Volume 9, #4 June 2011
In a Survival State of Mind
Three Essentials for Stepping Into a New Market
By
Sheila Mello
A sudden storm, dense underbrush that obscures the trail, the unexpected appearance of large wildlife--any of these can turn a carefree outing into a fight for survival. The outcome might well hinge on your wilderness survival skills.
Most experts agree that physical survival requires three essentials: shelter, water, and food. The most important survival tool may not be any particular technique but rather the ability to remain calm and keep your priorities straight (For example, the web site Survival and Self Sufficiency encourages you not to worry too much about food initially, since you can last much longer without food than without shelter or water.)
For a company setting off into the vast wilderness of a new market, the stakes may not literally be life or death, but the consequences of not preparing in advance can indeed be dire. It pays to give some thought to the skills that will get you through the journey. Following are my three essentials for entering new markets.
1) PACKING YOUR BAG: DEFINING A PROCESS FOR STRATEGIC COMPATIBILITY
Before you begin, be clear about whether you're walking the Freedom Trail in Boston, hiking Half-Dome in Yosemite, or scaling the Matterhorn--and why. You know your current market. How does this new market relate? Is it adjacent, overlapping, or completely distinct? How big is it? How fast is it growing? What skill set is needed to serve it?
Answering these questions will clarify your mission. Perhaps you have already spent time defining your company's mission (as you well should, and not only in order to create a colorful poster to display in your lobby). What you're looking for here is not a company mission but a mission for the market expansion itself. Of course, this should emanate from your company mission but its purpose is to help define the boundaries of the new markets you seek to enter. Initially, you may not know all the answers or be absolutely clear. The process itself will yield invaluable information. The up-front strategic work of defining a mission pays off later when you need to make the inevitable trade-offs involved in development, saving you from wandering into--and potentially getting lost in--territory unrelated to your company's core work.
Consider the expansion of sound technology company Bose, which, according to its web site, "built its reputation creating high-performing audio products." In recent years it has moved beyond its stereophile roots to introduce products in the home entertainment, architecture, materials testing, and automotive markets. Each of these expansions built on the company's core competencies (it did not, for example, expand into consumer packaged goods). The Bose ElectroForce Systems Group, for example, grew out of the application of sound technology--a specialized moving-magnet linear motor for an experimental loudspeaker--to the materials testing market.
2) GETTING TO KNOW THE LOCALS: MAKING A DIRECT CONNECTION TO CUSTOMER NEED
A tourist often can get away with a phrase book and a charming smile. A company looking to serve a new customer base with a new product first must spend time living among the natives.
This is not the occasion to skimp or speed ahead. You might think you understand the new market because a few of your existing customers are also part of the new market or because your CEO had lunch with a potential customer. Not good enough. You need to conduct in-depth research, not only with current customers but also with potential customers and non-customers. You have to ask open-ended, probing questions so your research results in a crystal clear picture of what it's like to be a customer in the new market. Only then can you begin the process of defining the product you'll create.
You can take this even further by dividing your research subjects into two groups: those who might use your product and those who buy it. The goal of research with users is to understand what impedes them as they go about trying to get their jobs done every day. Is it slow computers? Tedious tracking procedures? Instrument knobs that are tough to turn? When you understand these intimate details, you'll be in a position to brainstorm solutions that solve real, rather than guessed-at, customer problems. And interviewing would-be buyers (if users and buyers are not one and the same) lets you figure out how purchasing your product might help them even if they don't use it directly, and thus tailor marketing to appeal to them.
This data will become part of a feedback loop that informs your definition of the mission. The boundaries of the new market may shift as you gather data about who comprises the market and what most irritates or impedes them at work or in life.
3) MEASURING WHAT MATTERS: CREATING METRICS FOR SUCCESS
In wilderness survival, there's really only one metric that counts: did you get out alive?
Entering a new market doesn't have such a single, clear-cut measure of success. Metrics often are little more than an afterthought in the product development process, or they are established by outside groups without an understanding of the goals of development. Furthermore, companies frequently use metrics that yield information only after it's too late to do anything! For example, measuring revenue or profit yields data only after you have earned--or lost--the money. Instead, aim to employ predictive metrics, which, when developed before development begins, help you adjust course long before you reach a crisis. (Read this past Discoveries article for ideas about helpful metrics.) And metrics such as those derived from Kano analysis can actually give you a way to quantify market need.
It's All in the Preparation
Your entry into a new market might be a walk in the park. But a sudden industry shakeup, a strategy obscured by confusing research data, or the unexpected appearance of a large competitor might make you very glad indeed that you've honed your survival skills in advance.
What do you consider essential tools to survive in a new market? E-mail and let us know.
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