Labcast: Is Market Leadership Within Your Grasp?

Every company dreams of gaining leadership in their respective markets, but choosing the best market to attack in no easy task. In this episode of Labcast, Rapid Innovation Group consultant Paul Higgins calls in to discuss the strategies early and expansion stage companies can use to put themselves in the best position to attain marketing leadership and bury the competition.

Rapid Innovation Group is a U.K.-based strategy and execution firm that helps emerging tech companies accelerate their revenue growth and achieve market leadership. For more insight from Paul, check out the Rapid Innovation Group blog and follow him on Twitter @paulhigginz.

Recent articles from Paul on OpenView Labs:

• Why Push Your Company Overseas?
• Case Study: Is the Overseas Market Ready for Your Product?
• Sometimes, It’s Easier to Win Customers Overseas than at Home 

PODCAST TRANSCRIPT

Brendan Cournoyer: Hello again everyone. I’m Brendan Cournoyer. Welcome to this episode of Labcast. Today, we are joined by Paul Higgins. Paul is a consultant with Rapid Innovation Group, a UK-based strategy and execution firm that focuses on helping young companies accelerate their growth and achieve leadership in their select markets, and of course, he’s known worldwide as a frequent contributor to OpenView Labs.

Paul, thanks very much for taking the time to join us today.

Paul Higgins: It’s a pleasure, Brendan. Thanks for the massive build-up there.

Brendan: Absolutely. Hopefully, we can keep it going. Let’s just jump right into it. Like I mentioned, at Rapid Innovation Group you guys are really focused on helping growth stage companies develop best practices towards market leadership and in some cases, testing assumptions of what it really takes to get there. In your experience, what are some steps and examples that you can talk to us about as far as gaining that sort of traction in a market quickly?

Paul: That’s really what it’s all about, gaining market traction quickly. I think one of the principles that we try and get across is you should always try and find a market in which you can become the market leader. It’s really the first big strategic decision any entrepreneur has to make. Given what they know now, where are they going to place their bets? Are they going to go into a market where there’s no competition, for example, or do they want to pick on a competitor and try and become the premium option and attack them from the top, or become the value option and attack them from the bottom? But it has to be about trying to become the leader in the market that you’re trying to attack.

I think what you’re looking for is a market in which potential customers have the sorts of circumstances that really compel them to buy from you and that compel them away from the competition. I think it’s important to think about circumstances rather than attributes. Circumstances, to me, are what’s going on in the lives of those customers, what are they thinking about, what are they fearing, what are they hoping, compared to attributes, which are what do they look like? It’s a description. It’s their size and their location, and their number of employees, that kind of thing. People buy food because they’re hungry, not because they’re thin or they’re fat or they’re Gen X or Gen Y. Right?

Brendan: Sure.

Paul: It’s really about circumstances rather than attributes. I used to explain this by talking about Joe the Plumber from the U.S. elections last time. Do you remember Joe the Plumber?

Brendan: Yeah, I do. I didn’t think I’d ever hear his name again.

Paul: Joe the Plumber, apparently there was a real guy called Joe the Plumber, which I only found out later. He became the Republican’s ideal voter during the U.S. elections in 2008. This guy had attributes. He was in his 50s. He was a small business owner in the Midwest, married, kids, a dog, maybe. But the circumstances, I think were what’s really important. He was worried about losing his business. Or he had a couple of kids going to college in the fall or whatever. So I think circumstances are really the reasons people buy from you. Trying to build a picture of that ideal client is going to be always important to this. Write it down. Try and identify a market where you find those kinds of people. I think that’s the first thing.

Brendan: You’ve also talked about finding a market that’s narrow enough where you have that opportunity to become a leader. That’s a challenge as well, right?

Paul: Exactly. You think about some markets, like the UK supermarkets. There are only four or five big supermarkets in the UK. If you manage to sell to one or two of them, then you can pretty much call yourself the market leader. Then you become the least risky option for the rest. You can go to the third and the fourth and say, “Why would you go for anyone else?” It’s at that stage that it becomes easier. That’s really why market leadership is such a powerful principle I think. You can be in the expansion stage and growth stage, but still be the pragmatic buyer’s choice. So pick something narrow, pick something small.

A lot of technology and growth stage companies suffer from the burden of being able to solve too many problems in too many different sectors. Sometimes you’ve got to ignore those opportunities, which can be pretty hard, right, because, you’ve got investors. You want to demonstrate that you’re growing rapidly, quarter on quarter. You’ve got a team morale to keep up. Sometimes somebody will call in and say, “Can I buy some stuff from you,” and you’ve got to say, “Well, I’m focused on this sector now.” But if you don’t become the market leader in anything, you’ll never learn quickly enough. You’ll never become the obvious choice, and it’s really from there that you can grow.

I’ll give you an example from our work here. A company I worked with a few years back is now the market leader in providing web-based systems to the hospitality sector. A clear market leader in the UK, and they’re growing rapidly overseas now, as well. But they didn’t start by going after the hospitality sector. It’s pretty big. You’ve got restaurants, you’ve got hotels, catering, pubs, bars. They tried to identify what kind of restaurant would be the perfect one for what they were trying to sell. They sort of stumbled across what they called “casual fine dining,” which is your nice up-market restaurant, $20 to $30 a meal type place, the kind of place you’d take a nice girl on the first date, that kind of restaurant. A simple kind of entity, the ordering is done on site, the staff are onsite. It was a simple proposition. Decisions could be made quickly, and they could get a good price for it. Then they became the market leader of that tiny little niche. There’s not that many of those, but you could become a market leader of it. Then they thought, “Well, what’s next?” They moved on to quick service kiosks, which have some differences. The ordering might be done essentially in the local sites. They’re a bit smaller, but they’re sort of similar. Then from there, they moved on to restaurants, they moved on to hotels and larger facilities and so on. But they couldn’t have all done it from day one. I think this is one of the key points. They don’t initially reference very well, those different types of entities.

I know I’ve written about this on your Lab site before, but this is really an important concept. Geoffrey Moore in “Crossing the Chasm” talked about the fact that a market is only a market if the companies within that market reference well when they’re making a buying decision. What that means really is if you’ve sold to McDonald’s, and you have a great case study about how McDonald’s saved a million dollars a year or something, and you show it to a guy at Hilton Hotels, does the guy at Hilton say, “Right, I can understand how that would work for me,” or does he not. If he doesn’t, then you’re not really in the same market. You’re in two different markets. So you become the market leader of a small sub-market, a small sub-sector. You grow out. You get to the edges of that market, and then you start to see some overlap. Then you start to realize, well actually, a big restaurant is not too dissimilar from a five-star hotel, which has a restaurant onsite. You don’t talk to one about gross profit, and you don’t to the other one about revenue per available room, but the business case is kind of similar. You work up from there. But you’re only able to do that, and they were only able to do that, because they had this market leadership strategy of starting from a small point and then growing outwards.

Brendan: It’s funny, because some of those ideas might seem a little counterintuitive at first. We create content, and our portfolio is basically made out of technology companies. You mentioned having a product that does so much, but it’s not really targeted. At first, that might seem great. Look at all this stuff that our product can do. But really, what you’re saying is go smaller, be more focused, do one thing really well, and lead that market. And then move on to the other things.

Paul: It’s interesting, isn’t it? Trying to actually gain market traction in the expansion stage is really about understanding what your assumptions are about the market and about your go to market strategy, and trying to validate them and trying to learn really quickly, and then revisit them regularly. So a go to market strategy, by that I mean which market are you going after? Who are the companies in that market? Who’s the buyer? What’s the value proposition? What’s your approach? How are you trying to get in front of these guys? Are you trying to cold call your way in? Are you trying to get in through a networked approach? Are you trying to meet them at events? And then when you get in front of them, what do you say? What marketing collateral do you need? What tools? What knowledge? And so on.

Brendan: Paul, I’d also like to hear about where agility comes into play. We talk a lot about being agile from a product development standpoint. But from looking at the market and the market you’re targeting, it’s also important to be agile and be able to adapt. Some of the assumptions that you assumed was the right opportunity for you, eventually, after some research or after some work in that area, might actually be the wrong area to focus on. Then move onto to something else, right?

Paul: Yes, it’s really interesting, these kind of ideas like “lean” and “agile” that are really coming from a manufacturing background. I remember looking at an article by Mark Leslie and Charles Holloway in the Harvard Business Review a few years ago called, “The Sales Learning Curve,” which really hammered this point home. Sometimes you’ve got to be a small unit, and you’ve got to allow the whole company to learn from each other. You’ve got to allow the feedback to run through the company, rather than just setting off in one direction and going in one direction, without feeding back your assumptions as you go along.

Another project we were involved in a few years ago was with a technology company that had an online platform for analyzing visual information from camera phones. They initially thought that the retail sector was going to be pretty strong for them. They won a few early customers in that sector. The proposition there was they would help retailers understand whether the advertising banners, and so on, were positioned in the right way. At that stage, they could have said, “Our go to market strategy now is to hit the rest of the retail market, go in, go big, hire some sales guys, raise a load of funding, and just go for it.” But actually, as we went along, we realized that there’s probably more value in other areas. We identified a couple of other sectors. We investigated where the other value might be. We ended up on the utility sector. We realized that there was a big health and safety issue there which had a legislative issue behind it, a compliance issue, where the value was much greater.

This is really the point behind this sales learning curve or this agile principle that we’re talking about. If you go out and hire a load of sales guys and just tell them to go and sell, it’s very difficult to know what you’re hiring for. If you’re in a very early stage, you’re in an expansion stage, it’s difficult to know whether you’re looking for somebody that is a good hunter or a good gatherer. You sometimes just look for the criteria and if somebody has experience selling into my sector. But this might be the crucial point, right? In an expansion-stage company, a salesman’s job is not just sales. It’s about much more that. It’s about learning about the market, feeding back to your marketing team and your tech team and your ops team. And the same with everyone else. A developer’s job is not just development in a startup. A developer’s job has to be development plus helping the sales guy, helping the marketing guy work out what the best market/product fit is. I think being agile and being able to review your whole go to market strategy on a regular basis is crucial to that.

Brendan: The idea of being agile can speak to location as well, can’t it? You’ve written a lot on OpenView Labs about the concept and the decisions that go behind taking your company overseas or taking your company to a different country. Is there a point where the opportunity for market leadership might just not exist where you are, and that’s when you have to go out and target some markets in different parts of the world possibly?

Paul: Absolutely. Just thinking about the answer as you were going through the question, I remember a story of a U.S.-based dating site that did a lot of marketing in the U.S., and then suddenly, six months later, they realized that all their growth was coming from India. They rebranded themselves as the Indian dating site and moved their team over there. I think that you’ve got to be open to those sorts of options. It’s becoming easier and easier to develop a business overseas. Going back to that idea of what a market means, sometimes your market is really easier to reference across borders, rather than just within one territory. So absolutely, that’s something that you have to be open to at all times.

Brendan: Before we finish up here, I did want to ask you one last question about something that you actually referenced in an email to me, which was the concept that startups have to be about “to learn’ lists, instead of “to do” lists. I thought that was an interesting concept, and I was wondering if you could elaborate on that for us.

Paul: Sure. I think this came from a guy called Sean Ellis, and I know that it was referenced recently by the VP of Product at Groupon, whose presentation I saw recently. It’s a fascinating idea. It really feeds into these concepts of agile and lean principles we’ve been talking about. Say you’re in a sales position in a large company. You have your list of things that you have to achieve that day. You have to follow the process. You have actions to complete. In the expansion stage, it’s not so easy as that. You don’t have a list of actions, because you’re always trying to learn. You’re always trying to improve the way you interact with the market. You’re always trying to bring in feedback from the different areas of your organization. It’s really a question of going through a series of growth stages as an expansion stage company. You can imagine if you’re a B2B tech company that has five to ten customers. Maybe the CEO is doing the majority of the sales work. Maybe there’s one other sales guy. Your “to learn” list is really direct sales, right? You’ve got to learn how to get in front of potential buyers. You’ve got to learn how to structure that process to get to a deal.

The next stage after that is really helping build a sales team, helping put that process in place, so that when the next sales guy comes in and the next one after that, they have some structure to work through. But then, the job of the revenue function at that stage is not just about direct sales. Maybe you want to look at selling through partnerships, and you’ve got to learn a huge amount about that, about identifying the right partners, about getting to a deal, about managing the partners, about generating revenue through the partners. You’re not going to get to that in the early days. That’s something you might come to later. Then, bringing back the idea of going overseas as well. That’s a whole other area that you need to learn about. It’s not just a matter of executing. It’s about executing and learning and going back and revisiting your assumptions and getting that cycle working really well.

Brendan: Sure. Well, we really appreciate you sharing that insight. That’s really great stuff. Before we finish up, I’d love to give you the opportunity to tell us a little bit more about Rapid Innovation Group, and also where people can go to hear more from you. I know you guys have a blog, are active on Twitter and things like that. Correct?

Paul: Yeah, that’s right. Thanks. Rapid Innovation Group, as you’ve said, is based in London. We were established in 2002 to address what we felt was a need in high-growth potential companies to provide them with specialized skills to design and support highly effective go to market strategies. The past nine years we’ve worked with over 50 entrepreneurs, management teams of growth stage companies. We’ve had exits to companies like IBM and Microsoft. We’ve had companies list on the AIM Stock Exchange in London. We try to develop our knowledge in marketing, sales strategies, operations and execution, organizational design. I suppose, in that respect, a lot of the things we think and write about are similar to you guys in the OpenView Labs group, as well.

Brendan: Sure.

Paul: So it’s always interesting getting to know you guys over the last year or so. We write about these, and we have our blog which is Rapidinnovation.typepad.com. Our company website is www.rapidinnovation.co.uk, it’s all one word. You can find me on Twitter, which is @paulhigginz.

Brendan: Great. We’ll definitely provide links for our listeners. You can check out all of that stuff straight from the page that you’re listening to now.

Paul, thanks very much again for taking the time. Hopefully, we can do this again sometime soon, and we look forward to hearing about more of your thoughts and more of your articles at OpenView Labs.

Paul: Pleasure, Brendan. Thanks very much.

Brendan: Thank you.