Finding That Next New Market: Sometimes You Need to Hit the Road to Remove your Blind Spots

Mini Cooper

It happens in every firm: the core product saturates its main market and top-line growth stagnates.  Margins come under pressure next, and unless investments are made to seek new markets, the firm will inevitably decline.

It was a lesson I learned well early in my career.  I was part of an industrial telecom group that had built a market leadership position in high-power radio equipment.  We had decades of experience and were the market pace setters in the US.  

The product team decided that an entrance to the Western European market was the next logical step.  This was well before the EU agreement, so each of the major countries had their own version of the FCC, along with their own unique standards for all the major parameters of radio performance.  

We got to work on a big white board and developed an amazing matrix of requirements, such as power levels, channel spacing and sideband radiation.  We burned the midnight oil designing a modular product that could do it all – and could be built in one factory.

Ultimately, we built and released what we knew would be a category killer for a new product for our international distribution team and their partners.  

And it was a flop.

Needless to say, the product team was surprised, even though it shouldn’t have been.  After all, we made all the classic mistakes.

  1. We solved what we knew how to solve.  We had arguably the best control and RF designers in the world at that point, armed with the best design tools. Having this kind of internally-perceived advantage can be blinding and absorb attention that would be better spent on areas that the customer really values.
  2. We presumed, from our extensive North American experience that we knew what was most important.  We had countless installs and big systems under out belt and had gathered feedback from thousands of clients.  We thought we knew what installers needed.
  3. We forgot the fundamental tenet that all business is local.  We assumed that our global brand would get us in the door, and that any “rough edges” would be easily overcome by our top class sales team.

In geeky consulting language, we had a bad case of confirmation bias that was based on the wrong information.

What we Learned

With our anemic launch, we knew drastic action was needed.  In a scene reminiscent of the 1990 United Airlines commercial where the boss sends the whole team out, we all put together a plan to go and see the customers, installers and channel partners.  

As the mechanical architect, what followed was one of the most intense and memorable periods of my life, traveling from radio site to radio site in a Mini Cooper with a field engineer.  We visited sites in both the country and cities – and in the process, I got an earful from our field team, their partners, the site leasing agents, and the end customers.

The View from Their Side

  1. That fancy ability to build the radio in a modular fashion had created a nightmare when it came to creating an order.  The complexity created confusion for both the client and sales, and honestly when I was “presented” with the forms in one memorable meeting, I didn’t even know what all the options meant.
  2. What we thought was creative in terms of rack structure and cabling made the field installers job doubly hard.  We sent a pile of boxes, cable kits and multiple install instructions, with no guidance on how it was to be integrated.  No one installation matched the others, and the field team was burning valuable time that they didn’t have.
  3. Our “rugged” design was taken as overkill and wasteful by the local teams that valued efficiency.  
  4. Rack space was at an absolute premium, and our products took up twice the space of the competition for the same functionality.  Since site space was billed both by antenna height and space consumed, this was a big deal.
  5. The temperature ranges of the sites varied greatly by country, and they were all used to having only the cooling they needed for their climate zone.

So, 24 months later, we had resolved all of the above issues and had our category-winning products.  In a surprise payoff, the US-based products had a boost as well, since we were able to market new, more efficient product lines.

The Application for You and Your Team

The insights learned from that experience led me to build a four-point checklist for helping clients find great adjacent markets.

  1. Do the internal homework.  Use someone to help you get a really objective view of your strengths and blind spots (and blinding strengths from above) vis a vis a new potential market.  This should include insight into which viewpoints are so baked into the firm that we apply them whether they are helpful or not.  This might be things like high quality standards, or manufacturing skills like I described above.
  2. Get to the actual sites where the product or service will be used.  There is no substitute for on-the-ground observation and dialogue by a skilled practitioner.  When you learn of the specific problems encountered by people on a day-to-day basis, you are building the real intellectual property of the product.  Even simple things like local language instructions were a huge step forward.
  3. Integrate these insights.   There are lots of great tools (House of Quality, DMAIC, etc) that can assist you in making tradeoff decisions, but keep the main thing that each element of the design needs to add traceable value to the end customer.  
  4. Finally, I am a big fan of the layered launch strategy. This is where you segment your launch plan either by geography, application or price tier and allow for a learning cycle before committing to the full global footprint.  There are innumerable small cultural items that will come up even with the best pre-work.

Doing quality work in adjacencies and new markets is harder than it appears at the outset.  The momentum and decision making engines of your current firm will resist your efforts to do the deep learning needed to launch effectively, and a second pass is very expensive. We were able to get away with it because of our deep pockets, but in these days of much slimmer balance sheets, you need to get it right early.

If you’d like to talk more about how to do this in your own firm, drop me a line at scott@scottpropp.com, give me a call at 847-651-1014 or click here to set up a no-strings-attached, 20-minute phone call.

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