Embracing the digital opportunity
Businesses at every age and stage of development can benefit from the opportunities of a culture of data-led innovation. Inflexion’s Digital Director Charlie Cannell shares his views with ELITE and highlights the need for customer focus.
A culture of restless innovation
Innovation seeds success in businesses whatever their size. This is particularly true in the digital era, where the pace of technological change and adoption can make today’s digital test a global hit within weeks.
Aiming to facilitate repeated successes, ongoing innovation from within is a leading characteristic of all Unicorns ( this term refers to a project or firm with a unique potential) and FAANGS (for those not in the know, FAANG is an acronym for the market's five most popular and best-performing tech stocks, namely Facebook, Apple, Amazon, Netflix and Google). It’s easily forgotten that when Amazon Web Services (AWS) was being developed, commentators queried the merits of the retailer delving into cloud computing. Amazon persevered, acutely aware of the power of experimenting, delivering a bona fide world leading product through a commitment to innovation.
Google’s email system was created by an employee frustrated by the slow interface of existing systems relying on plain HTML, as well as an inability to efficiently search within email. Realising he had the world’s greatest search engine at his fingertips, he effectively spliced Google search with email to create Gmail, thanks to the infamous “Google 20% Time”.
The most successful companies embrace internal innovation into their culture; they make it part of their daily grind. Whilst this may be more straightforward in a younger, nimbler company, it isn’t impossible for older firms to disrupt themselves and their market. Recognising the importance of innovation, the London Stock Exchange Group has launched an international business support and capital raising programme,ELITE to support ambitious private companies on the growth journey, they programme has a dedicated a two-day innovation workshop to help their ELITE companies understand the importance of innovation and digitalisation. .
Recall Getty Images in the late 1990s: they created huge magazines of stock shots for ad agencies and you would call Getty if you wanted the high-res image a biked over. The launch of their online service was a breath-taking change; it gave customers control, accelerating their usage and driving amazing loyalty – it really showed what the internet could do for an established brand who wanted to shift their customer service and business model.
Data: asking the “what if?” question
Aside from operating a roadmap of new product innovation, the range of tools and services available now allow us to quickly analyse and learn from all sources of data inside a company.
Radius Payment Solutions had 200,000 fuel card customers making 40 million transactions per month – all providing healthy, profitable revenue. However, the firm was not addressing the commercial opportunity that this volume of data provided. After partnering with Inflexion, Radius engaged with data scientists to identify correlations across these data sources and create intelligence from the enhanced, accumulation of information. The project resulted in optimised location data and created a (previously thought impossible) tracker of regional variation in Radius’s market share.
Dutch specialist recruitment and tech services company Calco learned this too. The firm recruits non-STEM graduates and trains them up into technical professionals, then deploying those people as delivery teams into corporate clients. They were very good at training and selling consultancy, but as they scaled up, they needed to find more, high potential graduates. They risked casting the net wider and attracting quantity over quality, thereby wasting resource on the media channels as well as assessment centres. Inflexion backed the buyout of the firm and helped it successfully scale its recruitment engine; using a data science team, Inflexion identified the characteristics of a high performing consultant as early as their first, pre-graduation assessment centre and have built a process that allows the business to target recruits in a more effective way, and at increased scale.
Both of these examples have simply provided fresh focus and analytics on data that was already inside the company. In both cases, the outcome has been optimised performance, supporting increased customer satisfaction and profitability whilst growing the business.
Focus on the value of the niche
Though lots of consumer sectors are already highly disrupted (and often re-disrupted), parts of the b2b space are ripe for digital thinking. The rise of automation and the use of machine learning to help drive quicker and better decision-making – in what have been service-led markets - will drive this. Logistics and shipping are examples of a human-centred brokerage model which still dominates. In an effort to disrupt this industry – and likely to diversify its ride-hailing core business – Uber Freight was launched two years ago and has recently announced plans to invest $2 billion over the next decade into this business line from its new Chicago headquarters. Hot on Uber’s heels, Amazon launched its own freight service last year.
What opportunities lie in smart, practical applications of innovation in the value chains surround this and other b2b markets?
The combination of smart, scalable technology, powerful data tools, widespread skills and most importantly educated customers, there are still many opportunities in digital value creation across dozens of sectors and niches. A culture of focused, intentional data-led innovation will be key to unlocking those opportunities.
Inflexion is a mid-market private equity firm, investing in high growth, entrepreneurial businesses with ambitious management teams and working in partnership with them to accelerate growth. Inflexion’s flexible approach allows it to back both majority and minority investments, typically investing £10m to £250m of equity in each deal.
As Digital Director, Charlie provides leadership in digital technology to Inflexion’s portfolio businesses offering support and guidance to investee companies looking to improve or change their digital strategies.
By Inflexion Private Equity Partners LLP