Map your Way to Successful Partnerships

Using Market Maps to Identify Partnerships

Strategic partnerships provide companies with needed resources, expertise, and connections to thrive in today’s demanding and competitive business environment. Partnerships allow companies to focus on their core competencies while still providing comprehensive solutions. However, finding the right partners is difficult and extremely important. Market Opportunity Maps can help you uncover and determine which are the best potential partners for your business.

What is a Market Opportunity Map?

A market map is a structural representation of the market environment in which your product or service operates in.  A well-constructed market map can be insightful, flexible, and will serve many strategic needs. It can be utilized to develop product and portfolio strategy, competitive strategy, identifying partnership and acquisition candidates, and providing feature level customer insights.  In this example of a market opportunity map for Corporate Governance, there are two high-level tiers, Research & Advisory and Investment Tools and Data.  As the map moves to the right, to Tiers 3 and 4 it gets more and more specific at the feature level. 

The intention of a market opportunity map is to show the complete ecosystem that your product or service plays in, who is playing in each segment, and with what.  The job of the mapmaker is to capture the entire ecosystem and align these services, at the feature level, from one competitor to another.  In the language of the market map these are called Tiers. The typical market map has Four Tiers (above figure), each at an increasingly granular level and describing a more detailed classification of a product segment.

Market Opportunity Map for Partnerships

Using the Market Opportunity Map to generate partnership screening criteria is easy once the basic map is complete and competitors are mapped to it.  During the process of gathering information about the competitors’ products and services, we uncover information about competitors’ business models, sales channels, and customers.  In addition to the financial reasons to form a partnership the map allows you to look at synergistic attributes. We have identified five (field sales, client base, brand reputation, channels, and integration with existing products.

Once you have the Market Opportunity Map, partnership and/or acquisition candidate screening becomes easy to visualize. The first step is to identify the segments where a partner would help you grow. In this chart if you are weak in Research & Advisory and the market is trending toward that you now see which companies you might be able to approach or acquire and what you are getting. 

 Next, we use screening questions to do a first pass on the competitive list built into the map.  (Remember, all of this information was collected during the creation of the map.) These screening questions include:

1.      Does the target company play in the part of the market that is attractive?

2.      Is the target company aligned with the competitor’s vision and goes?

3.      Is the target company’s business model strong and sustainable?

4.      Do the target company’s customers overlap our competitor’s customers?

5.      How advanced are the target companies technologies, products and services?

The result is a matrix that weeds out companies not interesting in the first pass and adds in the added dimension of immediate or observable synergies. 

You now have a ranked list of which companies to approach and why.  The next step is some commercial due diligence. 

Market Opportunity is a Versatile Tool

The market map is a versatile tool and with the right collection of data will provide many answers to strategic questions you might have.  If you are interested in building a market map for your company message me through LinkedIn.  I’m happy to share other examples to help you construct your map.

Happy Mapping!

Can your new products be failing because of the team?

Some people just seem to be wired differently and when you put them together with other like-minded people great things seem to happen. There is a certain mindset that exists for successful individuals and teams that work on growth initiatives. We have all known people who were better at the front-end, those that have certain skills for putting the business case together and those that are king at execution. Have you ever wondered where you fall?

Research on employee characteristics suggests that:

1.  Employees that work on growth initiatives think and behave differently than others;

2.  Teams will fail if they don’t have the right mix of people that are like minded; and

3.  The culture of the company must support growth.

All three must be present to be successful. It may be all right to pick Jim from accounting to lead the growth project because Jim has been good with this or that. Only if Jim is wired for growth, has the right team around him and has the support from the company to execute will he be successful.

How do individuals fall?

We have found that employees fall into 4 categories.

1. Change Agents are good at the upfront design of growth. They are very strategic, process oriented individuals that know how to spot a trend and draw implications from the outside market to your business.
2. Growth Partners sit comfortably between the strategic thinkers and the doers. Great on a team and also as a team leader; they are easily able to do and delegate tasks. They know how to leverage resources to get the job done and are not afraid to make trade-off decisions throughout the project. They understand and see more than any other group, the “Big G” of growth and understand the implications to the business. If you are going to promote, this is the group to promote from. If you want a promotion try and be more like them.
3. Tactical Growth Agents are the doers but growth execution is not like other types of execution. Knowing how to do more with less without trading quality, features and functionality is the strength of this person.
4. Growth Contributors can be naysayers. They are great at managing status quo but are typically not wired for growth. But they play a vital role on the team, helping to mitigate risk and prioritize projects. Sorry for the over generalization but Operations and Financial employees typically fall here. If they fit within the dynamics of the team they can be very valuable.

The dynamics of the team are important.

Ever hear the saying, “a well-oiled machine”. Putting the right people together may be the most crucial step in growth. Our process helps us find clusters. That means, I might have the best person on an individual basis but they might not be the right person due to the makeup of the team. I’ve witnessed very capable people fail because the team is not like-minded. As the manager or team leader you will get more out of individuals, the team will be more motivated and will stay on track longer, if employees are similar in their makeup.

Are you truly supporting growth in your organization?

There is nothing worse in business than lip service, inability to decide, and giving responsibility without authority. The quickest way to destroy morale and stall growth is to operate like this. If you want to grow, support it and the people. I’m not saying give the team a blank check, but if the milestones are being met and the business rationale is sound and meets other corporate hurdles than don’t be wishy-washy.

So, what are you waiting for? If your team is struggling or you don’t know where to begin, start with an assessment of the players. When all the pieces are in place and working together it’s amazing what can be accomplished. 

For a free team assessment, please email me through LinkedIn. 

Map Your Way to Market Success

To successfully enter a new market, you need to understand the complex, competitive, and constantly changing market dynamics. It isn’t easy, as while there is a lot of data available, you need to uncover and decipher the right information. Market Maps are the perfect solution!

Mapping provides valuable insights

Market Maps provide the framework to collect the necessary data and conduct the analysis. Market Maps come in many different types (competitive, value, product, technology, positioning, partnerships & acquisition, etc.). The type of map you build is based on the questions you need answered. The key is to remember that you are analyzing the current competitors that play in and around your space to identify ways you can be more competitive. The completed map allows you to zoom in to view a specific competitor and to zoom out to determine ways to increase your competitiveness and create a Go-to-Market strategy.

Determine Customer/Product/Market Fit

One of the primary reasons company fail to get traction in a new market is the product isn’t the right fit for customers in the market. Market Maps solve this problem down to the feature level of products. Customers buy benefits to solve needs, and benefits come from features that were developed to satisfy the needs for a specific stakeholder. Those same features can then be positioned differently and can be compared against alternatives to develop a value proposition.

One of the most powerful frameworks we use to demonstrate how products fit with customers and how the product fits with the market. Most often we start by examining the product features demanded by customers and the market.

Be more competitive

Since the goal is to drive competitive thinking, we create a Market Map that includes current and future competitors. A Market Map gives you a Birdseye view of the ecosystem and competitors. The left-hand side of the map supports a feature hierarchy that will later be used to map companies that operate in this space. What you map is entirely based on what you are hoping to learn about the market. If we are interested in how to position the product, we look at how features are bundled and the added benefits from the bundle, which set of needs, are satisfied for a stakeholder group. If we are interested in technology we look at the underlying technology of each feature or set of features. The construction of the map is driven by the question or questions under review.

Enter Complex USA markets

Recently, we helped a European-based software company map the market for business software to identify opportunities and overcome obstacles. While they had many large corporate clients in Europe, they were struggling to penetrate the lucrative USA market.

We built a Market Map that primarily focused on product positioning. A dozen or so companies’ product features were evaluated. The output for this type of analysis is best shown graphically. Must-haves are defined as what the market has come to expect from these types of offerings. We develop the must-have list either through frequency analysis (how many other products have these features) or through primary customer research (what do customers expect and value). To the left are additional features that others are using to differentiate themselves and can become an opportunity for any company. 

The initial analysis showed that our client had built the right product, so why weren’t they successful selling. Interestingly, after some competitor intelligence we determined that others in the space weren’t that successful either. When we took the map out to potential customers we found something very interesting in the maturity of the market and how companies were positioning their offerings. Using the Market Map as our guide, we interviewed IT and end-users and found out where everyone was missing the mark.

Market Maps are a versatile tool

Market Maps are a highly productive way to collect and categorize competitor information. In our consulting work we have found that the construction of the market map provides insight to the market that our client’s rarely see. The map’s many uses provides another important benefit and that is the audit of intelligence and knowing where data came from and having the support to know why decisions were made. The ability to go back and update the Market Map makes it a dynamic tool that every CEO who wants to be competitive should require. 

Hurdles Startups can Avoid When Entering the USA Market

The decision to expand geographically is not one taken lightly by any company. When thinking about entering the US market companies should make this decision with a great deal of research and pre-work. To our surprise, the majority do not. Companies that are successful in their local foreign markets believe that similar buying behaviors exist with US customers. This puts the initial focus on sales activities. Instead of using the initial stage to prepare the company’s products and messaging for the US market customer, foreign companies are out trying to get customers to justify their decision to expand. For those that are lucky to get an initial customer signed up don’t be fooled, the second or third might not be that easy. 

To succeed in the US market puts you in an elite group because most companies coming to the US market fail or limp along before they pack up and head home. We have studied successful and unsuccessful attempts and have identified what it takes to be successful in the US market. If you are thinking about entering the US market, here ar some guidelines you might want to follow:

US market expansion is an artful mix of strategy and operations.  First, companies need to think strategically about why they are entering the US market. You need to think hard as a business, what is it about the US market that makes it attractive to your business now? This helps move the discussion to product / market fit and by analyzing the competition and where your product fits in the eco-system. Knowing this, companies can work on messaging and positioning. Two things to keep in mind as you begin the messaging and positioning stage, (1) it’s more likely than not that what you are trying to bring to the US is here or has been tried before, and (2) what you think is intended use will be bastardized as soon as customers start buying. It’s at this point that you are ready for active selling and foreign companies need to take a more systematic approach to how they approach these activities. It’s not hit or miss but rather a strategic attack on promising market segments. The initial days/weeks/months will tell you a lot about your ability to succeed and as a management team you should always be thinking about your strategy to grow, extend or exit. 

What we found in the work we do is that just having the strategy is not enough. There are five key operational areas that impact each of the five strategic areas and this is what separates success from failure. 

The first is hiring local talent or finding consultants with the knowledge to help at every stage. If you jump into the market with a “sales” only approach you will likely end up limping along without gaining any real traction. The marketing materials, product or service suite and approach to the market need to be reformatted to fit the US buyer.  Next, there needs to be an ongoing investment into the US business to support growth. Too many companies limit or believe that the operation should be self-funded. Not true in the beginning. Like any new business it needs the cash to be able to make the right decisions on growth. If you can’t make the investment you may have to think about another way to enter the market other than having a physical presence here. Third, measure everything across the strategic and operational spectrum. Put in place KPIs (Key Performance Indicators) to know when you are successful and when you are not. They key is to be honest with yourself and your team as you will live and die by the numbers in the early, interim and late stages.  Next, you need up-to-date tools and processes. These should be repeatable and easy to train others as you start to scale the business. Never miss the opportunity to document processes now and always be on the lookout for best practices. Finally, by building and understanding the eco-system your business operates in, will provide a unique view of opportunities for expansion organically and through partnerships, alliances, and even acquisitions. If you keep the analysis current it is easy to make decisions to grow, extend, or exit. 

The US is viewed as the most challenging foreign market to enter. With a little pre-planning and upfront work you can be successful here too. 

Context Matters for Startups

Industries have changed and the way products and services are developed and go to market have changed too.  Today, the startup operates in a world of uncertainty and speed.  Products are coming to market at a rapid pace, it’s no wonder why products are struggling. 

To succeed in this dynamic environment, new products need context.
Startups need to spend as much time understanding the problem they are trying to solve as building the product or service.  New product managers need to understand a potential customer's intent to buy before they commit to building or developing the product. Long gone are the days of "if you build it they will come".

How can startups take advantage of context? Context is the reason why we do anything.  Without context it is hard to know whether we are heading in the right direction and have been successful.  Lack of context has been cited as one of the reasons of wasted productivity and the biggest reason products miss the market.

There are four steps to increase context in your product design & launch. Each step builds on the prior one.

1) First, look at the problem holistically that your product solves.  A broader context will help focus the effort.  Take time to understand all customer segments and how different product features map to each segment.

2) Then validate the assumptions with customers.  Find a dozen companies in your target market to talk to. Be very specific about the potential target market early on and it will pay huge dividends later on. Often missed at this early stage are questions regarding willingness to purchase and price thresholds.

3) Next, segment the market by these different variables.  Segmenting the market this way can provide a useful method for prioritizing product features.  The right segmentation will provide insight into which markets to target and eventually how to position your product offering for these markets.

4)  Finally, plot the information on a value map to reinforce context.  The value map has five components: (1) features, (2) customer needs, (3) Benefits, (4) positioning, (5) and price and intent to buy. 

As you go through these four steps you will determine the value that customer’s place on the features you are developing and start to develop the positioning for each segment. 

It’s time to change the rules for how new products are developed & brought to market.  As a startup you should always strive for context and once you discover it use it as your guidepost to launch successful new products.

4 Ways to Use a Market Map

Tactical innovators assess their environment through the lens of a Market Map and listen to needs through the voice of the customer, enabling a proactive response to any market change.  I would argue that for every type of business, there are at least two paths to growth: (1) compete more effectively within existing segments or (2) identify new, high value segments where you can be successful.  Here are four ways a Market Map will support either approach to increase revenue.

1. The Market Map Drives Market Sizing and Segmentation

As you know from my most recent post (Market Maps = Better Product Decisions), the Market Map provides a structural view of the markets in which your products and services compete. This handy framework forces a logical assessment of the market informed by the various angles on which you compete.  This, in turn, drives detailed customer segmentation for each of those angles and once compiled, results in a market taxonomy that lends itself perfectly as the structure for bottoms-up market sizing.

1. The Market Map and Product Roadmap Go Hand-in-Hand

With a Market Map it’s easy to see where your competitors are concentrated and what solutions hold their focus.  Through this lens, gaps in your product portfolio will quickly become apparent.  A Market Map can serve as an excellent vehicle to either validate or help you fine-tune your product development roadmap. In other words, the Market Map helps you be confident that you have made the correct decisions about where to invest so that you can compete successfully in an existing segment or expand into new segments.

1. The Market Map is Your Guide to Competitors’ Moves

The Market Map provides a framework to gather and organize data to drive tactical decisions in response to actions taken by your competitors.  But do you truly understand the “why” behind these moves?  For example, if a competitor acquires another company in your space, can you easily determine what they may have gained from the new product set or technology platform?  Was the move motivated by the need to expand into a new part of the value-chain?  The Market Map will shed light on these questions and help you come up with the right response to any move a competitor takes.

1. The Market Map Uncovers Partners or Acquisition Targets

Building new products from scratch may not be the best path to rapid growth in today’s fast-paced business environment.  If acquisition or partnership is the answer, a well-constructed Market Map can narrow your search and highlight the best companies to consider.  In this case, one of our manufacturing clients was interested in a new opportunity segment and realized the best path to market entry was indeed an acquisition. Together, we developed a Market Map that provided an informed, customized acquisition-screening filter to identify companies to investigate further.

Now that we’ve covered just four of the practical applications of the Market Map, stay tuned for future posts that pair this useful framework with the Voice of the Customer.

Market Maps = Better Product Decision

Who doesn’t love a bird’s eye perspective?  Soaring high above the trees allows you to really see the landscape.  But how do you get that same bird’s eye view for your industry?  The answer, of course, is by constructing a market map.

The market map is a cornerstone of the tactical innovator’s tool kit and provides a structural view of the markets in which your products and services compete.  You will profile your competitors, catalog different products and platforms, segment buyers and users and evaluate channels, all in the name of supporting more informed product decisions.  A well-constructed market map helps you identify:

• Product segments that are ripe for expansion
• Emerging technologies that may pose a threat
• Capabilities and competencies that can be applied to other segments
• A broader view of competitive moves
• Existing business models (those that work, as well as those that do not)
• Market size and growth rates for each product segment
• Customer opportunities available now

There are many benefits to the detailed work that goes into the market map, not the least of which is that you now have a factual basis to make decisions about how and where to invest and what strategies to pursue to deliver near-term results.  The market map provides a way to assemble detailed information to support tactical decisions about how to respond to competitor’s moves.  In addition, the market map can serve as the starting point to identify the partner or acquisition targets that will help you enter or leverage a new opportunity segment.  The power of perspective as seen through a market map provides both a wider and more granular view of any industry in which you compete.  It’s a great way to ground your team – or your entire company – with an understanding of where you fit in the market and what your path forward should look like.

Stay tuned for my next tactical innovation post that expands on the powers of the market map and how this powerful tool can work hand-in-hand with your product road map.

Do your competitors' customers hold the key to your pricing strategy?

Setting the price is one of the more complex activities we undertake when launching a new product or service.  As a starting point to evaluate pricing, we tend to triangulate three variables: cost, competition (price), and contribution.  These three dimensions alone are not sufficient, however, and each by itself is limiting.  Product development & management research suggests that many companies struggle with pricing.  Even best-in-class companies are stuck in the 3-dimension mindset and once in the market, raising price is not easy.  Price, in fact, is a way to innovate and getting it right has never been more important.

But, we know there is a fourth dimension that informs value-based pricing and the truth lies in what customers are willing to pay.  Understanding your competitors’ customers will help you uncover answers to the following questions:

• If your product or service is superior to the competition and potential customers view it that way, can you charge a premium?
• Do you know where you stand, beyond price, relative to your competitors’ products?
• How are you positioned against alternatives and what other information might help you set the right price?

For years, companies have been telling us that they collect and monitor competitive pricing. When we review their data, it is usually public information available from published price sheets and their competitors’ websites.  Real competitive pricing is not being collected at the customer level.  If companies had the discipline to investigate what their competitors’ customers actually pay, they would find a treasure trove of information to validate the price/value mix and help inform other key marketing and product management decisions. How you collect this information ethically and where you start are two key questions every company should ask before beginning.  How you use this information is where the power lies.  Customers can value the benefits of a product or service subjectively and this may differ by company and sometimes even by the corporate purchaser.  Understanding how your competitors’ customers measure value and utility will provide you with insight to establish better pricing and promote your product or service to win deals and grow revenue.

What's more important in new product development, team or process?

As consultants to new product development teams, the interplay of team and process is a dynamic that we think about and research on a consistent basis. It’s long been thought that the right hire outweighs a standard process.   Smart, talented teams will always figure out how to make it happen. Right? What if we put the right processes in place and train everyone? That will give us the edge that we need. Maybe?

If I can paraphrase Peter Drucker, he talks about the discipline of managing people. He says that you don’t manage people, you lead people and make them productive by enhancing specific strengths and knowledge (Management Challenges for the 21st Century, 1999). He goes on to say that one (people or process) doesn’t determine the other, but shapes the other. 

I might conclude then, as managers, we lead people and manage a process and this is holds true for new product development. To gain some insight from today’s product leaders, product development & management research reveals some interesting findings that may help answer this question. Seven years of research highlights six key tenets that will have a measurable positive effect on the success of your new products.

SIX TENETS OF SUCCESSFUL NEW PRODUCTS

1. The right functions in the organization are required to support new products and the development process.
2. The right individuals who possess the necessary skills to be successful must be hired.
3. The right set of tools and training are necessary for individuals to be successful.
4. The right metrics must be set at the beginning of the project to gauge progress and measure success.
5. The right product teams, with complementary skill sets and similar work values, must be configured.
6. The right culture has to be supported by and driven from the top.

These tenets support another of my favorite Drucker aphorisms, “success is more likely to result from the systematic pursuit of opportunities than from a flash of genius.” (The Discipline of Innovation, 1985) Our clients see the benefits in increased productivity and effectiveness by subscribing to the six tenets of successful products everyday. What tenets does your product organization live by?

Tactical Innovation Starts Here

Innovation sessions can be a daunting exercise for any company. It can take months of preparation and planning, takes employees out of the field and can often be very disappointing when the event concludes, leaving you with lots of ideas but no clear way forward. We see a new wave coming and it’s centered on little "i" innovation, tactically focused and market-driven, as opposed to big “I” innovation that looks to transform your entire business or disrupt markets. Tactical innovation is frequently "event driven" innovation; changing regulations, budget shortfalls, new entrants, or emerging technologies may drive the need for a tactical innovation workshop.

What’s Different about a Tactical Innovation Workshop?

While innovation workshops are engaging when they are in full-session, after they are over and everyone returns to their day jobs, often no one gets assigned to bring prioritized ideas to the opportunity state. Here’s how a tactical innovation workshop is different:

• You are focused on a real problem, often caused by an event, that's staring you square in the face and demanding an answer.
• You work with a cross-functional team. Basically, anyone who will touch the new product (developers, sales people, product managers, even customers and vendors) should be involved, not just for brainstorming reasons but also for resource prioritization.
• You leverage existing capabilities or establish partnerships to fill in the gaps in your organizational competencies. Development time is accelerated and new products are launched quickly. There's a difference in timeframe with tactical innovation - you're in a race to market.

Outside events are often the tipping point for creating something new. I would argue that event-driven innovation has spawned just as many new companies as has big “I” innovation, that looks to a paradigm shift for creating new business models. Get the right people in a room with a tactical innovation workshop and you’ll be on the right path to drive a consistent pipeline of new products and services.

What's Next?

When everyone is working pedal to the metal on today’s business, the operative question is “who’s working on tomorrow’s?”  All too frequently, there isn’t enough focus on “What’s Next?”  Businesses are structured to run the day-to-day business and the people focused on the day-to-day business are compensated to make sure things run right.

Whether you work in a large or small company, the “What’s Next?” conundrum confronts most business owners.  Who has the time to focus on adjacent market opportunities?  Will products for those segments really be a better bet than the core portfolio?

“What’s Next?” Adjacent products and services come as an extension of the collection of existing capabilities and competencies from “what you do today.”  By looking for opportunities to create value in accessible markets where your growth investment pays off, you can leverage capabilities and more importantly, extend competencies to new opportunities, thus increasing your return on growth investment.

So “What’s Next?” for your company when growth opportunities are limited in the core business?  I would argue that adjacent market opportunities await!