This is the first of a not-very-organized series of posts on two related subjects:
- What are the keys to success?
- Which efforts are (how) likely to be (how) successful?
Most of my posts can be said to touch on those areas, especially the latter one. But in this series I’ll try to be more direct about it.
Useful background may be found in:
- The strategic worksheet, perhaps my best-received post ever. Many companies and individuals tell me they have profited from working through it.
- The less well-known execution worksheet that followed it.
- My recent post about kidding oneself, Pitfalls for Pollyannas.
For a new company in a new enterprise IT product category, the path to success may be oversimplified as:
- Achieve early/visionary/bleeding-edge adoption.
- Then achieve substantial adoption in several niches.
- And then achieve either substantial adoption in many niches or …
- … dominance in at least one niche.
I think both Geoffrey Moore and Clayton Christensen would support that general formulation, with differences including:
- Moore first gained fame by emphasizing that an opportunity is not a good one unless there’s a way to cross the chasm from the first of those stages to the second one, which he asserts is the hardest stage of the process.
- I see Christensen as more focused on the whys of niche success, while Moore is mainly concerned with the hows.
While this story is clearest in the new company/new category scenario, it also applies more broadly. If you’re considering a new product in an old company (and not just one that will appeal to your existing customer base), or a differentiated new entrant to an existing category, similar considerations apply.
With that as background, some of the key considerations that govern the quality of a market opportunity are:
- Is there an identifiable buying process for the new stuff? If there isn’t, all other considerations are moot.
- Will the new offering have high enough value to overcome buyer inertia? Note that inertia has at least four kinds of source:
- Total cost of adoption (TCO), real or imagined.
- Difficulty of adoption in ways beyond those that can be measured in cash cost; for example, internal corporate-politics battles.
- Fear, uncertainty and doubt (FUD) about whether the product lives up to its promises. FUD can be spread by rival vendors, or it can just grow organically; either way, fear is a powerful motivator.
- General lethargy.
- Will the new product also have high enough value versus competitive alternatives, recalling that competition can include efforts from all sorts of companies? In particular:
- How important are the product’s advantages?
- How important are its disadvantages?
- How sustainable are its advantages?
- How quickly and well can you close the gaps where it’s behind?
- How important are the sustainable parts of each contender’s advantages?
- Does the product do well on cool-vs.-weird tradeoffs? For example:
- Does it force unwelcome changes in how people work?
- Does it fly in the face of enterprise IT-strategy assumptions?
- Does it introduce welcome changes in how people work?
- Will enterprises think it moves them toward their strategic goals?
- Do people think it will be hot enough to look good on their resumes?
Further, since there surely will be favorable answers to these questions at some customer accounts, we have the crucial qualifiers:
- What is the magnitude of the opportunity (as measured in for example revenue) for which the answers are favorable …
- … assuming various levels of product completeness, where “product completeness” includes but is not limited to:
- Maturity — feature set, performance, etc.
- “Whole product” (another term popularized by Geoffrey Moore) — documentation, support, training, other services, partner ecosystem, etc.
- How long will those levels of completeness take to achieve (realistically!!!!), and what will competitors accomplish in the meantime?
Since I’m on record as believing that messaging is the core of strategy, you might think I believe that messaging plays into all this somewhere. You’d be very correct. For as noted above, it is important to persuade people that your offering is high-value, cool, not too weird, and sufficiently complete.
One last thing — these have all been general considerations. If you think there’s an opportunity out there, you also need to directly consider whether YOUR TEAM will be able to seize it. My thoughts on that final and critical issue start:
- High-end engineering skills (architecture, management, etc.) often draw on accumulated experience with similar technologies.
- Strategic marketing skills often draw on accumulated experience in similar markets.
- Sales skills often draw on accumulated experience with products at a similar level of maturity and customer impact.
- General entrepreneurial flair often transfers well from one kind of business to another.
The series so far
- This post
- 20th Century DBMS industry successes and failures
- 21st Century DBMS industry successes and failures
- Opportunities in data integration
- Should you start a tech company?