[Acrio Co., Ltd.] [Event Report] 7 Pitfalls of New Businesses for Large Companies – The Path to Success Revealed by Acrio
*Acrio Co., Ltd.*
Press release: September 3, 2024
**
[Event Report] 7 Pitfalls of New Businesses for Large Companies – The Path to Success Revealed by Acrio
*From misjudging market needs to innovation dilemmas – with plenty of examples and solutions*
On August 8th, Acryo Co., Ltd. (Representative Director and CEO Ueda A shocking fact was revealed at a seminar for new business managers of major companies held by Daiki (Shinagawa-ku, Tokyo). Many large companies fall into a common pitfall when starting a new business. This article details seven major pitfalls identified by Acrio and innovative strategic approaches to overcome them.
From misjudging market needs, to failure in resource allocation, cannibalization with existing businesses, innovation dilemmas, and lack of a sense of speed –
These challenges can be fatal obstacles to new business ventures for large companies. However, with the right strategy and insight, it is possible to avoid these pitfalls and lead your new business to success.
We will introduce specific examples discussed at Acryo’s seminars and practical solutions to each challenge. The issues that are occurring at the forefront of each industry, such as the importance of market research that can be learned from the failures of major electronics manufacturers, the lean startup method that utilizes lessons from the automobile industry, and countermeasures against cannibalization derived from experience in the publishing industry. We will explain in detail how to overcome it.
This is a must-read for anyone involved in new business. We will tell you how to launch a new business that has the agility of a startup while making the most of the strengths of a large company. Find the key to success in your new business with Acrio’s innovative approach.
Misjudgment of market needs
The first pitfall that many large companies fall into is misjudging market needs. There are many cases in which companies become overconfident in their own strengths and technologies based on successful experiences in existing businesses, leading to mismatches with actual customer needs.
Example: Household robot business of a major electronics manufacturer The company leveraged its advanced technological capabilities and invested heavily in the development of home robots. However, sales after commercialization fell far short of expectations. The reason is that although the technology was excellent, it did not take into account the needs and usage scenarios of ordinary households.
Solution:
At Acryo, we emphasize thorough market research and analysis of customer insights. From the concept stage of a new business, we conduct interviews with potential customers and conduct prototype tests to support product development based on actual needs.
Resource allocation failure
Abundant resources, which is a strength of major companies, can actually become a stumbling block for new businesses. There is a risk that excessive investment and staffing will deprive businesses of their flexibility and make them unable to respond to market changes. Example: Electric vehicle business of a major automaker
To enter the electric vehicle market, the company set up a large specialized department and invested a large amount of human resources. However, due to the enlargement of the organization, decision-making was delayed and the company was unable to keep up with the rapid changes in the market, resulting in it falling far behind latecomers.
Solution:
Acrio proposes the launch of a new business that incorporates the “Lean Startup” method. By conducting market verification with minimal resources and gradually expanding the business, we support the creation of a system that can flexibly respond to market changes while minimizing risks.
Cannibalization with existing businesses
It is not uncommon for new businesses to compete with existing businesses, putting pressure on overall profits. Failure to respond appropriately to this issue may result in internal opposition and the loss of momentum for new business.
Example: Digital book business of a major publisher
The company launched an e-book platform to respond to the expansion of the digital book market. However, due to insufficient measures to coexist with paper book sales, relationships with existing bookstores deteriorated and internal friction arose, resulting in a slowdown in the growth of both businesses.
Solution:
At Acryo, we place emphasis on strategic planning to maximize the synergies between new and existing businesses. We propose ways to minimize cannibalization and achieve growth for the company as a whole, such as cross-selling measures that leverage the strengths of both businesses and the formulation of a phased transition plan. innovation dilemma
Large, successful companies tend to be slow to respond to disruptive innovation. By focusing too much on existing customers and business models, there is a risk of missing out on new market opportunities. Example: Compatible with digital cameras from major film manufacturers This company had long prioritized its existing film camera business in response to the rise of digital camera technology, and was slow to respond to digitalization. As a result, we lost significant market share and were forced to restructure our business.
Solution:
Acrio advocates “ambidextrous management.” We support the construction of an organizational structure that explores new businesses while optimizing existing businesses. We also provide consulting on creating systems to promote innovation, such as collaboration with external startups and the introduction of internal venture systems.
lack of sense of speed
The decision-making processes and organizational inertia typical of large companies can hinder the speed of new business development. Swift action is essential to avoid missing out on market
opportunities.
Actual example: EC business development of a major retailer
Although the company recognized the growth of the e-commerce market, it took too long to coordinate with its existing store business, delaying its full-scale online expansion. As a result, the emerging EC Market share was lost to specialized companies.
Solution:
At Acryo, we propose the construction of a decision-making process specialized for new businesses. Apart from the regular approval system, we support business development with a sense of speed, including a mechanism for delegation of authority that enables quick decision-making and execution, and the introduction of agile development methods.
Issues in training and securing human resources
New businesses require different skill sets and ways of thinking than existing businesses. There are many cases in which businesses lose their driving force because they are unable to secure and train appropriate human resources.
Actual example: IoT business of a major manufacturing company The company decided to enter the IoT space, but struggled to find the software development talent it needed. In the existing personnel system, IT
Recruiting and retaining human resources was difficult, resulting in significant delays in business startup.
Solution:
Acrio supports the formulation of human resources strategies specific to new businesses. We propose optimal methods for securing and developing human resources using a multifaceted approach, including inviting human resources from outside, training programs for internal human resources, and acquiring human resources through collaboration and M&A.
Difficulties in evaluating results
If you evaluate the results of your new business using the same metrics as your existing business, you may get caught up in short-term profitability and miss out on long-term growth opportunities. Actual example: New service development for a major telecommunications carrier This company started developing a new communications service, but as it was evaluated using existing profitability indicators, it quickly decided to withdraw from the service due to losses in the early stages. Similar services were later successfully implemented by other companies, resulting in a missed market opportunity.
Solution: At Acryo, we develop KPIs tailored to the characteristics of new businesses.
We are proposing the establishment of a setting and evaluation system. In addition to short-term profits, we set multifaceted evaluation indicators according to the growth stage of your business, such as the number of customers acquired, repeat rate, and market share, to support you in making appropriate decisions.
conclusion
New businesses from major companies have significant advantages, such as abundant resources and an existing customer base. However, at the same time, the risk of falling into these pitfalls is high. Acryo deeply understands these challenges and provides tailored solutions tailored to each company’s situation.
Flexible thinking that is not bound by existing frameworks and quick and appropriate decision-making are essential for the success of a new business. By utilizing Acrio’s consulting services, you can avoid these pitfalls and clear the path to success for your new business.
If you are involved in a new business, please contact Acrio. By leveraging our experience and knowledge, we will support the success of your new business.
Click here for service materials
Click here for the application form