
Mid-sized businesses have significant advantages over startups and enterprises when it comes to delivering on digital innovation.
Typically the owner is the project sponsor and able to make decisions much quicker than in larger companies.
Projects are usually self-funded, meaning there's no need to spend time and energy raising money externally.
Mid-tier businesses often know their industry better than anyone else. This means the problem being solved is of real need to that sector.
Onboarding initial customers can be difficult for startups. An already operational business will have plenty of customers to test its product on.
For a large enterprise, the short-term financial gains from building a digital product may make the effort just not worth it. But, it could be a game changer for a smaller business.
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. Even so, 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.
In March 2018, Touchtech and Springload merged to become Wellington’s largest independently owned, full-service digital agency.