Creating new markets instead of new competition
The i dea of u ncontested market space is a novel one t hat e v er y ent r e preneur aspires to having – essentially a f r ic t ionless market i n which to operate as opposed to one teeming with competition.
The strategy of creating uncontested market space puts forward the notion that trying to compete in overcrowded markets cannot be sustained and that high performance is not possible to maintain in the long run. The increased pace of innovation makes creating and operating in a f r ictionless market nearly impossible.
The basis for a frictionless strategy is not to f ight your competitors headon for market share, but to move the boundaries of t he i ndustr y, t hus making your competition irrelevant.
Steven Kark, who started ATM Solutions 15 years ago and transformed it into Paycorp Holdings, explains how he keeps from getting caught up in the “blood bath” of oversaturated markets by constantly innovating.
“We entered t he market at a time when the need for ATMs far outweighed the bank’s supply of them and managed to create f rictionless space (also referred to as “the blue ocean”) with a significant commercial opportunity by taking ATMs closer to where people shop, work and live. By being disruptive in our business model and innovative in creating additional revenue for retailers, we managed in the f irst t wo years to install 650 independent ATM machines which, we believe, was more than all of the big four banks combined over the same period.”
Kark put i n place f undamental and incremental innovations in what looked like a highly-contested market space to grow a business that staged a management buy-out co-funded by Actis for R937m in 2013.
Those innovations took the form of allowing merchants to replenish ATMs t hemselves and a l ong with other innovations that reduced costs, the bank’s footprint was extended without them having to incur high installation and maintenance costs associated with replenishing cash.
“All our machines have a ‘ dip-in’ card reader which means that cards are never swallowed, thereby reducing t he need for servicing due to card errors and can be solar powered in areas i mpacted by power outages,” he says. According to Kark, staying well-informed of movements in the market, being able to differentiate t he noise f rom t he realit y and not having any “sacred cows”, or preferred products, keeps the business creating uncontested market opportunities out of the advanced and saturated financial services market.
“People have a propensity to get comfortable. I am a bad sleeper and constantly alert to opportunities so, as an avid reader, I stay abreast of anything and everything as far as is possible,” he says.
WHAT IS THE BLUE OCEAN LIKE?
The idea of creating a new market seems like an ideal place to be in where there are no other competitors and the market is yours for the taking. But in reality, the blue ocean is vast and wide with dangers that are hidden and there are no other forerunners to help you prepare for the potential dangers.
David Gluckman, an economist and now social entrepreneur, and his partner Francois Petousis developed a township fire protection device that has won local and international innovation awards. The most recent was the local Chivas Regal Win the Right Way award that will send the entrepreneurs to Silicon Valley to run against the other global competitors.
However, the swim through the blue ocean is not as romantic as it may sound, Gluckman explains. “The blue ocean or uncontested space with an innovation such as ours might have more pitfalls than the traditional start-up innovation. We know there is a need with the high rate of shack fires in our country and around the world, so what might seem like a blue ocean is actually one fraught with tsunamis.