GUEST POST from Geoffrey A. Moore
As the global economy gropes its way to a new normal, with buyers still looking to regain their confidence to invest, most companies are dealing with sluggish performance—not terrible, but not great. In such circumstances, management attention gravitates to the Productivity Zone, where the focus is internal on ourselves, and the goal is to optimize our processes to prop up our operating margins. All good, but only half the solution.
The other half is to reengage with the Performance Zone. The goal of this zone is to not to improve–it is to win the game. There is no process for doing this (if there were, then Germany would win the World Cup every year), so internal focusing will not help. Instead, we need to reexamine our relationship with others, specifically with our customers and our competitors. Strategy begins, in other words, when we divert our attention from us and put it on them.
Investigating our Customers
In a doldrums economy, we know that existing budgets are tight, so if we are to find growth opportunities, we need to detect where new budgets are emerging. In other words, we are looking for forces at work in our target markets that are changing the investment priorities of our target customers. The key unit of examination here is the use case.
Use cases live at the intersection of our portfolio of offerings and customer value realization. We already have libraries of established use cases, but those are the ones that are under budget constraint. We are looking for emerging use cases, typically gnarly problems that are possible to solve with our stuff, but only with net new innovation and additional attention from us. Such use cases are at odds with our Productivity Zone focus on efficiency, but they are key to finding growth opportunities in trying times.
Each use case is a shorthand representation for a mini-TAM (Total Addressable Market). We are not looking for big here, we are looking for urgent. We want use cases that will activate customers to invest now, even when budgets are tight, keeping in mind that even the most highly focused use case with the smallest immediate TAM is normally a harbinger of bigger things to come. First-mover advantage in an emerging use case is like winning an early primary election—it is modestly valuable in itself, but even more so in terms of its impact on later competitions in bigger venues.
To detect these opportunities we need to interrogate our customer-facing teams in sales, solution engineering, and customer success to extract from them anecdotal evidence of novel use cases, regardless of who the vendor is. We also want to hear stories about customers struggling with problems that no one is solving. The question we are trying to answer is, what does the world really want from our company now? What would cause prospective customers to line up to spend money with us today?
To be sure, pursuing net new use cases requires investment at our end, and we too are under budget pressure, so there can be no “spray and pray” here. We need to stack rank whatever opportunities we detect on a risk/reward gradient and focus on the top one or two only, the limiting factor being that whatever we do fund must get “all the way to bright.” Adding even just one more opportunity than there is budget to fund results in all opportunities getting underfunded and nothing getting over the finish line. It is the most common cause of companies losing their way and drifting into irrelevance.
Learning from our Competitors
Here again we should divide up the landscape into legacy versus future competitors, as we will treat each differently. The legacy group are competing for the same constrained budgets as we are, using tactics we are now quite likely to be familiar with. This is the realm of execution, not strategy. It rewards campaigns led by the Productivity Zone focused on extracting the best returns we can from what is a low-yield, but also a low-risk, situation. Our customers are not going away, but they are going to sweat their assets and consolidate vendors wherever they can. Inertia here is our friend, and we need to leverage it as best we can by eliminating any sources of friction that would diminish our returns.
On the other hand, our future competitors do warrant strategic attention, for any number of reasons. For example, any recent wins they may have had could signal an emerging new use case, one that we too should be checking out. Alternatively, we may learn they are attacking our own target use case, in which case we need to differentiate quickly and dramatically in order to block them out early (a mini-TAM is too small for more than one winner). A third possibility is that we may be getting blindsided altogether, our installed base under some whole new form of attack, potentially jeopardizing the future of our entire franchise. It’s a wake-up call nobody likes to get, essentially forecasting an existential threat, but that is often what it takes to prod an established enterprise to adjust to a changing market landscape.
The standard unit of work for investigating future-oriented competition is the win/loss analysis. Again, we need to bring in the customer-facing teams to get their anecdotal evidence. Analyst reports don’t help much—they tend either to track us and our legacy competitors in established markets, or to glom onto the next potential disruptive technology and make extravagant extrapolations of its future returns. Instead, we want to look closely at the new use cases, regardless of whether we have won or lost, to see what the customer ended up prioritizing and why that drove their buying decision. As always, we prefer to win, but it is imperative regardless that we learn.
Changing the Narrative
Once we have focused on others, once we have revised our understanding of what the world wants from us, and who we are going to be competing with, we can now legitimately focus our attention on ourselves and our stakeholders. These include our installed base, our ecosystem partners, our investors, and our employee workforce. Our new strategy calls for a change in our course and speed, and we need everyone in our boat to row in the same direction. This can only happen if we change the narrative.
It is hard to overemphasize this point, so let me put it another way. If we do not change the narrative, nothing new will happen. No one will change course and speed. Even if we make clear the course corrections we are making, things still won’t change. That’s because everyone always assumes that things will be more or less the same, and that goes especially for established franchises. Getting stakeholders to turn a big boat requires a big signal.
The structure of the successful new narrative is always the same. It is never about you. Nobody cares about you (well, except your mom, of course, God bless her). Stakeholders have plenty on their own plates to worry about without taking on stuff on yours. What they do care about, on the other hand, is what is happening in their world, how it impinges on their hopes and plans, where it is creating risk for them, and what, if anything, you might be able to do to help them mitigate that risk. That’s what your new narrative must be all about. It’s a new you because it is a new world, and you are rising to meet the occasion. Not only does this change people’s focus, it energizes those whom it attracts, giving a real boost to the team at a time when everyone can use one.
That’s what I think. What do you think?
Image Credit: Unsplash
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