Why Is It Crucial to Build a Digital Venture Near Your Business Core?
If you have a legacy company and think that it's time to add digital product or transform your company digitally, or you are the tech person who creates the digital products this article is for you.
Let's imagine you own a company that produces materials for interior design. Your company has several departments, including:
Marketing team
Sales team
Manufacturing team
Design team
Legal team
Each team has a clear role: the marketing team searches for the perfect market fit, the sales team focuses on customers, the manufacturing team handles production (whether by machine or hand), and the design team creates innovative, beautiful, and distinctive designs.
Your company is doing well, with a strong market position and satisfied employees. However, over time, you’ve accumulated data from various sources. This data reveals:
After a certain item is sold (e.g., a designer table), users often search for dinnerware sets.
Before purchasing a particular item (e.g., a sofa), users frequently search for carpets.
You are familiar with local dishware and carpet sellers and producers.\
These insights present three potential opportunities for capitalization. However, each comes with its own set of challenges.
For instance, to produce and sell dinnerware sets with your tables, you would need to hire a ceramics team, create a workspace for them, manage their operations, and integrate the new products into your online shop. This requires creating separate marketing strategies and can be quite complex. Similar challenges exist for carpet production and sales.
Instead of expanding into these new product lines directly, let's discuss creating a digital venture, which doesn’t necessarily align with your core business. This approach requires an innovative mindset and can be the beginning of your company’s digital transformation.
As mentioned, there are local manufacturers and producers of the goods your customers seek before or after purchasing your items. If your business is customer-centric, you can leverage this data. You might identify that these local businesses lack a strong online presence or e-commerce platforms. By building an online store for them, you can monetize this data. However, you might lack the expertise or team to develop such a platform.
The first step is prioritizing this initiative. Once prioritized, you can start searching for a tech team with experience in building digital ventures. It’s not necessary to find a team with extensive digital transformation experience. Often, it’s better to have a team that grows with you through this process.
When the team is ready, you might feel it’s risky and fear financial loss. This is where having a team with a digital venture builder mindset is crucial. Such individuals know that you don’t need to start big. Begin by creating an illustrative MVP (Minimum Viable Product) to gather potential customer feedback with minimal budgeting.
If the feedback is positive, your dedicated team can green-light the project.
After the illustrative MVP is approved, you can proceed to build a functional MVP with minimal features to test the first version of the product and collect realistic data. If this data is promising, your team will approve it again. With this data, which includes customer feedback, you can make informed decisions on what to do next, whether it's iterating, adding or removing features, or adjusting your reach. This general process overview sets the stage for building the final product.
If you’re interested in more detailed steps, such as:
How to recruit the team
How to create a team of decision-makers within the company and why it’s important
How to define a shared vision
Tools for building MVPs
How to choose the right problem to solve
How to retrain your team
Let me know, and I can create a separate article covering these topics.
P.S.
Digital transformation can occur in many ways and doesn’t necessarily need to be close to your core business. All you need is the will to pursue it. So, have a great DX journey!