Corporate Strategy: How to Know When It’s Time to Stop Analyzing and Start Executing
December 28, 2011
Or, when does your knowledge of your market suffice?
My colleague Brian Zimmerman wrote recently on the importance of Personas in his evaluation of investment prospects. I have also written many times in the past about the need to focus on a set of segments, to understand those segments inside out in terms of the right target prospects, and their respective personas.
But this is indeed an daunting task and many people have asked me: How thoroughly do they need to research and analyze their potential market before they can make a decision and start executing a corporate strategy? How do we avoid paralysis by analysis even as more and more data is becoming available in an increasingly competitive and complex marketplace?
Sometimes, the level of details of our exposition of these ideas sometimes belies our sensitivity to speed of execution. At OpenView, we operate under the Scrum methodology ourselves, and thus are very familiar with the iterative, fast moving ways of completing projects. While the comprehensive picture should be painted to show the extent of the knowledge to be gained, we are also comfortable executing with very little knowledge, as long as we know that 1. that modicum of knowledge is valid and 2. that executing against the selected segments will help us understand more about those segments and back fill the missing pieces. We see our understanding of a target market as proceeding along a ladders of increasing depth and sophistication.
First Level of Understanding
The first level of understanding is having informal knowledge, gathered through direct exposure to the market, through small scale customer engagement (product development, sales and marketing). It is characterized by the following conditions, typically seen at early stage startups or at companies building a new product for a new market:
The company’s senior team:
- Can name the market
- Can name 5 customers that are in the target market and 5 that are not
- Can define a typical buyer persona in terms of title, responsibility, business goals/needs
- Can define a typical user persona in terms of title, responsibility, use case
- Can name 1 direct competitor and 1 indirect competitor
- Can name most important marketing channel, sales channel and user communication channel
Second Level of Understanding
The second level assumes a very well-defined market but is not crisp on the leverage points in that market, and is not supported by exhaustive data and analysis. This is very typical of early expansion stage companies, who already has some institutionalized knowledge about their target markets through their sales and marketing activities, but do not yet know how to engineer massive growth in that market.
The company’s senior team:
- Satisfy all the requirements of Level 1
- Can define the distinct customer segment in concrete terms, understand the rough size and market trends, not necessary with fully validated data:
- Industry
- Company Size
- Company’s business models
- Company’s products
- Other well-defined differentiating factors
- Can define the most important/common buyer personas in terms of demographics, responsibilities, business goals/needs, buying process, buying roles
- Can define the most important/common user personas in terms of demographics, responsibilities, use case, most important required features
- Can define the most important direct and indirect competitors
- Can define the most important sales and marketing channels
- Can fully define the ecosystems of the product: the essential technology platforms it rests on, the complementary technologies it plugs into
- Can name the most important users and buyers influencers
Third Level of Understanding
At the third level, the company’s Product, Sales and Marketing teams possess in-depth knowledge of market targets, supported by rigorous research and analysis. The conditions for this are:
- The segments are well defined in that each segment consists of customers with homogeneous needs and buying behavior, while segments are distinct and easily identifiable. There is sufficient data to validate target segment size, growth rate and most important trends.
- There is sufficient data to validate definition of most important buyer personas as in Level 2
- There is sufficient data to validate definition of most important user personas as in Level 2
- There is sufficient data to support key product requirements and product roadmap
- There is sufficient data to position company against direct and indirect competitors in terms of product positioning, ability to execute and competitive advantage
- Selection of best sales, marketing and user communication channels is done with rigorous, comprehensive research and analysis
- Most important platform and complementary technologies are selected based on rigorous, comprehensive research and analysis
- Most important buyers and users influencers are selected with rigorous, comprehensive research and analysis
Highest Level of Understanding
In the highest level, the company not only understands its market targets extremely well and has the data to support it, it also has developed actionable insight on how to apply the right resources and strategy to really dominate the selected markets. Its knowledge is no longer just analytical and academic, instead, it is prominently practical and applicable:
Beyond satisfying all the conditions in Level 3, the company has:
- Well defined market strategy that ties go-to-market strategies with product development strategies, tailored to the specifics of the target market segment
- Data sources on list of prospects, buyers and users in the target market segment
- Understanding of best practice and methodologies for utilizing the identified sales, marketing and user communication channels
- Well defined, prioritized feature and roadmap backlog to satisfy user requirements, integrations with most important essential platform and complementary technologies
- Understanding of best practice and methodologies for approaching and leveraging selected influencers