Key points in launching a new digital business

The use of new digital technologies has become a prerequisite for many new businesses of major companies across all industry sectors. These technologies, such as SaaS tools, enable companies to build operations quickly and cost-effectively. They also help create better experiences for end users, including business partners and consumers. New technologies, such as AI/machine learning-based health checks and blockchain-based overseas remittances that are secure and can be implemented in a short period of time, are creating experiences and services that were not possible before. New technologies continue to create experiences and services that could not be realized in the past.

In addition, with the spread of mobile devices, it is becoming commonplace for people to first become aware of new services, products, and brands through online services such as SNS and video sites, rather than through real media or advertisements such as TV commercials. Users often form different impressions of the same product, service, or brand depending on whether they encounter it through real contact points (like stores or face-to-face interactions) or digital contact points (such as smartphones or PCs). Even when the same message and creative are used across both channels, the user response can vary significantly. In fact, even with the same product lineup, it is common for the best-selling products in real stores to not match the sales rankings on the e-commerce site.

Even for large traditional companies that have developed their business mainly through traditional real channels, digital channels, whether B2C or B2B, can be the first place for brand recognition of products and services, or an opportunity for real channel usage to be done through digital channels (e.g. BOPIS: Buy Online Pick Up In Store (BOPIS: Buy Online Pick Up In Store, a service in which customers receive products purchased on an e-commerce site at a storefront). Against this backdrop, we will introduce some points of focus that can serve as a guideline when planning a new business based on digital services.

What are the digital natives in your target market?

Digital natives are defined as "customers who tend to actively gather information using relatively new digital tools and have the ability to transmit information" in the target market. For example, in the consumer market, the use of mobile apps and payments are commonplace, so it is not an activity that is unique to digital natives in that market, but in the traditional manufacturing industry, companies and businesses that use mobile apps such as DocuSign for contract procedures in order to receive and place orders for purchase transactions are considered digital natives. However, the number of companies and businesspersons who use mobile apps such as DocuSign for contract processing in the traditional manufacturing industry is quite small at this point, so it can be said that they are digital natives in the target market. These customers are not only active users of new technological tools and digital services, but also have a high ability to communicate information to the surrounding community, making it easy to test initial hypotheses for new businesses and services without special marketing research or promotions. This tends to make it easier to test initial hypotheses for new businesses and services without having to conduct special marketing research or promotions. When considering a new business for a major company, it is often the case that customers with a large share of sales, such as existing customers, are prioritized as initial customers. Market strategy. We recommend focusing on gathering information and planning from the perspective of "digital natives" during the initial research stage. This approach, unencumbered by existing transactions or products, can easily lead to innovative ideas. It's one of the key considerations we emphasize for effective market research.

What are the customers and applications where the target technology can provide the most benefit?

When considering a use case for a new technology or tool, it is important to consider who the target customers are and which means can provide the greatest benefits compared to conventional means in any industry or market. Naturally, if you are aiming to create a new market, you will be required to solve a problem or provide a gain, so it is useful to expand the scope of your business idea from the perspective of the maximum benefit that can be realized, rather than just solving problems or making improvements as an extension of conventional operations or lifestyles. For example, if there is a technology that can measure body temperature simply by pointing a camera at it through image analysis using machine learning, many business ideas can be considered for this alone. The concept of replacing traditional thermometers is relatively easy to envision. However, providing customers with a benefit that can overcome the long history and trusted familiarity of physical temperature-taking is challenging. This remains true even if the new method offers statistically superior speed and accuracy. On the other hand, there may be some problems with accuracy. On the other hand, even if there are some accuracy problems, there may be demand for a service that can semi-automatically monitor body temperature at a fixed point to estimate women's menstrual cycles or to watch over children and the elderly. It could also become a means of managing the physical condition of employees working in factories and power plants. From a slightly different perspective, technology that can measure the body temperature of a group of people with a camera could have unexpected applications and needs as a means of understanding the state of excitement at live concerts and sports stadiums. These are just examples, but there is a high possibility that market opportunities for similar technologies will differ greatly depending on their applications and customers.

What is the most appropriate market selection at this time?

Even if you have verified that there is customer demand for your new technology-based service, the timing of your market entry can affect the speed of growth of your business and service. For example, for a start-up company, the timing of market entry is more obvious and affects the success or failure of the business, since the ease of attracting funding and human resources depends on the trends of the time. For example, Gartner's Hype Cycle of Technology maps specific technologies by dividing them into the following phases: 1. early days, 2. peak, 3. disillusionment, 4. enlightenment, and 5. stable. Identity, etc. have reached their peak and are expected to enter a period of disillusionment¹. Even for the same technology in its infancy and peak phases, the impression from both inside and outside the company will differ, and the cost of explaining the technology to those involved will also be affected, which can make a big difference just in terms of the ease of securing business resources. In addition, in the digital-related business domain, it is not uncommon for the competitive environment of the business to be very different today than it was several years ago, as assumptions about the makeup of the major players and the ROI of online marketing can change over the years. When actually starting a business, there are many opportunities to be asked to explain to internal and external stakeholders why this service should be started now, so it is important to have at least a few assumptions about when the appropriate time to enter the market is. In terms of market timing, the four perspectives of PEST analysis (Political, Economic, Socio-cultural, and Technological) can be useful in organizing initial thinking.

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Conclusion

Although this article focuses on the focus of new digital-related businesses, the above points are also important for "digital transformation," which is aimed at transforming existing businesses. In both new businesses and digital transformation of existing businesses, it is ideal to release products and services in a short period of time, and to verify and discover business ideas by meeting with customers. However, it is not uncommon for a major company to take years to release a single business or project, and even PoC projects can be large-scale with many people involved, making it difficult to test hypotheses in a short cycle like a startup. We hope that this article will be of some help to those who are considering and promoting projects in such an environment.