Starting a company is daunting. This is especially true when you’re targeting big markets (real estate, health care, and higher education, among many others) that have been overlooked by technological innovation for years. From organizational inertia and entrenched legacy software to employees who skew older and are reticent to make radical adjustments, change comes at a glacial pace, if at all.
But despite the many obstacles of bringing technology to bear on industries that have been broken and ignored the longest, these are often the ripest for disruption--and companies that succeed can truly change their corner of the world.
Easy to Switch, Harder to Stick: Change Management Must Be First Priority
The emergence of cloud technologies has made it easier than ever for experimentation. The barrier to entry is lower than ever before as companies may purchase a few software licenses, see how it works and, if it doesn’t meet expectations, just let the subscription expire with little wasted effort or investment. As such, it’s becoming more and more natural for companies to welcome technological change.
This isn’t always the case in less tech-savvy industries, where it’s a tall order for companies to rip out existing systems or commit to long-term rollouts, even if the new solution is easy to use. Consider the operational and security implications of a giant health care company replacing its HRIS or a retail chain rolling out a new point-of-sale (POS) system across hundreds of brick and mortar stores nationwide. Change requires significant investment, planning, and training, and in more tech-averse industries, that can be an almost impenetrable barrier--unless you approach the markets with these concerns already addressed.
In bringing dotloop  to an industry of more than than 1.2 million real estate agents, I’ve learned to approach each account almost entirely focused on change management. Given half the initial conversations I have focus on how we go about getting offices running on our platform versus the actual technology we’re selling, it’s clear the majority of hesitation is not in adopting the product itself, but the need to not slow business to a halt in transition. Plus, when you’re targeting a user with an average age of 57--one who has likely used the same paper-dependent process for decades--it’s essential to be candid about the challenges change poses and to set expectations appropriately.
Whether it’s switching something as trivial as your default Internet browser or something more important as your health care policy, most people have an aversion to change. And once someone anticipates change as an obstacle, it’s very easy to lose them to their established way of doing things. This has never been more true in the business world than it is in selling to established markets.
Competing with Home-Grown Solutions: You Need Some TLC
A dearth of technological innovation compels people to work around the shortcomings and make due with the available tools, often to great effect. I purchased my first house at age 17, and soon after, worked as a real estate agent. Fifteen seconds into my first transaction, I was overwhelmed and frustrated by the endless reams of paperwork that blocked me at every turn. And as I did more deals, I learned it wasn’t just me; it was an issue facing the entire industry.
Over the years, most brokerages have tailored their own processes to the particularities of their offices--not to mention fax machines and copiers often being the tools agents used most often. It’s not that these systems are without merit. They’ve been cobbled together to fit the specific needs of that company, with a lot of time, money, and energy invested in tweaking them to work "just so."
However, as the world had moved beyond paper, email attachments, and faxes, the real estate industry--and many others--haven’t been able to keep up. The underlying problem with the status quo, whether it’s buying a house, visiting the doctor, or getting your license renewed, is that the people don’t want to deal with paperwork. And with the proliferation of smartphones and tablets, they don’t have to anywhere else in their daily lives.
Of course, shifting any process heavily reliant on paperwork to the cloud and reinventing the process by which business takes place is not the quickest of transitions. There’s a steep learning curve, and to adapt, companies trying to reinvent old industries must invest as much in customer implementation and support as in the actual technology.
That might not seem like the most efficient business model--and counterintuitive to most SaaS companies’ focus--but when replacing incumbent solutions and working with more tech-averse users, it’s critical to get them over the hump and comfortable. We’ve found that some extra TLC and extra customer support are often the magic ingredients.
The Status Quo is a Formidable Opponent: Identify Folks That Can Get You Over the Hump
The threshold to adoption is different for every market. The challenge in attacking stuck-in-the-past industries is that your audience isn’t likely made of early technology adopters, those willing to accept the hiccups inherent in using the product before the masses. And that’s where many startups run into problems. Between the periods of early adopters and the early majority is a period that technology consultant Geoffrey Moore  calls “the chasm,” which swallows up most companies.
Successfully crossing over and getting a significant number of customers using your technology is difficult in these markets because most companies don’t adopt until the vendor has proven customers, financial backing, and infrastructure. It’s just a different sociology. Companies often look for references from pragmatic customers, yet with fewer early adopters, it’s a difficult double bind to navigate and is why many companies fail to make it.
The key is to find early adopters who share your vision--and even in industries with limited technology adoption, these groups exist. It’s essential to identify this short list of early adopters and do whatever it takes to get them on board. It’s not enough to have a revolutionary product in big, broken markets and expect to make it. The majority of customers need to see success before they too develop an appetite for change.
Targeting industries that have been overlooked for decades means a steeper hill to climb--but because fewer competitors attempt to, the rewards can be much greater. Often, companies are left competing mostly against dated ways of doing business, rather than each other. Sure, those ways are comfortable and largely work, but by bringing technology to bear on these industries, businesses can have a huge impact and grow rapidly.
As with any startup, a great product isn’t the end of the story. From timing to sheer luck (we launched toward the end of 2009, when the real estate market had nowhere to go but up), there are all sorts of factors beyond a CEO’s resolve or swing for the fences approach that determine whether a company is successful or not. Those that are able to succeed in markets that are more reticent to change will find it incredibly rewarding--and, with a bit of luck, incredibly profitable, too.
[Image: Flickr user Angus ]