Disruptive Innovation is thriving in a Disrupted World
Melanie Goward, Investment Director at Maven, looks at how COVID-19 will accelerate innovation and act as the catalyst for disruptive business models. She also discusses some of the Maven portfolio companies which are already unlocking the opportunities created by changing consumer behaviour and beliefs.
The Covid-19 pandemic has had an unprecedented worldwide impact, with the activities of individuals and organisations altered in a myriad of different ways. Nearly every aspect of daily life has been affected, from the way we greet and interact with each other; to how we buy food, clothes and other goods; how we exercise and manage our health; and even how we educate our children. The virus has brought about change to social and working lives across the globe like no other event in modern times.
When we eventually enter the new “Post-COVID” era, significant transformation is anticipated as the “old ways” of working and socialising are adjusted, and markets appear receptive to the adoption of new technologies and solutions.
In the business world, the term “disruptive” is often used to describe the process whereby a smaller company is able to successfully challenge established businesses. As the incumbents focus on improving their products and services for their most demanding (and usually most profitable) customers, they exceed the needs of some segments and ignore the needs of others. Classically, disruptive entrants successfully target overlooked segments, gaining a foothold by delivering more suitable functionality - sometimes at a lower price. Incumbents, chasing higher profitability in more demanding segments, tend not to respond vigorously to the new competitor. Entrants then move upmarket, delivering the performance that incumbents’ mainstream customers require, while preserving the advantages that drove their early success amongst underserved customer segments. When mainstream customers start adopting the new entrants’ offerings in volume, disruption has occurred. The current pandemic is likely to prove a significant catalyst to this process in many sectors, accelerating the process of disruption across a wide range of industries, in some cases almost overnight.
Perhaps the most well-known example is Zoom, which within just a few days became the go-to video platform for millions of new users, including large numbers of business users, seeing its share price double as a result. Google Hangouts, Microsoft Teams, and Skype have all seen similar big increases in user numbers.
But video communication companies are not the only ones that have been impacted, and across the Maven portfolios there are plenty of examples of companies that are poised to help clients navigate the “new normal” more effectively.
For example, following the shift to home working across many industries during lockdown, market growth in the provision of remote working tools is becoming apparent. Maven portfolio company NorthRow focuses on real time delivery of clients’ complex Know Your Customer digital onboarding and Anti Money Laundering requirements. Targeting regulated clients in the financial and property markets, NorthRow’s product portfolio includes the “Remote Verify” tool, which enables clients to verify their customers’ ID without the need to attend an office or post original documentation, ensuring that customers can be onboarded remotely and safely.
The health industry is also experiencing huge change, with remote access again being a key driver. The GP Service is a provider of online services for general medical consultations and prescriptions. The web-based platform allows GP consultations to be delivered via live video link, with prescriptions issued to a pharmacy of the user’s choice. The market for online GP access has been steadily growing for a number of years, but the pandemic has undoubtedly accelerated take-up of this type of service.
Medical supply chains have come under significant stress in recent months and many companies have switched production lines to help meet the need for PPE and other vital items during the outbreak. Amongst them were three Maven portfolio companies, UAP, normally a leading UK supplier and distributor of high specification door and window hardware, Autins, a manufacturer of supplies for the automotive, office and industrial interiors sectors and Westfield Medical, which specialises in single use sterile packaging for medical equipment and identified that a material used during its standard manufacturing process, a special microbial barrier textile called SMMS, was ideal for PPE gowns and could help to address the severe shortage within the NHS. These companies have offered to help fulfil the requirements of the other Maven portfolio companies, as the need for PPE becomes more widespread across the workplace. You can read more about Westfield’s change of production focus to help supply specialist material to produce PPE garments in our latest investor newsletter, Creating Value.
The hospitality industries have been heavily impacted by COVID-19. However, here too a Maven portfolio company has found itself advantageously positioned. QikServe is a cloud-based platform aimed at hospitality operators which enables customers to order and pay for items from a smartphone, tablet or self-service terminal. In the “New Normal”, the uptake of such mobile ordering systems is likely to be further accelerated.
Education has also been affected, with those establishments already having, or able to rapidly adopt, remote learning platforms being at a decided advantage. Waterbear is an educational establishment based in Brighton that provides degree-level music courses. The business was already able to provide courses completely online and has experienced minimal disruption in recent months as a result. In the corporate world, Maven portfolio company Filtered Technologies’ “Magpie” platform curates corporate online learning content to provide a personalised employee learning plan. Again, the online environment has provided clients with the opportunity to provide tailored learning to employees whilst many have been working from home.
The pandemic has also impacted those leaving the learning environment for the first time. Graduate recruitment platform Bright Network adapted its business model in light of the pandemic. Whereas previously the business provided a mixture of digital online and face-to-face graduate recruitment events, it has now focused on digital provision and virtual networking, together with the rapid design and launch of a new virtual internship programme. Bright Network worked with a wide range of blue-chip employers to offer fully online, structured 3-day intern experiences to graduates across a range of industries including banking and finance, law and technology. The company experienced a huge student uptake, with over 100,000 applications and more than 1 million hours of e-learning delivered on the platform. The programme provided constructive and valid work experience to students that were otherwise severely restricted by the lockdown.
These are just a few examples of the innovations being driven by disruptive companies across the Maven portfolio in order to overcome the challenges posed by a post COVID-19 world. We cannot tell what further problems may lie in wait, but it is recognised that adversity has the effect of eliciting talents and solutions that are not always needed or apparent in times of prosperity. British business has a proud record of strength, resilience and ingenuity, even in the most difficult of times and Maven’s portfolio companies are amongst those rising to the challenge.