Five ways digital technologies are lowering barriers to entry

Who benefits from digital technologies is a subject of heated debate. Some will say it's the customers -- choice is more abundant then ever before (Uber? Lyft? Taxi? Car service? Getaround? Zipcar?). Other will say it's businesses, and point to the billion-dollar valuations unicorns are sporting.

Digital technologies, like mobile, cloud, social, and analytics, have become part of an ongoing evolution in how we interact with each other, with vendors, with partners. Overall, it's been an incredibly empowering sea-change, with much of "technology" demystified and made intuitive, freeing information from the confines of clunky interfaces.

Empowerment runs both ways

Once upon a time, a customer "belonged" to a business. They came to you with a need or a desire, and they asked what you had to address it. Did they need new shoes? You had brown and black lace-ups or loafers. Did they need a new computer? They could choose a desktop or a minitower. Did they want specific features in a new customer relationship management application suite? You would see what your engineers could do.

But today, the tables have turned, and the customer is an equal partner in every business relationship – or even a little more powerful. No longer are customers content to be treated like business opportunities or members of a “market”. Today, consumers have an expectation that the businesses they patronize are the guests in their lives rather than the other way around. They are not satisfied merely to be “invited in” to do business with you, because they want to do the inviting.

How did that happen? Digital technologies have fundamentally lowered the barriers to entering new business areas, which means more competition appears. Now customers do the choosing, and you're one of many options. And that means your challenge is to earn the invitation that you once just had to hand out. And your solutions have to be comprehensive and work with the others in your customers' lives. It's your job to fit into their ecosystem of vendors and providers.

Digital jiujitsu

But the same digital tools that gave rise to the empowered customer can also help businesses serve them. Just as it has never been easier to start a new business, it has also never been easier to transform existing businesses into digitally-driven, adaptive enterprises focused on customer needs.

This is due to the dramatic increase of computing power, coupled with the steep decline in computing prices, both predicted by Moore's Law. And at the same time, applications and systems moved from proprietary to open, essentially transforming the foundations of digital technologies into abundant, affordable commodities accessible to virtually any business of any size.

Five ways digital technologies are lowering the barriers to entry for new businesses

1. Deep knowledge is easier to acquire
   • Knowledge that you used to hire or purchase is also freely available. Blogs, accelerators, mentoring programs, meetups, and other educational opportunities, none of which existed just a few years ago, now exist online and everywhere business is done, allowing newcomers to tap into expert knowledge, and adopters of new tools and systems to self-train and get to work faster.
2. Distribution is democratized
   • Even sales, marketing, and customer relationship management tools, supporting virtually every market category, can be found free with little more than a web search.
   • Removal of intermediate distribution layers has made reaching consumers simpler, and provided a level playing field for upstarts both in the digital and the physical economies. For instance, Apple's AppStore has allowed software developers to sell virtually direct to end-customers. Amazon has done the same for sellers of physical products.
3. Production is more agile
   • Almost all software development, hardware design and modeling, and system integration tools used today are available as freeware, or shareware with a very modest cost.
   • Additionally, innovations such as 3D printing cut days, weeks, or months off cycles of new product prototyping, testing, and refinement.  (i.e., even physical things can be created, not just apps... we can add reference to shared fabrication places.
4. Setting up IT hardware and software is a snap
   • You don't need to buy software packages, seat licenses, or even computer hardware because almost anything you need can be found and based “in the cloud.”
   • Cheaper infrastructure makes business more affordable, and flexible infrastructure makes change faster and easier.
5. Capital is more freely available
   • A few days ago, the SEC announced its decision to bring non-accredited investors into the fold for equity crowdfunding. According to this Forbes article, this will have massive implications, allowing everyday citizens to invest in startups. This will further improve capital availability to early stage companies.

All in all, these developments have created a new business environment where meaningful connections with customers are easier to establish, nurture, and sustain. And that's what the excitement surrounding digital technologies is really all about: they create a new distribution of power among customers, established firms, and industry newcomers. No matter which one you are—or whether you're one to your customers and another to your suppliers—your digital technology adoption efforts should focus on ways to take advantage of these benefits rather than the solutions you choose to achieve them. Would love to hear your thoughts.