Were you in the middle of launching a new product or startup when the pandemic hit? Like a lot of entrepreneurs, you probably hit the brakes on your project or put your new ideas on the back-burner in order to conserve resources and ride out the uncertainty.
Many of us were optimistic that the storm would quickly pass. But weeks have turned into months and the reality is finally starting to set in:
We have shifted into a new normal and some things are never going to go back to the way they were.
So what do you do with your product/startup plans?
What if I told you that there has never been a better time to start up or pivot your product?
While bracing for survival is often the first (and right) instinct during a crisis, once certain basic measures are in place, this is also a time to totally re-evaluate opportunities with a completely new perspective.
Crises have historically resulted in a massive redistribution of the value chain from incumbents to new challenger companies and products.
Here is a small sampling of such challenger companies and products created during past crises listed in chronological order from the great depression to the present:
- Post the Great Depression 1930s: Disney, Hewlett-Packard, Lego.
- Post World War II 1940s: Sony.
- Oil Embargo recession 1970s: Microsoft, Apple.
- Energy crisis 1980s: Electronic Arts, Adobe, Whole Foods.
- Post Dotcom bust 2000s: Apple launches iPod and the iPhone, Mailchimp.
- the Great Recession of 2009: Uber, Slack, Airbnb.
- COVID-19 2020s: TBD
Innovation comes from struggle
This isn’t a new concept but the bigger question is how do you position your company to be on the right side of this value redistribution?
The job of a startup
Startups are in the business of challenging the status quo by introducing new ways of doing things and causing a switch from an old way to their new way.
Yes, no matter how disruptive your offering, there is always an old way.
It helps to visualize "innovation as switching" using a hill-climbing metaphor:
Simply introducing a better new way usually isn’t enough to cause the switch.
Why not?
Because consumers are creatures of habit. Their default position is to resist change. In the hill-climbing metaphor, this resistance to change is inertia.
Furthermore, a new way, being new, is uncertain and invokes anxiety which introduces another resistive force: friction.
The inability to overcome consumer inertia (habit) and friction (anxiety) is the reason why most first-to-market products fail.
They require too much behavior change that consumers are not yet ready to undertake.
One way to overcome this inertia is building a significantly better product (as perceived by customers, not you) with an order of magnitude (10X) leap in value proposition.
So why don't all startups do this?
Because building a 10X better product that customers can 1) readily find and 2) easily understand is more easily said than done.
In other words, building a truly awesome product out of the gate, in the minds of the consumer, is rare and really hard to pull off. Unicorns, anyone?
Most products, even the unicorns, have to slog through the product adoption lifecycle.
The average time to finding product/market fit is about 2 years and 80% of startups never find it.
This means that most of the times the incumbents are naturally favored to win…unless…
Unless something external changes that break the incumbent.
This brings us to vitamins.
Vitamins vs. Painkillers
What causes you to buy vitamins? When do you stop taking vitamins? There isn’t a clear triggering event for either. This is why vitamins are in the nice-to-have product category.
If you’re building a vitamin, the burden is on you to interrupt the customer and trigger them to buy your product. Not an easy task.
Take painkillers on the other hand.
When you’re in pain, finding a painkiller quickly rises to the top of your decision tree and becomes your top priority.
If you’re building a painkiller and if/when customers are in pain, they seek you out making them must-have products.
Vitamins are aspirational, while painkillers are problem solvers.
Also, consumers are more motivated by eliminating pain than by acquiring gains.
What's the takeaway?
Every product switch requires a triggering event.
Most of the time, startups have to take on the arduous task of creating interrupt-driven triggering events using their marketing messages. Again, not an easy task.
But every now and then we run into intrinsic triggering events.
These types of triggering events challenge or outright break the old way and create an extra helper force that helps motivate or push the customer up the hill -- thereby reduce the switching gap from the old way to your new way.
Crises are intrinsic triggering events
Crises naturally challenge the status quo providing the additional push for change. This is exactly why they also create massive opportunities for innovation.
A new normal
In just the span of a few months, COVID-19 has broken many old ways and has changed consumer behaviors across many industries: travel, food, education, work, entertainment, to name a few.
These are all billion-dollar industries.
The added PUSH has accelerated the pace of new way adoption even in traditionally bureaucratic or conservative industries.
While it’s too early to call startup winners, here’s an early list of product winners that have seen explosive uptake in traction since the pandemic started: Amazon, Zoom, Netflix, Peloton, Spotify.
Why?
Because they all were in the right place when the old way broke.
There are many such yet to be discovered new opportunities for the taking.
But it requires a new perspective.
A black-swan event
Unlike all the other crises before it, this one is unique.
COVID-19 is playing out at a global scale affecting 8 billion people simultaneously.
What you discover works in your backyard potentially could work in all backyards.
So you need to think bigger from day one.
Speed has always been a startup’s unfair advantage
This is even more important today.
While incumbents scramble to survive and adapt, the bigger challenge for capturing market share will come from other startups who turn their sights to studying similar opportunities.
The new winners will be those who learn, iterate, and adapt quickly in the face of extreme uncertainty.
