How re-inventing your business model can destabilise your competition and accelerate growth

In The Essential Entrepreneur, author Richard Turner lays out a step-by-step guide to growing a successful business, covering everything a business owner needs to navigate the challenges ahead.

In this extract, Turner shares strategies for using the market strength of existing competitors against them in order to accelerate the growth of your own business.

Being successful begins with looking for ways to change the way an industry operates. Without that, you’re just competing against established businesses on their playing field.

They already have the financial backing, customers, infrastructure, people and processes to defend their market share and will make it very difficult for you to compete as a startup unless you change the way the industry operates and make it difficult for them to manoeuvre and compete.

If you’re smart enough and nimble enough, you can literally use their market strength as a weakness, leveraging their inability to quickly change their business model to counter your new approach. Let me share some strategies I’ve used to gain a market advantage and accelerate growth in my own businesses.

Aligning to your customer

In our first business, Regency Food Services, my brother Greg and I realised that our business was operating as traditional distribution warehouses did, from early morning until mid-afternoon, yet the market we were servicing, being hospitality, was operating from lunchtime until late evening—almost opposite hours of the clock!

As a result, orders were largely left on answering machines well after our sales staff had gone home. Chefs, who generally ordered their nightly (large) orders to replenish the kitchen after their dinner service, were often tired and short-tempered and didn’t provide the best descriptions, and then weren’t available if we wanted to clarify their order in the morning. ‘Send me the usual brand I have’ or ‘you know what I want’ were among the vague descriptions given, resulting in wrong orders and expensive couriers, and of course it’s difficult to push customers to accept liability for any mistakes.

We came to the realisation that if we were going to service the hospitality industry successfully, we had to work the same hours they worked and actually talk to them with empathy and a focus on service.

We quickly set about creating the first 24-hour food service distribution operation in Australia, negotiating a key enterprise bargaining agreement (EBA) with our staff to enable them to work overnight.

We then recruited and trained tele-sales staff to work in three shifts, so we had staff available until 10 pm to call our customers for their orders after their dinner trade, enabling them to talk through and confirm every line.

Next we pushed the bleeding edge of the technology of the day to process batch-picking sheets for our warehouse from 10 pm to midnight, batch-picked the stock, with one sweep of the warehouse done for each truck, and then staged (prepared and sorted the stock) into reverse delivery order and loaded our trucks, using large telescopic loaders, enabling them to be on the road by 4 am.

This process provided a number of strategic market advantages to our company, including a significantly reduced number of costly errors.

We were the last to take personalised orders in the evening and the first on the road to deliver the next day. On the back of this initiative, the company grew very quickly and I clearly remember the call from the CEO of Qantas Flight Catering in January 1996 when we were awarded the food service supply contract for Qantas in South Australia, followed closely by another contract for the huge Olympic Dam mining operation soon after.

Think laterally

Another innovation was when the company laterally extended into hospitality staffing in 1996 with the creation of Regency Staffing. It was at a time when cafés were exploding across the hospitality scene and good staff, both front and back of house, were short in supply. Our food sales team were often being asked to sound out staff in other venues in a crude attempt by hospitality managers to try and poach staff if possible.

It became evident that an opportunity existed to establish a small hospitality staffing operation to assist in this area for an appropriate service fee, so we started putting our thoughts into developing a business even though we had no immediate experience in the field.

We spoke to a senior recruitment consultant, who was helping our business with our own recruitment at the time about the concept, and she agreed the opportunity was there and was willing to set up and operate the business for us. We developed a business plan and in no time Regency Staffing was underway and within a year had surpassed $1 million in revenue!

Not only was the service a benefit to our existing customers, but it also helped recruit many new customers to both businesses. In addition to the recruitment service itself, we also provided a labour hire service and a flexible workforce for many establishments that were experiencing changes in demand throughout the year. This enabled us to literally be the employer of hundreds of chefs and food and beverage staff who were placed in many large and progressive venues including Qantas flight catering.

A further ‘circular’ benefit from employing the chefs, in particular, who in most cases ordered the food, was their support for Regency Staffing and Regency Food Services for getting them jobs in these venues. So, in most cases, we were the immediate first choice for the venue’s food supply. A very entrepreneurial outcome for our business resulting in the combined companies being awarded the 1996 Ernst and Young Entrepreneur of the Year award for South Australia.

Be ahead of the game

My most recent business, ZEN Energy, landed in the incredibly challenging arena of pioneering the renewable energy industry in Australia. This was a market governed by very complex rules and regulations designed for fossil fuel generators and retailers together with incumbent operators, who were heavily vested in a very controlled market and were not prepared to let new technology entrants join in a hurry.

As ZEN transitioned from a solar energy business to incorporate leading energy storage technologies and later becoming a full energy generator and retailer, it was quickly heading into an area beyond my personal knowledge and experience. It became clear I was going to need to bring experts into the business to navigate this complex journey if the company was going to reach its full potential.

We needed the energy density that Li-ion battery storage technology promised with the application of the technology from residential to grid scale. This would be the enabler for large-scale renewables connected to the grid, balancing both voltage and frequency from the intermittent generation of solar and wind. Access to this technology came to us through our first investment by Raymond Spencer, a remarkable Australian entrepreneur, who was introduced to ZEN Energy as chair of the judging panel for the Ernst & Young Australian Entrepreneur of the Year award in 2010 when ZEN Energy won the Cleantech sector.

We leveraged the PR and media from this opportunity, but many regulatory hurdles made the progression and entry of grid-scale batteries into the Australian grid a very slow and painful exercise, and it was clear we needed influence to progress these required regulatory changes.

In 2015, Professor Ross Garnaut — Australia’s pre-eminent economics professor from the University of Melbourne, who was commissioned to undertake the 2008 and 2011 Garnaut Climate Change Review into the economic impact of climate change in Australia — decided it was time to play an active role in the transition of our energy system to renewables. This is when he was introduced to ZEN Energy.

The fit was right. ZEN needed the market influence that Ross could provide and together he and the company were able to commence its transition to an energy generator and retailer. Ross invested and became chairman and Raymond continued as deputy chair. The company was developing a formidable board and management team.

The next key piece to the jigsaw in rolling out large-scale renewable projects, including solar farms, wind farms and big batteries, was to have a key customer take the power and de-risk the huge financial outlay. For ZEN this came in the form of GFG Alliance.

The model GFG used in the UK to revive the traditional steel industry was to deploy large-scale renewables to significantly reduce the cost of electricity to their operations including hydro, wind, tidal and batteries. GFG made significant and successful investments in the renewable energy supply chain and had to do the same in Australia, recognising that when solar was added to that mix the cost reductions would be even higher, making the business in Australia globally competitive.

While negotiations were underway to acquire the steelworks, parallel talks were already in place with ZEN to put our companies together and replicate the UK model, as we had the people, technology and influence, and there was no point re-inventing the wheel.

In October 2017, ZEN Energy embarked on a merger with GFG Alliance, which acquired a 50.1 per cent majority shareholding in the company and rebranded itself as SIMEC Energy Australia to fit GFG’s global branding. It retained the ZEN Energy brand for its traditional residential and commercial businesses. The company’s vision was to create Australia’s first major clean energy generator, consumer and retailer — to not only supply GFG’s heavy energy-consuming steel and resource businesses with globally competitive clean electricity, but to build out enough generation to supply a significant segment of industrial and commercial Australia to meet the ambitions of the ZEN Energy board and to become Australia’s first major clean energy retailer.

Unfortunately, though, not all best-laid plans go exactly the way they were intended and re-invention was yet again necessary and strategically planned.

In early 2020, due to delays in the construction of key projects on the GFG side, the ZEN board moved towards a demerger with GFG, enabling ZEN to move forward independently with its plan to become one of Australia’s largest clean energy electricity retailers and to work towards becoming a full clean energy utility. This demerger was completed in September 2020 and the company is now one of the largest electricity retailers in Australia with its clean energy generating assets spread across the country.

This was a complex and disruptive journey that needed strategic investment by key people to be successful by re-inventing a company to now become a significant ‘new energy’ electricity retailer in Australia.

It’s a great example of identifying early on what journey you’re going on, how you’re going to disrupt a market and whether you have the skills to complete that journey — and if not, what skills and people you need to bring on board.

This is an edited extract from The Essential Entrepreneur by Richard Turner (Wiley, November 2022) RRP $29.99.