Over the last 10 years, we have been involved in more than 20 eCommerce companies across Europe and APAC. On top of it, we started a full-service digital agency in 2014 and have worked with some of the leading brands in their respective industries. Lastly, we helped more than a dozen companies in their digital transformation process.
Through this, we have experienced first-hand differences between the old economy (analogue predecessors) vs. digitally born companies. I thought it was time to summarise some of the key findings about the characteristics of a digital company vs their analogue predecessors.
Focus obsessively on your customers
There is a reason why Jeff Bezos first question for any new initiative is: “Why is what you are recommending important to the customer?”
According to him “the No. 1 thing that has made us (Amazon) successful by far is obsessive compulsive focus on the customer”. So Amazon is putting their customer at the centre of everything they do. Even if it means incurring short-term losses for the benefit of long-term customer relationships. Whereas traditional companies often ask “how does it help us” digital born companies always put the customer first – mostly at the cost of short-term profits.
Put pace before perfection
One common theme that we see when working with established brands vs. new startups (such as Deliveroo or Klook) is that speed is key. This is in stark contrast with the typical thinking of established companies that come back with the statement “…but we have to launch a perfect product”. I was pretty impressed when I once spoke to the Head of Culture at UBER who told me that their internal maxima is “done is better than perfect”. This encapsulates the thinking about the new born digital enterprises. They put speed before perfection. Or as Jeff Bezos said “I better to have a bad decision on Monday then a good on Friday. You have to live with & learn from it and move on.” Which brings me to the next characteristic.
Experiment more and learn from failure
When we launched Sen Natural our maxima was clear: every week we want to test 2-3 initiatives while knowing that most won’t work (but we will learn a lot for the next iteration) and the ones that work we triple down on them. The buzzword is growth hacking, but in reality it is constant testing and active documentation of learnings. It is instilling a culture of failing and embracing experimentation. Obviously, you don’t want to fail big time so you start small.
Start with small budgets and ramp after success
This is something that I have learned from the Venture Capital industry. Essentially you start with small investments in a variety of companies and double (or triple) down on the companies that perform best. Same with key initiatives for digitalisation. You test a handful of structured experiments and evaluate (based on data and feedback) what works best and put more effort (and thus $$) behind it. It is easier said than done. Same in the Venture Capital industry where you learn to be disciplined otherwise you won’t generate positive (long-term) returns. So it is important to start with small budgets and ramp up activities after the (first) successes. This can be done in form of a milestone-based project management in the style of Venture Capitalists but applicable in the world of digital enterprises.
Make data-driven decisions than relying on your gut instinct
Having worked in both the start-up and advertising industries for the last decade, this has been a continuous challenge with some of my colleagues from both industries. Coming from the typical ad agencies that value ideas or gut instincts with little focus on data-driven, performance-led decisions I came from the other extreme: the only thing I trust were data points. I guess the real success comes from a middle ground: data driven decisions rather (and not instead) of gut instinct. Yes, you have a hypothesis (=gut instinct) about something. But instead of arguing this is right or wrong (or “my idea is better than yours”), we run an experiment and see how the real decision maker (=consumer) decides. From there we can adjust how we run our next activity or campaign. So introducing a culture of data-driven decision that incorporates gut instinct is a challenging and never-ending task. But the benefits of applying it strongly outweighs the energy it consumes to argue about my or your great idea.
In the future, we will see much more digital born companies that will disrupt and challenge existing players. So before you start your next digital company (or project) you can refer to these characteristics of a digital company.
Katharina Kugler has contributed to the article. Thanks, Kat.