Strategy

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.

Growth Hacking and the Philosopher’s Stone

Growth HackingThe search for the philosopher’s stone has confounded some of the world’s brightest minds for centuries. Alchemists, from as far back as the 8th-century, have longed for the day when they would be able to mix the right ingredients, in the right way, to create a stone that would not only turn commonplace metals into gold but would render its owner immortal.

Just like the alchemists of the past, today’s marketers are constantly on the hunt for a recipe of tactics that, when combined in the right order, will create a whirlwind of viral growth that accelerates revenue and generates eternal success.

This idea of using low-cost tactics to achieve expectation-shattering revenue is frequently known as “growth hacking.” It’s a buzz phrase that will light up a CMO’s eyes. But, while it is easy to understand why a company wants to integrate growth hacking techniques, few leaders truly know exactly what recipe will achieve alchemic-level results.

Because, unlike the practice of alchemy, which predicted that any person could be victorious by using the same recipe, successful growth hacking is distinctly unique to each and every organization. It can rarely be achieved by reusing the exact formula of another.

So, if there is no universal recipe for achieving viral growth, where do you start in the hunt for revenue gold and organizational immortality?

Download the rest of the ‘Growth Hacking and the Philosopher’s Stone’ whitepaper to learn how you can successfully craft and implement growth hacking campaigns into your digital strategy.

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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 (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…."

Top Ten Best Practices for Managing Your Board

One of the most challenging things an entrepreneur must do is communicate effectively with his or her board. After spending countless hours with lots of entrepreneurs helping them prepare for board meetings and working with lots of boards to get what they need from their entrepreneurs, I’ve come up with a list of ten practices that make for good relations with this critical group of experts as you build your product and get it ready to go to market. How many of these do you regularly practice today? Choose the ones where you're deficient, and dig in. You'll get more out of your board relationships, and so will they.

  1. Understand how the board operates. Who is the alpha dog? How do the members communicate with each other? Know who your sponsor is. Respect the structure and fit in.
  2. Organize your thoughts ahead of time. Edit ruthlessly. Be concise. Use pictures, diagrams, infographics to convey messages.
  3. Never surprise your board. Reach out ahead of board meetings and run ideas past people. Use your sponsor to share good news and bad news ahead of board meetings and ALWAYS have a solution in mind if what you are sharing is a problem.
  4. Assign each board member a “role” in your mind to provide advice, counsel, context, whatever, and use them for that. Build a relationship with each one on a specific platform.
  5. Speak Metrics. Your preferred way of communicating may be words or pictures or even voice. But board members, especially venture capitalists,speak metrics. Learn the language and convey your points in it.
  6. Know more about your business than they do. Drop a “golden nugget” or two that they don’t know about your market, your competitors, your industry. Assume that they think you know everything about your business. Add something new each time you meet.
  7. Forecast accurately. A forecast is not a hope. And hope is not a strategy. Use a framework. Be conservative. Meet your forecasts. And if you will not meet them, let the board know ahead of time—why and what you are going to do about it. Start with your sponsor.
  8. Be confident. You are the CEO. There are people’s expectations and money resting on your decisions. Take the responsibility seriously and project accordingly.
  9. Set expectations. Be the voice of reason as it relates to goals and objectives that are first reviewed by and agreed upon by the board—before the clock starts ticking. Then remember to continue to set expectations in every conversation and especially every meeting. What is happening next and how does it fit in the plan and move the company forward?
  10. Provide follow-up that is also well organized, thoughtful and concise. Show your board that you took note of their questions and took the time to get the answers. Send them additional nuggets of good news between board meetings that show progress from the last meeting.

Secret Number 2 to Branding Technology

I talked about the first secret to building a technology brand, aspiration, in my post last week.  I described aspiration as the emotional hook to get your target customers on the line.  The aspiration of your brand is indeed critical, but if you don’t follow it by delivering something meaningful, your customers will drop you like a hot potato.  Deliver something meaningful: sounds easy enough.  But how do you know that a new technology is meaningful?  And more importantly, how do you make sure it stays that way, so you can keep selling your stuff?

The more addictive a product is, the more meaningful it is.  Think of the addictive qualities of your smart phone, your Fitbit, your Facebook account, your Twitter feed, your Netflix views, your Pandora station, your favorite apps.  There’s something inside these products that makes you continue to come back to them and want more.  They are sticky.

Screen Shot 2014-02-11 at 5.53.49 PMAnd that’s the second secret to branding technology: stickiness in the product.  Stickiness is a quality that, for customers, is simply too good to miss and too good to keep to oneself.  And if the stickiness produces the “network effect,” all the better.  It is stickiness that enables a product to go viral.

Don’t think this applies just to consumer products. B2B technologies need to be sticky as well, perhaps now more than ever.  In this BYOD world, you are selling your stuff to people, whether they are wearing an employee hat at the time or not. Products that are clumsy to use, don’t deliver value and create drudgery aren’t long for the B2B world.  They will be supplanted or disrupted by products that are easy and cool to use. If they aren't sticky, they'll be replaced by products that are.

viralHow do you get stickiness in a product? Sometimes (but rarely), it’s luck.  But it should be strategy.  In fact, it’s your job to make it sticky.  Of course you need to be able to identify the appropriate market, describe the product in the most compelling way, figure out how to go to market appropriately and then create some awareness.  Of course you need to connect your brand to the aspiration I talked about in my last post. But before you do that, you should be deeply engaged in the product itself, and build it on a complete understanding of the market and the target customer.  As a marketer or an executive, your job isn’t just to take the product from engineering, give it a good tagline, and then talk it up in the press.   Your job is to make the product sticky.  And to make it sticky, you have to know what the “main addiction” is and test and refine it until you get it right.  If you haven’t read The Lean Start-Up, it’s time to do so.

Here are ten questions you can ask yourself to check the stickiness of your product. 

  1. What is the main addiction?
  2. What is its addiction potential? Have you tested it?
  3. Is it ridiculously easy to use?
  4. Is the design or UI elegant and attractive?
  5. Does it align with a current trend?
  6. Does it continue to deliver more and more over time?
  7. Is it affordable?
  8. Does it create pride of association?
  9. Can it be easily shared with others?
  10. Does it produce a network effect?

If you know the main addiction of your product and understand that potential, and if you can also answer each of the remaining eight questions with a “yes,” knowing why you’ve answered that way, you are well on your way to having a sticky product and going viral.  Not so hard at all. Certainly worthy of aspiration.

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.

Growth-Stage Start-ups: Aligning Your IT and Marketing Needs Now

In August 2013, Accenture published a detailed report titled "The CMO-CIO Disconnect," about the importance of marketers and information leaders collaborating, and the un-stellar level to which they're doing that in enterprises today.  Enterprise marketing leaders and CIOs at the U.S.' largest 2,000 companies probably gobbled up the report. I would bet, though, that very few CEOs of growth-stage tech start-ups have paid any attention to it. It's not marketed to them, not considered relevant. They probably don't even have CMOs or CIOs yet.  Listen up, entrepreneurs. You should pay attention to the report. Its wisdom is absolutely relevant to you.

Here's why: A CEO of a growing tech start-up has all of the upside to gain from aligning IT and marketing interests early in the company's evolution -- combined with none of the legacy baggage that makes the alignment difficult to achieve. Start-ups enjoy a nimble agility that enterprises don't have. Only 1 in 10 enterprise marketing and IT executives interviewed by Accenture say the level of collaboration is where it needs to be. You want to disrupt a larger competitor as you vault your company through its growth phase? Knock this alignment out of the park from today forward.

Let me summarize the three strategic imperatives from the report that strike me as most relevant to CEOs of start-ups, especially if there's no CMO or CIO in your company yet.

1. "Identify your CMO as your Chief Experience Officer. "

Okay, so you don't have a CMO yet. That's fine.... as long as the CEO -- or someone -- is passionately stewarding the quality of your customers' and partners' experience in using and interacting with your company and its products.  Who is looking out for things like:

    • how easy it is to find what you have, understand it, try it, and buy it?
    • how easy it is to use it, from the day of purchase until it's time to replace it with something else?
    • how easy it is to support and sell it, and to collaborate with you, for your channel partners?
    • how easy it is to transact and collaborate with you, for your supply chain partners?
    • how these external stakeholders' point of view is represented in your brand, your communications, your strategic decisions?

If no one in your company owns this critical function today, get it assigned, preferably to someone who brings a passionate point of view to it. (The responsibility can get passed down to a marketing leader later in your evolution.) Then, move on to the second bullet point below.

2. "Agree on key business levers for marketing and IT alignment."

In other words, decide what drivers will govern who prevails if marketing and IT have conflicting needs.  This may seem far ahead of where you are if you're a growth-stage start-up, but you're designing now the architecture that is going to become your "legacy" later -- with all its benefits and limitations. Anticipate that IT and marketing conflict will tend to converge most at two intersections:

1) Where marketing's need for transparency of customer and company data will intersect with IT's need for information security.

2) Where marketing's need for third-party, best-at-what-it-does software intersects with IT's need to control system standards and protect the sanctity of its infrastructure.

Here are some questions your CEO and leadership team can ask yourselves today, to ensure what you're building will meet your needs as you scale and reap new and loyal customers and partners:

    • What kind of customer data, and how much, will our company eventually need to exploit to gain new customers and keep existing customers? To deliver on that great experience we're designing for them?
    • What kind of company data will our company eventually need to make transparent in order to support the ideal experience we are creating for  our customers, channel partners, and supply chain partners?
    • What third-party software demands are we going to have in marketing this business -- keeping in mind things like mobile marketing and mobile service delivery, mobile payments, targeted marketing campaigns, customer relationship management, information management, etc? How will emerging trends like NFC and biometrics impact these needs?
    • Given the countries in which our target market exists, what kinds of data security and consumer privacy legislation are we subject to? How is the legislation evolving in these countries?
    • Where do we fall on the spectrum of conservative to aggressive when it comes to data privacy and infrastructure standards? Are we certain we can scale, market, and interact with customers and partners effectively and profitably given our answer?

3. "Change the skill mix to ensure that both organizations are more marketing- and tech-savvy."

This one's easy to adapt to growth-stage tech startups. Just change the sentence to read: "Hire people who are both marketing- and tech-savvy."  Be smart. Build the team right from the ground up.

When it's time to bring on a CIO or similar functional leader, ask candidates for their point of view on how their job intersects with marketing needs. Ask them for their point of view on how digital marketing is most effectively enabled, and what it might look like within your organization.

When it's time to bring on a marketing leader, ask candidates what they need from their IT partners in the organization.  Ask them for their point of view on how the balance should be struck between data access and information security.

**

You can download and read the full Accenture report here, if you want to know what other recommendations .... and the data that shows how your enterprise (future) competitors are performing against them.

Measuring Your Company Value - a Holistic Blueprint

True story: A wise CFO was meeting with the rest of his small start-up team, eighteen months (and a few pivots) into the group’s journey as a business.  He was about to report to them on the firm’s financial situation.  “Everything we do is about increasing value for all our stakeholders,” he began.  “Let me show you how we measure that we’re doing that.”

Up came a slide with sixteen simple words:

  • Revenue growth
  • Profit
  • Cash flows
  • Ability to obtain new business and deliver it profitably
  • Intellectual Property

He landed there only briefly, just long enough for the team to grasp the five obvious and easily measured items the slide contained.  Then he flipped to a second slide.

“And then there are the less easily measured, more subjective value drivers,” he said.

The team read the long list together:

  • Size, depth, and breadth of the sales pipeline
  • Share of potential market penetration
  • Quality and depth of the customer portfolio
  • Volume and breadth of the customer portfolio
  • History of repeat and loyal clients
  • Skills, experience, and specific expertise
  • Contacts and network of the team
  • Delivery methods and operating efficiency
  • Reputation
  • Succession plans

There were nods all around the room, a stated appreciation for the holistic approach to defining value, and some good discussion about the group’s resulting priorities.

My immediate impression on seeing this list was to write it down and share it here as a strong example of a business measurement scorecard – applicable to both start-ups and the largest enterprise teams. (Mind you, I’d only moments before it read Paul Graham’s good thoughts on the importance of start-up teams’ focus on doing things that do not scale, so holistic nurturing was on my mind, anyway.)

Are you measuring the health of your business – and the value you deliver to every stakeholder you serve – in terms of this extensive list?  Are you pausing from time to time as a team to discuss performance across the span it represents, and not just looking at cash flows?

Do you have a recommended amendment or addition to this list?

Why In-Company Incubators Aren't Working… Yet (Part 3)

239px-Brown_Leghorn_rooster_in_Australia This is part 3 of a 3-part series.  <<Part 1      <Part 2

In this three-part series, I'm addressing the topic of why in-house incubators don't necessarily work, and specifically answering the question about whether organizations should entrust innovation to their entire organization or just to an elite team, incubator style.  The answer is, it depends on where your organization is in the three-part innovation process.

In my first post I explained this concept, and covered the first phase, Ideation.  A few days ago I covered the second phase, Validation.  Today, I'll tackle the one that seems to be most comfortable for enterprises and startups, and yet also the failure point for  many of them: Execution.

Once your idea has been validated, it's time to start thinking of bringing that idea to market like building business. Here is where a lot of organizations make the mistake of putting the nascent product or service in a current business unit and letting them run with it. After all, now that it's a product with a defined market, you should just treat it like every other product in your portfolio, right?

Well, sort of.

Sometimes, your new innovation will inherently play by a new set of rules, a set that doesn't apply to your existing products.  These new rules need to be identified and dealt with -- through permissions, process, skill sets, etc -- as the innovation is developed and delivered.

To explain this more clearly, I'll offer a story from my own experience, when I was at PeopleSoft managing the eProcurement product. There definitely was a market (thanks to Ariba and CommerceOne), and there was traction in the growing number of customers that we had. However, there was a lot of catching up to do with what the market expected, but we were constrained by product development processes designed for maintaing something like Accounts Payable and General Ledger in a 12-18 month product cycle, while our more nimble competitors were able to ship in less than half that time. It felt like we were competing with the proverbial one hand tied behind our back.

To get around our constraints, we had to break the rules and ship new functionality when we weren't' supposed to (long-time customers may recall version 8.0 SP2) and make PeopleTools dance in ways it wasn't designed. I credit the engineering team and the creativity of their manager, MJ Guru (now at Workday) for making this all work. He had just enough of a rebellious edge to make it work without getting fired.

The lesson here is that this innovative product had to iterate and add functionality faster than our more mature products like AP and GL. It also was a new kind of solution for PeopleSoft - one meant for all employees to use without training, not just people in the back office. It was different, and playing by the rules set by a more mature product line would have killed the product if it weren't for the team that wanted it to succeed.

Of course, every new product can't require a new organization to be created. It wouldn't work. What companies should consider doing is creating some sort of "half-way house" for products that are still in the early stage to allow them to iterate quickly for the first year or two. Just because you have traction and have validated the solution does not mean that you have a complete product and are finished learning. Far from it. In fact, from my experience, the amount of learning grows exponentially as you get more customers and start receiving more pointed feedback from people using your product every day.

In the end, every product and solution has its development "supply chain" and its point on its lifecycle in addition to having an affinity to other products that have the same economic buyer and market. For companies looking to launch new products and become innovative, it's not only about coming up with the next great idea, but also knowing how to make it work with the organization that you have.

<< Part 1: Ideation      < Part 2: Validation

 

Get in touch with SeriesC to talk with us about how we help clients navigate the innovation process: team@seriesc.net