6 Truths About Innovation That Will Change Your View About Business Opportunities

Business Opportunities of the Past

Most people believe that the number of business opportunities are infinite and that as many remain, regardless of how many companies that are started. This may be true, but it is becoming increasingly difficult and demanding to find new business opportunities, because the most obvious ones and many of the ones with the biggest potential have already been exploited.

At the beginning of industrialisation people could look around them and find opportunities to build high-growth businesses. Few such opportunities remain unexploited:

– Someone saw people doing their laundry in cold running water, washing dishes in sinks, and throwing away rancid food and some would have thought “I can invent a machine that solves this for them!” — And they invented the washing machine, the dishwasher, the fridge, and the freezer. All these appliances, and many more, have been bought by millions of households since then.

– Another person saw people writing using pencils and pens, thinking that they could invent a machine that did this for them, and suddenly there was the typewriter that could be used for writing books, journal articles, and business documents.

– A carpenter thought that he could simplify the production of furniture and founded a company that made furniture. He sold his products in wider and wider circles, getting people to demand the less expensive industrially produced sofas instead of the hand-crafted bespoke models offered by craftsmen.

The same thing happened with food, transportation, tools, and everything else we use on a daily basis. Someone saw the need, industrialised production, and mass distribution and marketing was invented to sell the stuff.

From Less Efficient to Super-Efficient

Everything that can be done can also be done better, but nothing can be done in less than no time or at a cost lower than zero. The closer companies get to zero, the less a further improvement will be worth and the more it will cost to achieve it. Progress has been going on towards zero in the past century:

– Zero time — via Google users get all relevant results for a search in almost no time and at a cost close to zero. Google made a huge improvement over Alta Vista, but it will be tough to innovate a search engine that beats Google.

– Efficient documentation, storage, and administration — Instead of using typewriters and filing documents and sending them in envelopes scientists invented computers. This reduced the time taken to write, store, and send documents to a minimum. Computers also calculate, store photographs, offer gaming opportunities and other types of entertainment. Little paid time is now wasted for these and other purposes that can be handled digitally.

– Zero waste of time and resources — IKEA has shaved off all unnecessary activities and cost from their service of providing furniture in flat packages and built volume that will be hard to beat. The same goes for Wal-Mart and other leading distributors.

– Car manufacturing — automotive companies have spent a lot of time and resources since the early 90’s to apply Lean Management and eliminate all waste so that most of what now remains are value-adding activities.

In many areas humanity has come close to the absolute limit in terms of efficiency and reduction of waste. Development now needs to go in the other direction.

What Now?

In many areas the tide seems to turn. The idea is to increase the share of local production and reduce imports from Asia, replace petrol and diesel vehicles by the more expensive electric or hydrogen fuel cell alternatives, and to increase the use of biological materials and let those replace some of the plastics that are used.

Still, however, products need to be inexpensive to compete and on-line sales and automated services need to be developed that take away the remaining inefficiencies from ordering and administrative processes.

6 Truths About the Future of Innovation

Instead of the opportunity to sell inexpensive products made in huge volumes to a global market, the opportunities of the future seem to involve some of the opposite:

1. The creation of local production and distribution systems that are still efficient enough to become competitive. Opportunities will exist to franchise successful concepts to collaboration partners in other regions and thereby grow.

2. Instead of using the cheapest possible plastics materials to make inexpensive products for global markets the future seems to hold promises for companies that develop products in biological materials that will last and deliver value over the long term.

3. Instead of catering to the basic needs that are easily identifiable the companies of the future will have to look deep into technology and business trends. Opportunities can be identified in areas like blockchain business and in other advanced technological areas, with biological and advanced materials, by selling locally produced goods and increasing the value from each product by sharing or reselling products.

4. Instead of using only the best bits of material and products companies will strive to reduce waste and make use of as much as possible of raw materials and products.

5. The average size of business opportunities is likely to go down, but the number of opportunities may increase. This is because local production and distribution systems will be developed in all local areas. There will have to be a number of local players, instead of a few companies that dominate all business in their industries world-wide.

6. The size of markets will increase over time as the new business models grow and become increasingly competitive.

The Conclusion?

In order to take advantage of the business opportunities of the future entrepreneurs need to reverse their thinking and find ways to build businesses in seemingly smaller markets. Large companies can benefit from this as well, by applying their competence and resources in many local markets at the same time. Many business concepts will be different in the future compared to today.

Entrepreneurs need to build new business models on advanced new technologies to remove any inefficiencies that still remain and increase, for example, the security of transactions through blockchain applications and other innovative technologies.

As always, many business areas that are at present insignificant are likely to grow and become the playing fields of the giants of the future, whether or not they will be as large as the giants of the past, only time will tell.