Businesses that fail to innovate are at risk of going the way of the blacksmith and being usurped by smaller, more agile outfits. Here are four examples of little companies that have proven the theory.
Netflix launched on 14 April 1998 based on “little more than a hunch”, co-founder Marc Randolph says. Randolph and his business partner Reed Hastings had been brainstorming ideas for two months, among the hundreds they toyed with was the concept of providing video rental by mail. At the time video rental was still on VHS cassettes, too heavy, fragile and expensive to make the idea a reality. “It didn’t take much to realise this was a non-starter,” Randolph recalls. However, a few months later, Hastings heard about a test market taking place in San Francisco for a new technology called the DVD. Suddenly movie rental by mail seemed more plausible. The pair put their idea to the test and posted a music CD to Hastings’ home. “The next morning when Reed came to pick me up he didn’t need to say anything,” Randolph says. “He just held up this little envelope with an unbroken CD in it that had got to his house in less than 24 hours. We realised this might just be an opportunity.” Today, Netflix has over 100 million subscribers. “We make our own movies and TV shows and even have our own memes,” Randolph beams. “It’s the most amazing thing to me. I never believed Netflix would achieve the size, scale or influence that it has.”
Following the rise of Napster and pirated music in the late 1990s, the music industry was struggling to find a viable model to contain the spread of illicit music sharing. Enter Spotify with its freemium subscription service to millions of songs. Since its launch in 2008, the platform has been revolutionising the monetisation of the industry and evolving consumer behaviour - with music streaming now predicted to generate $104 billion by 2030. More than 100 million customers use Spotify today, including 40 million subscribers who pay a monthly fee.
When Apple launched the iPhone in 2007, it broke every rule. It was more expensive than popular handsets of the time, had no physical keyboard and was made by a brand known only for computers. But the iPhone changed our view of what a phone should be, in the process replacing the need for cameras, street directories, weather reports, desktop access to email and internet, and eventually, commandeering how we listen to music. Today more than 2 billion people use smartphones, and this number is only expected to grow.
Skype was founded in 2003, combining two existing technologies - peer-to-peer and VOIP technology - into a transformative new business model. Offering both free services such as voice and video calls as well as paid services including calls to mobiles and landlines, it has revolutionised the telco industry and now has over 300 million active users. Skype’s P2P framework enables encrypted and secure phone calls – which standard phone companies cannot offer. Combine this with high-quality audio and video and Skype has been able to successfully expand across both personal and enterprise level markets.
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