The Technology Tipping Point
An opportunity or a threat?
Many of us talk about Tipping Points, but not everyone understands their significance. A tipping point can be both an opportunity for a business and a threat.
There are lots of definitions of “Tipping Points” but they all derive from the same origin. It’s the point at which a series of small changes or incidents becomes significant enough to cause a larger, more important change and often irreversible change.
For many industries, the first phase of technical tipping point has been reached. Consider banking where almost all key transactions used to occur in the bank but today, with an app, customers can handle most tasks without leaving their homes. In short, the tipping point was giving customers control of and visibility to their transactions. As more and more industries move in this direction, customers come to want and expect this type of control and visibility into their business transactions.
While a technological advance can trigger a tipping point, its effects can be accelerated by non-connected environmental or market changes. The shifts towards E-Commerce and Online Banking have been dramatically accelerated as the COVID Pandemic forced people to try new approaches.
Commercial Advantage in the TIC sector
Turning to the TIC sector, it is a matter of time before we will see the “first movers” gain significant commercial advantage with this type of three-tiered, customer focused business methods.
The first tier uses already in use secure software that can be managed by the TIC business, customers will be able to schedule their work based on their time needs associated with TIC business’s availability giving the customer knowledge and foresight into the actual work plan at the TIC business. This type of technology has been employed for many years in the hospitality industry for booking hotel rooms and reservations at restaurants. Customers see this as a significant change in business because they feel more in control of the business process. In addition, they can track the actual work product through its entire cycle.
In the second tier, technology is available to track the work completion process, output finalization and associated billing. This gives the customer the ability to have confidence their work is progressing and will fit into their own post processing workload and financial planning.
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Finally, in the third tier, the TIC business can also tie together their billing and customer payment with work completion, as many businesses do currently, by doing so the benefit derived is better cash flow and fewer delinquent bill payments and associated collection process.
Once these three tiers are in place, transactional costs are significantly lowered, accuracy is improved as is customer satisfaction. Additional advantages surface in the form of business capacity planning and operational efficiencies such that underutilized capacity can be prioritized for mining new prospects to enhance sales and business value.
As a TIC business there is clearly economic benefit or efficiency gains to be gained by implementing the three tiers in this example, but the actual tipping point only occurs when more clients expect or demand this approach that increases their suppliers’ efficiencies, convenience, or costs
To be ready before any actual tipping point is the opportunity.
Clients are more likely to see your business as leading, forward thinking, and ready for the future. This perception will benefit the image of the whole business.
The threat is when businesses are having to play catch up having missed a tipping point. In those cases, the overall perception can be negatively impacted at best, or at worst the company can become irrelevant. To give an example, Kodak ignored the tipping point to digital photography, and their film / camera business is now dead.
It is always best to identify potential tipping points before they occur – that is the opportunity.
At Red Swan Partners our team have extensive experience from growing and selling their own businesses, being TIC corporate’s M&A executives, as well as working with a wide range of TIC business owners to support them in the development of their own exit strategy.
Red Swan are ready to assist in ensuring appropriate advanced planning to ensure a future successful exit and we are also ready to help you identify the ideal timing to avoid any negative impact on your business valuation.