One of my fairly serious hobbies is seeking out, analyzing, and (rarely) investing in under appreciated excellent companies. And I'm a ferocious reader, consuming a growing list of business, success, finance, investing, entrepreneurship, and related books, blogs, papers, articles, and similar texts. I've also had hands-on involvement in several start-up and more mature businesses in various capacities of responsibility.
It is interesting that a common problematic theme I come across is that of the business strategy being too fast and loose. This happens in large public companies just as often as it happens in small one-person businesses. Sometimes you hear about "needing more focus", "defining your market", "defining your niche", etc.
While this can manifest itself regardless of the stage of the business, it often becomes more dire (or at least externally apparent) as more people become involved in the business and more customers/clients are taken on. Scaling is tough due to the lack of clarity across the organization. Things get dropped. Micro-managing ensues. Mismatched product and service lines and extensions are rolled out. Resources are chaotically allocated. Turf wars can occur. Otherwise preferred and ideal customers/clients leave and similar prospects drag the sales cycle on longer. People quit in frustration -- no longer having the energy to see things through. Seemingly dumb decisions are made by otherwise highly intelligent and competent people throughout the organization.
This is all about and so often can be addressed by the same thing: Be as specific as you possibly can about your market, your niche within that market, and the characteristics of your customers. Once you do, everything else (i.e. next actions, tactical moves, where to allocate limited resources, who to hire, which investments to make, which investments to cut loose on and re-evaluate) becomes quite suddenly far far easier.
Your risk is immediately reduced and communicating your value proposition becomes a day at the beach. Lest you think this is just a business problem not applicable to our personal lives, consider how being more specific with your goals usually makes it more likely you'll achieve them. Don't shortchange yourself or your business. Draw a specific line in the sand and say there is where I'm/we're headed (don't be afraid to do it because you suspect it may change down the road, that's just fine and shows you're thinking about it).
But that's not the entire story either. An ancillary theme -- and perhaps one causation of the prior problem -- I've noticed takes the form of over eagerness used as an excuse to keep the market/niche/customer defined so loosely. By this I mean not just that the entrepreneur (or equivalent within an existing company pursuing a new product/service concept) is eager to get started with development or selling but that their ambition is so large that they fail to realize that the way to most effectively attack a broader market is often to start by attacking a segment of it first not the entire thing (and then chip away until the entire thing is yours).
Most supposedly "large markets" are really groups of smaller micro-markets. Each of those micro-markets has slightly different needs and other characteristics which make them unique. You are making your job tougher by trying to attack the "whole thing" at the start. It's a question with differing answers -- not because the question is complex but because the question isn't specific enough.
This is a constant problem all over the place. Just this morning I was reading an article posted on GonzoBanking entitled Understanding the Decline and Fall of the Banking Industry (it happens to be told in a satire-like way which makes more sense if you end up reading the entire article but the excerpt is applicable regardless):Excerpts from strategic plans in this period, however, indicate that bank management was still trying to target all customer segments, all product lines and all delivery approaches. Quotes from this period in business are somewhat comical as bankers write that they aspire to be “best in class,” “high performance” and “customer driven,” but none of the historical strategic plans seem to include what any of these terms actually meant.
My background is not in marketing. I'm actually stereotypically pre-disposed to think that "most marketing folks are fools and liars" since I'm generally thought of as a technology/IT geek (most of "us" tend to be cynics about all forms of marketing and advertising in seems). But that's an unfortunate, naive, and misguided reactionary opinion. After all, what geek wants to build stuff nobody wants to buy/use?
No business should be in business if it doesn't know exactly, and specifically:
- who it's target customer's/client's are
- why they are (or should be) doing business with you (from their perspective only, not yours),
- how they find you and acquire your products/services
- You're current (or not yet in existence but looming future) competition will consume your customer base and eat you alive
- You will spend money on the wrong things and go out of business (or be forced to merge with a stronger competitor, more on their terms than your own)
- You will be relegated, unbeknownst to you, to the least profitable and most difficult customers/clients in your loosely defined market to serve
- You will spend incredible and blackhole-ish increasing amounts of money acquiring (marketing to) new customers without adequate return on your investment
- You will burn out (and, if you have other staff and management, they too, which has it's own direct and indirect costs which will manifest themselves even if you keep plowing ahead oblivious) sooner rather than later and, along the way, probably burn bridges, alienate clients and partners, grow frustrated with seemingly piling up problems that lack a framework to prioritize them objectively within, inability to successfully delegate, freezing up and putting off critical major difficult decisions that only you can make, and otherwise eventually "giving up" (perhaps not even entirely consciously).
CHALLENGE #1: As specifically as possible (and if you think you are already to that point, challenge yourself to see how much more specific you can get) write down your initial gut feeling of:
- who your target customer's/client's are
- why they are (or should be) doing business with you (from their perspective only, not yours),
- how they find you and acquire your products/services
