I’m working with a firm that has been in a single, vertically integrated business for a very long time. They have been quite successful and have been a participant who has been able to build share by consolidating their current market via tuck under acquisitions.
This has left them in what would seem to be an enviable position – they have a strong balance sheet and good prospects for in-market strength. So, yes they are doing well. However to truly kill it – that is to create exponential value – they need to be able to get more than the sum of the parts they integrated. What they really need, is to develop new value out of the pieces they already have.
The next frontier for them is to find value that lies in the market, but between their current offerings – something I call interstitial value. Needless to say, this is a hard shift for my client. She is moving from a space where she has deep expertise into a new zone where there seems to be an unlimited number of paths forward.
The payoff for getting this right will be strong bottom line growth and what comes with it: an even stronger balance sheet, more opportunities for internal leaders to grow, and room for lots of expanded roles for staff. This will trickle through to have a stronger impact on their communities, partners and clients.
Get it wrong, and stagnation is just around the corner. There are many firms who camp out on their historic wins, only to find smaller, more focused competitors sniping out key clients.
So Just How Does She Proceed?
There is a lot to this, and it requires really intentional focus and research. It also demands true discernment by the product and distribution teams to avoid building what they think the new customer needs instead of doing the deeper work of determining what they truly want (and many times can’t directly articulate).
Let me offer a few tips on how to do this journey well.
#1: Be Curious
Personnel from an existing business are coming from a place of deep competence and parachuting into a land that appears at first without structure and boundaries. Getting them through the overwhelm to see the opportunity is best done by leading with curiosity.
Once reframed, you find this is an amazing time that has significant value, as you are clear eyed and without many biases of those already in the niche. Value can be developed simply by asking questions and connecting what you learn into your map of the client needs. The most important part is to stay curious and be willing to take some risks by asking questions that may or may not take you down a road (and I’ll suggest some questions in the next couple of sections).
#2: Gather as Much Data as You Can – Quickly
Get ahold of everything that you can. Are there external analysts in the space? What about competition – who and how many? What is the history of this category? Are there substitutes from another category? What job is the client hiring you to do? How has it shifted from the time of the first offering? Are prices steady, increasing or under pressure? How are other players in the value chain doing? Keep a notebook to highlight and consolidate learning.
#3: Develop a Map
When you are on your learning journey, take time to consolidate your work and make sketches. What exactly are the specific jobs being done for the client (yes there are usually more than one)? What is the basis for competition? What is the technology of the product and how does it come together? What is the distribution pathway and how does it get consolidated or split as it moves toward the end user? What are the key events in building value into the product?
#4: Learn the Constraints
Even though it seems like this new world is completely without limits, there are always constraints. Find out where they are. Good candidates are:
- Expertise (talent, know how)
- Economic limits (price, capital equipment, liability)
- Limited geography or market (international regulations, tariffs, regulatory agencies)
- Intellectual property boundaries (patents, trade secrets)
- Manufacturing process limits
#5: Take a Field Trip
Go to the point of use of the product. If it’s a consumer item, go to the point of sale. Then take note of its positioning: is it in a high-traffic location, or tucked into the back? Does it take some expertise to sell it?
Now that you’ve got this data, you need to use a framework that allows you to develop a strong hypothesis and built out a truly new, well-conceived offering. I’ve been using the STRIDE process (see more here, here and here) to help clients hold the creative work (Strategy Tactics & Reality), in balance with the scaling efforts (Integrate, Deploy and Extend). STRIDE allows the firm to use the strength of the scientific method with lean techniques to develop extremely robust approaches to new spaces that are anchored in their core competencies.
Leading growth in a new space is like a good conversation with a new contact. First you meet, then seek some areas of commonality. Once you find a connection, that’s when the real fun begins. You can speed this up significantly by working from frameworks. I use a number of them in my consulting practice that may be useful to you – I’d encourage you to reach out if you’re interested.
Please call me at 847-651-1014 or use this link to set up a 20-minute dialogue with me directly in my calendar. Thank you.
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