Positioning

Companies Are Like People

Originally published on The Huffington Post UK

The Human Genome Project completed in 2003 gave us the miraculous ability to understand who we are through our DNA. And thanks to enterprising entrepreneurs, we now have tools to explore our own DNA and learn what our genes say about us: our origins, our coloring, our tastes and our propensity for certain diseases. Armed with this understanding, we can construct a lifestyle that is aligned with our genes to help us fight off the maladies that afflict our DNA type. 

Know your DNA and be a better you.

But just as people can understand much of who we are from our DNA, so too can companies. Like people, companies are organisms that reflect their creators, their environments, their obstacles, and their strengths. They carry a core instruction set that informs the actions and outcomes of their work. In short, they have DNA. Not chemical, biological DNA, of course, but what I call corporate DNA.

While human DNA is ineffably complex, its business equivalent is far simpler, made up of just three kinds of companies. That’s it: only three types of companies in the world, each with its own distinctive DNA. Just as I look the way I look because of my DNA and you look the way you do because of yours, companies are what they are because of their DNA, and every organization expresses the DNA of one of these types. 

Although it is less complex, each DNA type resembles its human counterpart: Mothers are customer-oriented companies, Mechanics are product-oriented companies, and Missionaries are concept-oriented companies. After having consulted for more than 30 years with hundreds of companies to help them find their optimal position in the market and tell their stories compellingly, I’ve come to the conclusion that all companies fit into one of these DNA types. I’ve also learned that knowing which type you are is extremely helpful in developing a go-to-market strategy that sticks.

All living species are influenced by a mixture of DNA and environment, and when it comes to corporate DNA, companies are no different. DNA affects a company’s culture; its structure; how it measures success; how it hires, trains, and rewards employees; how it allocates resources; how it frames its narrative; and how it decides what brand to send out into the world. DNA is the single biggest factor when it comes to identifying a company’s role and relevance in the market and determining its optimal positioning.

The key to maximizing competitive advantage is to pinpoint your corporate DNA and use it to your advantage, just like an athlete. The idea is to use your DNA to position your company in the market so that you can win. Your DNA and how it is reflected in your position should lie at the center of every single decision you make, from your go-to-market strategy, to the skill set you seek in your hires, to the way you invest precious resources. It is the foundation for all external messages and campaigns, from branding, to sales strategy, to web copy, to brochure design.

Knowing what you’re made of helps you make something of it.

Positioning the Underdog: T-Mobile as a Concept Company

With the recent success of T-Mobile, it's hard to believe it wasn't that long ago that T-Mobile was left for dead - a deteriorating asset waiting for someone like AT&T, Dish or Softbank/Sprint to pick up. It was losing customers thanks to no iPhone at the time, and its network infrastructure was late to the LTE game. Today, T-Mobile is the number three wireless carrier in the US, having just surpassed Sprint in the number of subscribers. It's worth taking a look at what they did from a strategy and positioning point of view.

Why strategy and positioning? A company's position is tightly coupled with a company's strategy and operations. Without that tie, a position lacks credibility from the inability of a company to deliver on its promise. Comcast has announced that it wants to be a "customer-focused" company, but given its organizational structure and internal incentives to reduce churn, Comcast has thus far been incapable of delivering on that message. Customer focus is not in Comcast’s DNA.

When we help reposition companies, we use a Company DNA framework to assess its ability to deliver on its differentiation. In our collective experience, we have found that technology companies can be categorized in one of three ways — Product, Customer and Concept — and each can be differentiated in one of two ways.

  • For a Product company, it's about features or value.
  • For a Customer company, experience or segmentation.
  • For a Concept, it's category creation or cult of personality.

All companies have aspects of these three categories, but only one can be a dominant personality. As a former client noted, DNA is the "first impression you give when you meet for the first time" (thanks Arkady).

T-Mobile decided that the only way it could win was by becoming a Concept company. In March 2013, T-Mobile launched its Uncarrier effort to position itself against the Big Two wireless carriers (Verizon and AT&T). The face of this effort is CEO John Legere, who has adopted a straight-talking customer hero persona that T-Mobile die-hards have embraced.

What's interesting is that T-Mobile executives made that conclusion earlier, but they didn't have the leadership with the right DNA to match until Legere took the job as CEO.

It was equally important to make radical changes to its products and services to credibly deliver on a Concept differentiation - no contract plans, unique phone payment plans, etc. These are changes that Verizon and AT&T had no choice but tofollow.

In many industries, but especially in tech, success is often times measured in marketshare. You could argue that if T-Mobile were really that successful, it should be #1 in marketshare, right? Actually, no. Concept companies are out there to change the world, and success is measured in how many believers you've acquired and what kind of outsized impact you've made to the world.

Has T-Mobile’s repositioning been a success? Absolutely.

Jobs to be Done? It's All About Substitutes

img.phpWhen thinking about who your real competition is, it is helpful to step back and think broadly about all the different ways that the problem you're addressing can be solved. Clay Christensen and his disciples have come up with a framework - Jobs to be Done - and are trying to create a movement around this concept to help understand the competitive environment and how to refine products. They've even created their own hashtag - #JTBD - on Twitter to engage others in the conversation. But is it really that new?

To me, this is just a reformulation of the economics concept of a substitute (let's skip the math for now). The challenge for people in technology is that they tend to consider only perfect substitutes - competition that looks, smells and tastes like them - instead of stepping back and considering gross (or net) substitutes. To me, that's all this "jobs to be done" stuff is about - what are other ways that people are going about solving their problems?

A good example of this is when I was at a client discussing the merit of spending marketing dollars to promote a marquee feature of a product - photo sharing - that no one was using. When I asked the product manager who the competition was for this feature, he immediately started listing all the products in their space - little black boxes that were networked-enabled and had storage options.

The real answer was Facebook and Instagram (and now Google, Apple and Dropbox, among others). The product manager didn't step back to understand what are the real alternatives (the substitutes) for the act of storing and sharing photos with others rather than just other consumer electronics that have some photo sharing capabilities (or not).

No amount of "marketing" to promote this feature would have helped. Consumers already left this feature behind, which is why there was no adoption.

So, as a product manager, it is important to understand not only what a feature does, but also why it should exist and how it solves a problem in a way that's better than what they do today in general. Step out of your own space and look around. And if you need the #JTBD framework to help you, that's fine. You should be thinking that way anyway.

The Middle - A Followup

Speaking of being in the middle, check out Ben Thompson's post Twitter and What Might Have Been on his Stratechery blog. Money shot:

This was the context for the aforementioned post: advertising works best at scale but 3rd-party apps were peeling away too much of Twitter’s audience. That is why the company made such a big mistake: they didn’t kill 3rd-party apps completely. (my emphasis)

...

The funny/sad thing about this entire episode is that Twitter was clearly trying to bend over backwards for its 3rd-party developers: it was strategically stupid and financially unwise to let them continue to exist, but Twitter left this massive loophole open that limited growth but didn’t kill successful apps like Twitterrific or Tweetbot. And yet, the company was pilloried and tarred with a reputation for being especially unfriendly to developers, a reputation that strongly persists to this day.

Twitter clearly had a strategic direction they wanted to follow, yet muddled it up by still allowing some access to third-party apps.

Twitter got caught in the middle.

By the way, if you aren't a regular reader of Stratechery, you should be - it's chock full of insightful analysis and strategic thinking. I also subscribe to his Daily Update, and it's worth the investment.

The Middle (Where You Don't Want to Be)

3stooges One of the things they drill into you when studying strategy is never to be in the middle. The canonical example is the trade-off between being low-cost vs. high value / differentiated. If you are neither low-cost nor high value, you can't compete on price, nor can you deliver high enough value to customers to sell at a premium price. Samsung is a timely example of a company with a product line caught in this kind of squeeze – its smartphones are not inexpensive enough to compete with the multitude of cheap Android devices, yet not delivering the complete experience that Apple does at the high end.

Beyond the classic analysis, I find evaluating whether or not being in the middle of two strong positions to be a useful construct in general. You can see it in professional sports (h/t:Paul Sytsma), where some teams actively tank — hello Sixers fans! — to get the top draft picks to build championship teams, while other teams maintain mediocrity.

An illuminating example is the fate that befell Compaq when it was trying to compete with the Dell in the late 90's. Compaq, for those who aren't old enough to remember, had a very strong and successful channel model. Its supply chain was specifically designed for this type of model. Dell, with its direct model, leveraged the web to create a configurator that approximated mass customization. Dell's go-to-market took the PC world by storm, and grew quickly, jeopardizing Compaq's leadership in PCs.

How did Compaq react? By trying to add this direct-to-market model while maintaining its channel. I am aware of a number of consulting firms that were engaged in the late 90s to try to figure out how to implement some flexibility in Compaq's supply chain to address both conflicting approaches. As you can see from the results (a merger with HP, which is now being spun out into its own company), it was not a successful endeavor.

It wasn't just the supply chain, it was the business model and go-to-market itself. Compaq was unwilling to commit fully to the new world, which would upset its channel. The end result was a muddled mess, where it couldn't compete effectively with Dell online, yet its legacy partners were still upset.

Compaq was caught in the middle.

Being in the middle can seem to be a good approach for two-sided marketplaces. After all, they act as the hub and facilitator for transactions between two independent parties. That great... except for the part where it's too easy for the two parties take their transactions and interactions off-line. Once the parties meet, there is nothing to stop future transactions from happening outside the marketplace.

Consequently, those marketplaces started building up capabilities to become more sticky. But where do you start? The first is identifying who is your real customer. Is it the buyer or the seller? Consumer destination sites like eBay and Amazon Marketplace chose the sellers as their real customers - spending a lot of money and effort to create tools to make it easy to onboard sellers, create offers and manage their businesses.

Business marketplaces took the other approach - for example, the Ariba Commerce Supplier Network came bundled with Ariba's procurement solutions. They focused on big buyers where they had leverage to bring their own suppliers on the network. However, in the past few years, Ariba, now a part of SAP and calling its marketplace the "Business Commerce Network," has been trying to have it both ways - not only still selling buy-side solutions, but also jacking up supplier fees. Needless to say, this approach has been causing some consternation with the suppliers on the network.

Can Ariba/SAP have it both ways? It remains to be seen, but I'm doubtful.

So, how do you know if your product or company could be caught in the middle? What is really helpful is thinking about the tradeoffs you have to make for your products, operations and/or marketing. If a decision you make puts you in a place that does not satisfies any of the desired strategies or requirements — where one action that supports one requirement would be detrimental to another, or makes things more confusing — it is definitely worth stepping back to see if you are putting you, your company or your product in the undesirable middle.

In the end, trying not to be in the middle is all about having strategic clarity and focus. It's the business version of "you can't make everyone happy, so stop trying…."

The first of two secrets to branding technology

Spending three decades in marketing at the epicenter of technology has taught me a thing or two about how we think here in Silicon Valley and what makes us who we are.  "Innovate or die," as the saying goes.  But recently, I reached a new understanding, and figured out the two secrets to branding this stuff.  By “branding” I mean establishing an innovation in the marketplace and building a brand.  Which, of course, is the goal. Today, I'll share the first of those two secrets. But first a little background. We celebrate our engineers here in the Land of Innovation, but when these guys release their version or product or app or device, it’s the marketers who have to get traction with customers.  So how do you do that?

Screen Shot 2014-01-27 at 11.39.09 AMI think it’s important to recognize, first off, that technology people are different.  We like to try new things.  We embrace change. We participate in crowd-funding of projects and companies.  We early-adopt new devices.  And we have patience with failure, our own as well as others, their companies and their products.

Secondly, we must understand that a customer buying a technology product early in its lifecycle is a “technology person.”  Ok, she probably isn’t an engineer, or a technologist or a rocket scientist.  But you can bet if she’s laying out cold hard cash (or mobile payment of choice) for a product that is touting something new, she “gets it.”  She gets that she’s part of a grand experiment, a Beta tester of sorts, a guinea pig.  And she likes it that way. Being the first to try a new product, to show it off to your co-workers, to brag about waiting in line to get it is all cool.  If you’re a technology person.  In fact, it is so cool that it actually confers admission for you into a sort of virtual “club” for innovators.  And of course, if you’re in the club, the people with whom you hang are likely to be in the club as well so they will also think it’s cool.  Word of mouth ensues—the Holy Grail for technology products.

So, if you’re on the selling side of a new technology, it stands to reason that you will want to sell your widget to other members of the innovators club who will think it’s cool because it’s new, who will be patient with its functionality and who will tell their friends about it.

As a marketer, you’re going to want to capitalize on the natural order of things in this situation.   You’re going to want to get people to try your product and you’re going to want to create word of mouth among other technology people.  Because if you amass a circle of innovators who love your product and tell their friends about it, you will create a bigger circle of early adopters, and if you’re lucky and the product is sticky enough, the word of mouth you generate among early adopters will spread beyond technology people, outside the innovators club and into the real world.  At this point, you’re reaching what we marketers call the early majority, or the mass market.  Success!

But the question is always this.  How do I get members of the innovators club to pay attention to my new technology?  What makes it cool?

Here’s the first secret.  Aspiration. 

MatterhornThe reason innovators and early adopters are attracted to some products and services that are untested in the market is because in some way, they establish an emotional connection with the buyer, one that usually offers the promise of positive change.  The buyer believes that the product or service will change her life in some way and quite possibly the lives of others as well.  Remember, technology people embrace change.  That’s where the aspiration comes in.  If you build a brand that reaches out enough to be aspirational in nature, that promises to change the world in some way, you stand a better chance of attracting innovators and early adopters to it.  And of course if you are successful in attracting innovators and early adopters, you are more likely to make it to the early majority.

Oh, and one more thing.  Technologists innovate to change the world.  They think in terms of vision.  How will the world be different because I was here?  How will my product or service change the way people do things?  The way the world operates?  So if you’re a marketer trying to help a company get its innovation to market, remember that you’re not only selling to innovators and early adopters out there in the marketplace, you’re selling your marketing strategies to the very same kind of technology people you are trying to reach in the real world.  If you start with an aspiration, a goal of changing the world in some way, you will connect with your engineers as well as your target customers and set the stage for building a technology brand.

In my next post, I'll explain the second secret to branding technology. Stay tuned!

Three Critical Focal Points for Your Growth Strategy

For the most recent McKinsey Quarterly, the firm produced a video in which two of its experts discuss the evolution of strategy in business. The video echos so much of what we advise our clients -- growing companies -- as we help them develop, adjust, and align their teams around their ideal strategies.  Here are three of the points we firmly believe that were backed up by comments in the video.  All three are critical focal points entrepreneurs and leaders should attend to when it comes to strategy: 1.  Market selection and targeting has the lion's share of impact on your growth. A direct quote from the video: "80% of growth is explained by decisions about where to compete or by market selection."  You must begin your growth strategy with a realistic assessment of how you make money, what problems you solve, for whom -- and on that last bit, even more specifically, for which segment(s) of the market.  Doing so well requires considering marketplace trends, competitive forces, your product's fit with market segment needs, and your company's very DNA.  Get this wrong and you might experience incremental growth, but not cross the chasm.

2. Positioning of your company and product is critical, and should precede and guide decisions on brand, product development,  marketing plans, pricing, and even hiring. To quote the video: "Companies should be just as focused [on] positional improvement as they are on performance improvement .... [it is] fundamentally about positioning the company against the right trends, catching the right waves, and putting our bets on the right markets."  SeriesC defines positioning as the articulation of strategy, inseparable from it.   When our clients ask us to help them with positioning, we approach it not as a creative exercise, but as a scientific and fact-driven one.

3. When a strategy fails, leaders might be inclined to fault the strategy.  In the vast majority of cases, however, the strategy itself is not to blame; it's the execution that went wrong.  We often encourage clients who are facing failed strategies to assess how well or poorly they executed the strategy in four categories: Processes, Culture, Product, and Tools/Information.  So frequently, this analysis unearths breakdowns in multiple places within multiple categories.  A quote from the McKinsey video hit on one of those categories, culture: "Strategy’s not just about what’s on paper, but about the thinking and feeling processes of the leaders of the company."  In other words, strategy will go nowhere if the leadership who must execute it are not aligned to it and psychologically prepared to embrace and support it.

Do you have a question about your strategy, or how to bring focus to its development? Leave us a comment or contact our consultant team.

Five Truths About Marketing to Millennials (From a Millennial)

fotolia_bridgebuzzcollegestudents1 This is my first blog post for SeriesC. I am a second-stint intern at SeriesC, and also a 21-year-old senior business major concentrating on marketing and management at Trinity University, a small liberal arts school in San Antonio, Texas.

I want to share some insights on marketing to millennials, based on my perspective both as a marketing professional and a millennial consumer. Countless articles and guides are floating around on the Internet about how to market to millennials. From my experience, I assure you that not all of them are steering you in the right direction and not every company knows what they are doing. So how do you navigate the clutter and get to the realistic and useful guides? Here are a few tips and insights:

  1.  Use social right- Everyone will tell you that you need to use social media to reach millennials. Brands can see huge benefits from an effective social media presence, but this advice often neglects to emphasize that first you need to grow your user base and do it in the right target market. If you fail to do this you are wasting your social media investment. Campaigns that create natural buzz and drive traffic to your social pages are the best way to do this quickly. And you don’t have to break the bank to create them. See Louisville Slugger for a great case study on jump-starting organic buzz through social media.
  2. Don’t forget to be lean – A common mistake companies make is jumping to develop a mobile app too early because studies tell them that millennials are using apps. If you are considering doing this, stop and think about lean principles (see another SeriesC blog post on more about this).  All it takes is asking your customers if they want that mobile app that you are building, and just as important, whether there are enough of them who will use it. Yes, millennials are mobile and we do use apps frequently, but for companies that plan to launch their app as a secondary customer destination, it is important to first have enough demand on your primary selling point to support it. Just like any other piece of building a lean company, telling yourself, “If [we] build it, they will come” is not enough.
  3. Help us convince our parents- For products that are expensive and require consumers to go through all the preliminary stages of the buying process (need recognition, information search, and evaluation of alternatives) before making a purchase younger millennials are probably going to need to consult their parents for advice or money. It is not enough to just market to your target customer; you must also have messaging for their key influencer. More often than you might realize, those influencers are Mom and Dad.
  4. Give us a discount- Millennials, especially college students, do not have much disposable income at this point. We love discounts! Companies like Amazon (Student Prime membership with free two day shipping) have done this effectively and seen a huge growth in millennial customers. Do this now and we’ll stay with you when we do have money.
  5. Be authentic – I can’t emphasize this one enough! Just because we are younger than you, it doesn’t mean we were born yesterday. We can see through false claims or attempts to be funny in ways that don’t relate to your brand or product. It’s ok, and in fact encouraged to be creative in marketing to millennials. However, you cannot forget your key messages and brand pillars. Add nuance to your messages; but don’t try to be someone you aren’t.

Our team at SeriesC creates positioning and jumpstarts innovation for established and emerging tech companies daily. If we can help you find your true authentic voice and the ideal messages for millennials, you know where to find us!

The Forgotten Marketing Basics

Elia Freedman has an interesting little rant, The App Store Problem Is Not Price, which has elicited a response by Loren Brichter in the comments and by Marco Arment here. In my experience, if you have to have people try your product to understand the differentiation from competing products, your positioning (and therefore your marketing) isn't fully baked. Or your differentiation doesn't matter to your potential customers.

That being said, it is a reminder of thinking through all aspects of marketing, especially if you plan on making your app available on a crowded place like the App Store or Google Play.

Let's use the old 4P's framework here.  Sure, Apple has locked down Place, but that just makes for an even playing field. It is what it is. Given Apple's inscrutable nature, to count on future changes in the App Store is irrational. As a former sales colleague still likes to say: "hope is not a strategy!"

The real question you should be asking yourself is what you doing with the other 3P's? Elia mention changing Product (differentiation) and perhaps changing Pricing, but then goes off and complains about Loren Brichter and Marco Arment (yes, I'd say that calling what Marco has an "echo chamber" is a bit pejorative), which is more about Promotion.

I'd say yes to all of the above. Don't count on the App Store to change - make your product truly differentiated (and that doesn't mean just layering on "cool," but useless features) and do proper promotion. Marco has invested a lot of time and energy in his blog and podcasts, which, by the way, are forms of promotion.

Yes, it's all about taking care of your marketing basics. By not addressing your Product, Promotion and Place, your Price will indeed suffer.

Large Companies: Are You Losing Your Innovation Mojo?

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Leaders in enterprises, is "disruption" keeping you up at night? If so this post is for you.  Sometimes it feels as though the only companies getting attention these days are startups.  That today's established companies are dinosaurs and, except for a handful of large companies who are consistently succeeding – the rest are increasingly at risk.   If you fear that you are drifting toward the latter category, this blog is for you.   It might require a change in how you look at your people and how you get things, especially product development, done.   I am here to offer encouragement.

Let's start with three fundamental truths: 

  1. First, I hope we can all agree that the primary role of a company is value creation.  Yes, companies need to create products and services.  Yes, they need to engage and 'delight' customers -- even build communities of interest sometimes.   But these are all business model decisions in the context of some value creation system.   He or she who creates and monetizes the most value wins.
  2. Second, barriers to creating value have never been lower.   If your company's value is either created or enhanced "digitally" ( its becoming increasingly difficult to find one that isn't these days), your world has been changing around you. You have to move - fast.
  3. Third, the path to end-users has never been more direct.  Almost everyone has a smartphone.  Almost everyone is a part of LinkedIn, Twitter, Facebook, Instagram - pick one or two.   And they all get the news and information they want from Google.  There is no longer good reason to allow others between you and those for whom you are creating value.

What does all this mean?  Well, for one, small companies -- startups, more specifically -- have some important inherent advantages over big ones. They have not institutionalized business processes made obsolete by today's "401(k) world," as Thomas Friedman calls it.  In his recent NYT opinion piece, Friedman says that, "more people can start stuff, collaborate on stuff, learn stuff, make stuff (and destroy stuff) with more other people than ever before."   As Friedman points out, this has all happened in the last ten years or so, and many of us are not well suited to succeed in these new operating conditions.

Startups don't have to "unlearn" or "work around" the old ways of doing things.  They can pivot quickly on feedback gleaned from real prospects in real purchase situations in real-time.

So, what's a large company to do?

It all begins by remembering that the only reason for your existence is to create value.  In this context, your role as an organization is to efficiently do two things:

1. identify and qualify new value-creation opportunities, and

2. rapidly deploy the business models to monetize them.

How to identify new value creation opportunities

With respect to the first imperative, large companies do have an advantage: a highly attuned sensory network of employees and partners, all focused on today's business, channels, customers and everything we do to create value for them.

Think of them as thousands of iron filings through which a big magnet has been pulled. No other company has a collection quite like yours.  And it got you where you are today.  You just have to employ it more efficiently in the context of identifying and qualifying business opportunities.

This is where 'innovation crowd-sourcing' or 'social problem-solving' comes into play.   Treat these communities as an idea-generating asset - one which can be systematically harvested for new value-creation ideas.  They are smarter and more attuned than you think.  In other words, the time when all the good ideas come from the strategy team at HQ is well behind us.

How to rapidly develop new business models

On the second imperative, big companies need to harness the principles of Lean Startups:

  • Trade in 3-year business plans for Lean Canvases.
  • Cultivate a culture of Testing Hypotheses.
  • Quickly deploy Minimum Viable Product prototypes.
  • Employ the Build=>Measure=>Learn cycle.
  • Encourage fast failure and know how and when to Pivot.

In short, start treating your employees like entrepreneurs.  Give them the tools, training and environment to behave like a part of your value-creation system.  (We can help.)  Remember, the world hasn't changed in favor of more nimble start-ups.  What has changed are the conditions for success. There is nothing keeping you from being a part of that change, right?