The Zombie Planning Meeting: Stop Investing in Dead Ideas

Have you ever had déjà vu during a meeting while discussing an idea that you’re certain was dismissed last year, or the year before that? Yet here it is, still being discussed and maybe even invested in. Like the zombies in a bad horror movie, these ideas just keep coming back, undead, to hunt you down.

Good strategy in the B2B world is about choice, and that means not doing some things that sound good. Yet even companies that achieve strategic focus on paper have difficulty making it stick. Old strategic ideas may be pushed underground for a while, but they continue to come back.

One of my clients recently realized through their strategic-planning process that they were allocating their precious R&D budget by giving $10-20,000 to every scientific research project that asked for funding. While harmless on an individual level, this practice meant that they were spending millions total on projects that would likely never amount to anything instead of focusing their investment on the projects with the most potential and highest probability for a payback. The conclusion was that they really needed to invest a healthy amount in just one or two areas if they wanted any chance of discovering something groundbreaking. We went through a long process to choose which projects to focus on, and actually built consensus on a set of priorities. Sadly, however, in the end they didn’t want to give up doing those smaller, $10k projects. It was too threatening, and it will probably hold them back.

Choice is hard. In many companies, compromise is the norm. People who take extreme positions risk being shunned. In addition, choice is risky. Betting on just a couple of technologies increases the chance that none will succeed, and you’ll be left in a sorry competitive position. Lastly, choice, like the kind we are describing, is counter to the organizational incentives that many B2B companies put in place. For example, if my job title is product line manager, how likely am I to suggest that we stop investing in my product line?

Understanding these factors and addressing them is key to the success of any strategic initiative. Socializing risk rather than just hoping for changes in individual behavior is often a good place to start. This starts with making strategic choices publicly and transparently, and separating them from the individuals involved.

Are you under attack by zombie strategies? If so, you may need to do a better job of communicating your desired strategic focus and understanding how your organization will respond.

Have you been attacked by zombie projects that should have been killed long ago? Seen projects with great potential die due to under-funding? Share your stories and thoughts in the comments section. 

The Hidden Cost of Office Printing and Scanning: The Nuance Story

Content marketing is an integral piece of today’s B2B marketing approach. However, pushing out content just to prove you have a content marketing strategy rarely generates meaningful results. To be meaningful, you have to help buyers realize why they should work with you. One of my clients, Nuance, does this by showing prospects how much the status quo is costing them.

Background

Nuance’s document workflow and automation tools deliver measurable productivity and reduce costs by streamlining how people create, share, store, and use office documents. However, many prospects in Nuance’s target vertical markets such as legal, finance, government, construction, education, and insurance are unaware of their true cost of lost productivity and unnecessary expenditures.

Hidden Costs

Gartner’s study, “Why You Should Manage Your Office Printing,” called office printing “an unexploited savings opportunity” and pointed out that companies can reduce office printing spending by 10% to 30% “through active management.”

Even if you don’t happen to be an expert in print-and-document management, which I’m sure most readers aren’t, it’s not difficult to imagine benefits such as:

  • Less time wasted by employees,
  • Better optimized printer fleet,
  • Less maintenance,
  • Decrease in help-desk calls,
  • Reduced consumption of supplies.

We decided that if we could help Nuance communicate these opportunities, then Nuance’s value would be more tangible and real to prospects.

Value-Based Positioning

Our approach was to create a value calculator that provides prospects with a cost breakdown and savings summary of using Nuance’s print management and document scanning and conversion solutions. Users can enter their own data or use the pre-populated data to estimate cost savings in categories. These would include, for example:

  • IT labor,
  • Office worker labor,
  • Office supplies,
  • Document storage,
  • Hardware.

Once buyers realize how much they can save — and where the savings come from — Nuance sales reps can have a useful dialog with prospects about value. Another benefit is that prospective buyers can generate a business case to support the need for Nuance’s solutions. This is also a point made in the Gartner study, and one we at Stratavant have articulated for years: a great antidote to buyer inaction is to give buyers the economic reason to make a change. Armed with a compelling business case, buyers can justify the value of your solution and help them realize why they should work with you.

Stratavant tools can be used to quantify the value of your solution and capture more leads. How do you communicate the value your solution? Leave your thoughts in the comments section or email me at dsvigel@stratavant.com.

Market Sizing – Is it as simple as buying an analyst report?

All too often when working with clients, I hear the question asked, “What’s the size of the market?” That’s a question that analyst firms love to hear because they can sell the answer to whomever is asking the question. However, proper market sizing goes much deeper than what a typical analyst firm can answer, and is much more about relative size than precision.  A project team that I was working with a while back gave a presentation to their Executive VP about investing in a new opportunity. The company was not currently in this particular market and the team was asking for investment dollars to go after a market that they estimated to be between $5B and $6B. The executive asked the team “Well, which is it?” The bewildered team asked, “Which is what?” The executive replied, “Is it $5B or $6B?” The team replied, “We don’t know precisely, but we are confident that it is in that range.” At which time the executive sent the team away to do more research because, as she said: “If you don’t know the market better than that, we shouldn’t be investing.”

Obviously the executive was asking the wrong question. The decision to invest didn’t depend on whether the market was $5B or $6B. In their case, the answer was the same if the market was $5B or $6B, but the right questions would have been:

  1. “Why do we think that we can win in this market?”
  2. “What do we have that will be unique or different from others in this market?”
  3. “Is there a segment of this market where we believe we will have a stronger value proposition?”
  4. “How can we make money in this market?”

The first step people often take when sizing a potential market is to buy an analyst report. They figure that, with just a few mouse clicks, they can find out market size and growth rate with good precision. Easy, right?

Sure, getting the report is easy. And while analyst firms serve a very useful function, the truth is that their reports have some inherent limitations. For the purpose of looking at the potential size of a target market, analyst reports should be only one source of information.

Why is that? For starters, an analyst firm will almost always define a market based on the product or service to be provided. In other words, they will scan the market for existing indications that customers could use or would want your product. What they won’t uncover is indications that don’t yet exist.  They also don’t address the size of the problem being solved.

At a typical analyst firm, a junior analyst will collect information about the market by calling the competitors in the market. The competitors will provide some form of information based on how they want to be perceived, but typically not actual results (unless of course that information is already publicly available). The analyst will then use that historical data, based upon the questionable responses from the vendors, to project forward the market’s growth rate.

The data will also only take into account customers that have actually bought the product or service, not those that have chosen (either knowingly or unknowingly) to not buy nor those that have chosen to solve the problem in a different way. This omission alone could cause the analyst firm to grossly underestimate the potential market size. The market size will also be based upon the current pricing for the offering in the market, again another faux pas. However, the size and growth rate will be reported with great precision and authority, so we feel good about the answer.

Thus you end up:

  • Taking advice from someone who doesn’t know your market as well as you do (hopefully) …
  • Collecting potentially unreliable data from unreliable and/or partially informed sources …
  • Focusing only on established market needs and potentially missing hidden opportunities …
  • Projecting the growth of the current market based only on historical trends …

Other than that, analyst reports are perfect!

All sarcasm aside, analyst reports do provide a good indication of the current market conditions and the competitive landscape. They can also help you understand what’s likely to happen, given no other changes. Provided you understand the limitations, they are a good source of information about the current market and current trends. However, I encourage you not to stop there. Press forward and ask the right questions.

What value do you find in analyst reports? Have they helped you size market potential? Have you seen market sizing exercises go bad? Share your thoughts in the comments. 

Find New Growth Opportunities by Expanding Your Market Definition

If you’re trying to find new opportunities in a market, it doesn’t necessarily mean you have to expand your product line. First expand your perspective. Why do I say this? To paraphrase Harvard marketing professor Theodore Levitt, people don’t want to buy a quarter-inch drill bit. They want a quarter-inch hole. In other words, look at the market from the perspective of the problem that you solve.

In other words, if you’re looking for opportunities for growth, don’t limit your thinking by looking just for people who want drill bits. Look for people who need to find ways to make holes. A potential buyer might find any number of options: hammer and nail, a neighbor’s drill, a contractor, a laser cutter, a CNC machine — even dynamite (if he doesn’t care about the precision of the hole). If you limit your understanding of your market to a product definition, you miss out on many alternatives to solving the customer’s problem.

Invariably, however, markets continue to be organized by the product or service being sold. Again, that’s because many sellers and marketers accept the premise that a market is specific to a good or service. If you define your market this way, you’ll frequently miss all kinds of potential customers, including those who

  • Aren’t aware that a solution exists, or didn’t even realize that they have a problem.
  • Don’t have access to buy the solution because there isn’t a developed channel to serve them.
  • Are currently unable to use the solution because they are missing other elements required to solve the problem.
  • Currently won’t buy because the solution lacks benefits for their situation.
  • Currently won’t buy because the solution is too expensive for their situation.

I use the word “solution” on purpose, because it highlights the fact that there was a problem being solved. In one of my recent blog posts, A Tale of Finding New Profitable Growth Opportunities, I discussed how Apple found opportunity in the MP3 market when everyone else was struggling. Back then, I think it’s likely that Apple wouldn’t have defined this market as the “MP3 Market.” Instead, they probably would have defined the market as something along the lines of “anyone who wants music to be portable, legal, easy to access, and fun.” That isn’t a product view of the world; it’s a view of a problem being solved.

It’s not always easy to find new opportunities for market growth, but it helps if you look for potential from both a smaller and larger market perspective. The smaller market definition is your core. The larger market definition shows where there is room for growth and where you should be looking to expand.

When looking for new market opportunities, there are many dimensions that you can consider, but these three questions often prove helpful:

One: Who do we serve? Possibilities include:

  • Industries
  • Geographies
  • End-use applications

Two: What are we delivering?  Possibilities include:

  • Scope of supply An example of scope of supply would be you can make a sensor going into a pressure measurement device going into a pressure control loop going into a fuel control system, or you could make any of the larger portions of the system.
  • Problems you are solving

Three: How are we serving the customer (or getting paid)?

  • Payment model (paid an initial price, paid a price plus maintenance, paid as a service (SaaS)
  • Basis of payment (paid for delivery of a product, paid for delivery of a capability, paid for an outcome)

The diagram below shows an example of how a product company might be able to expand their market definition.

3d market model

Think about the market from your potential customers’ perspective. Then, define the market based on the problem that you’re solving. That will help you think about all the alternative ways to solve the problem, and it should help you to find new opportunities and identify potential competitive threats.