oil industry | Human-Centered Change and Innovation

Take a Tip from the Oil Industry

Strategizing Execution

GUEST POST from Geoffrey A. Moore

When it comes to executing any market development playbook, the work should be organized around the same checklist of factors that structured our earlier blog on marketing strategy. Here is the overall framework to keep in mind:

The first four focus on constructing the ROI engine, the second four, on activating it. Or, to use the parlance of the oil industry, the first four represent the upstream work that locates and extracts the trapped value of an oil reservoir. This is the work of product management. The second four represent the downstream work of refining, distributing, and monetizing the end product. This is the work of product marketing. Both functions should report to a product line manager to ensure that end-to-end coordination is maintained throughout.

When a category is working its way through the Technology Adoption Life Cycle, the roles of the product manager and the product marketing manager change dramatically at each stage. In the early market, neither function has yet been staffed, as it is simply too early to organize for scaled deployment, but for the following three phases of the bowling alley, the tornado, and Main Street, these two functions lead the charge.

For the upstream product manager, here’s how the market development playbook evolves:

In the bowling alley, as we discussed at length in the earlier post on market power, the trapped value is due to a broken mission-critical process that needs substantial re-engineering only made possible by next-generation technology. The product manager needs to become an expert in this use case, and their role calls for them to both guide the product development roadmap and orchestrate the ecosystem to ensure the right partners show up at the right time.

In the tornado, trapped value has migrated from specific use cases to a whole host of potential applications. As a result, demand is widespread, infrastructure owners have budget for the new category and plan to spend it this year, and the goal is to win as much market share as one can. Product roadmaps are driven by feature competitions with others in category, and time to market with the next hot feature is the top concern. Partner recruitment now shifts to the sales side of the house where the goal is to win more market share by expanding distribution coverage beyond the limits of the direct sales force. The product manager supports this effort by driving a “partner-ready” track in the product development roadmap.

On Main Street, the “trapped value” is less like an oil reservoir and more like shale oil—it’s still there, but it is highly diffuse, collecting in small local pockets. Here the end user is in the best position to advocate for the improvements that would help most. Budgets are limited, however, so improvements need to be add-ons that are discretionary, ideally available through a digital-direct transaction.

Turning now to the downstream side of the market development checklist, here’s how the product marketing manager’s playbook evolves:

In the bowling alley, sales plays are consultative, organized around a diagnostic/prescriptive approach which the product marketing manager must continually update as more and more is learned about the problem process and how to fix it. The sales channel is direct, and the pricing is value-based, calibrated by the cost impact of not fixing the problem process. The offer competes with the status quo and the incumbent vendor who will push back with the best “good enough” response it can muster. The positioning has to make clear why that does not fill the bill and how the disruptive offer will take the problem off the table once and for all.

Inside the tornado, sales plays are competitive, organized around battle cards that are competitor-specific, which the product marketing manager must continually update to reflect the latest releases from the competition. Pricing is organized around company status in the market pecking order. Where there is proprietary technology involved, the gorilla sets the premium price for the category overall, chimps can set local pricing in their market segments if they are sufficiently differentiated to keep the gorilla out, and monkeys license or clone the gorilla technology and then compete on lowest price. Where there is no proprietary technology to create a barrier to entry, the same pecking order emerges, but it is much more fluid, meaning that it is much easier for a prince to depose a king than it is for a chimp to displace a gorilla. In all cases, competitions tend to get resolved via product versus product comparisons on features and benefits.

On Main Street, sales plays are transactional, ideally delivered through a digital self-service channel. Here the product marketing manager normally cannot rely on sending prospects to the corporate website—it is typically way too noisy a channel for this body of work—but instead either spin up a separate portal or work with a third-party digital distributor. Pricing and packaging matters a ton in any transactional business model, so the product marketing manager is responsible for frequent A/B testing or comparable experimentation on an ongoing basis. The competition is rarely direct—you are the incumbent vendor at this stage—but you must keep an eye out for the next-generation disruptor who sees your profit pool as a sitting duck. The more you can bolster your core offer with add-ons, the higher the switching costs for your end users, the less likely the challenger can penetrate your market.