5 Reasons Your Market Is Bigger Than You Think
I wrote recently that originality is overrated, and that it’s a lot easier to be an innovator, making the wheel spin faster and with less friction, than it is to be an inventor trying to come up with the next great wheel.
I still believe that. But it’s even smarter to find someone else’s great idea, which has already demonstrated some success, and put your personal twist on it. No one thinks of this approach as “stealing” anymore. It’s just another form--like imitation--of financial flattery. Some of the smartest players have built entire businesses around systematizing this routine of rapid rip-offs to make sure that their competitive entries will win.
The guys at Rocket Internet, in Berlin, would probably claim to have invented this approach. They’ve been at it for many years, with great success. They’ve sold “clone” companies to eBay, Groupon, eHarmony, and more.
But when you look carefully at their strategy, you immediately see that they’ve focused almost entirely on one vector--geography--as the dimension along which they’ll launch their clones. If someone has a great U.S.-based business (like Groupon, for example, in the old days), these guys will build and launch a Groupon clone in their territory. Sure, they want their clone company to be a local success, but more than that, if they grow it fast enough, they want Groupon to come along and buy their business instead of launching a belated competitive entry into the space.
But when you “slide to the side,” and attack adjacent market opportunities, geography is only one of many possibilities. Each of many possible variables presents chances to build additional highly-successful versions of a core product or service. But very few businesses of any size or maturity do anything more than a cursory and sporadic examination of these kinds of prospects.
It’s fairly easy and straightforward, but you do have to commit to doing it. You also have to make sure that the entire management team buys into the process. That said, every single business will have expansion adjacencies along five basic vectors, including geography.
The first step is to understand the vectors and how they apply to your particular business. The five vectors, in the simplest form, are as follows:
Types and composition of customers and other purchasers
Second and third tier direct and derivative types of users
Demographic aggregations and other differentiated groups
Un-served or under-served populations
Product or service additions or extensions
Product mixes, packages or bundles, pricing and discount variances
New applications and uses - different degrees of utilization
New forms of access and slicing/dicing of offerings
New data products and solutions generated by core activities
Anywhere - geographic
Everywhere - global and ubiquitous
Mobile - remote - free of place or other restrictions
Changes in organization
Changes in delivery or service processes - Degrees of interaction
Networks and collaborative contributions and consumption
Changes in available and employed technologies
Changes in partners, vendors, agents, distributors
All the time
Persistent - without asking - location-based or triggered
I’m sure that within these generic buckets there are many additions, variations and other increments as well, but these five are a good start to kick off the investigation for any company. It’s far more important to get the process started than to wait for some “perfect” framework to be developed.
The second step is to determine whether and which of the identified opportunities are ripe in terms of your timing, your resources, the competing or conflicting internal opportunities, the external competitive considerations, and the relative value and potential contribution, and risks of each choice.
These considerations can also be readily organized into a basic time and action decision matrix.
WIN BIG MISSED OPPORTUNITY
(Right action, right time) (Right action, wrong time)
WASTED EFFORT LOSE BIG
(Wrong action, right time) (Wrong action, wrong time)
After these broad cuts are made, you can then weigh the relative impact of the other considerations listed above in reaching your final decisions.
HOWARD TULLMAN | Columnist
Howard Tullman is the CEO of 1871 in Chicago where, at the moment, 260 digital startups are building their businesses every day. He is also the general managing partner of G2T3V, LLC and Chicago High Tech Investors – both early-stage venture funds; a member of Mayor Emanuel’s ChicagoNEXT Innovation Council; and Governor Quinn’s Illinois Innovation Council. He is an adviser to many technology businesses and an adjunct professor at the Kellogg Graduate School of Management. @tullman