I remember one of my first marketing courses at university, with lots of micro-economic models and bell curves showing demand distribution. One memorable lecture reminded us that, as a player in a market, "you can’t be all things to all people". Thankfully, this means you must choose the market space in which you want to compete profitably, with a business model that lets you extract that commercial value.
And that’s just what companies did in first-world economies, very successfully, for many decades, growing quickly and using their size to extract economies of scope and scale. Until, that is, consumers became more sophisticated, industries more competitive and differentiation a life-or-death corporate pursuit. Hence, innovation – of products, services, business model – was the skill set to get you there, and certainly today still is.
The innovation effect
Consider some of the pre-millennium innovators and how they disrupted their sectors. One of the first was Freddie Laker with his transatlantic airline allowing passengers to affordably travel long-haul. This allowed the likes of easyJet and other low-cost carriers to build on this consumer appetite and reinvent how to allow passengers to affordably travel in the age of algorithms. Apple similarly disrupted the PC market with elegant designs and easier interfaces. Dyson, of course, disrupted the vacuum-cleaner industry with a bagless machine no homeowner thought they’d ever need.
This millennium’s innovators, while occupying just as broad a variety of sectors, more frequently base their disruptions on the use of IT. Consider Airbnb, Uber, Zipcar, Fly Victor, Vonage or Netflix, to name a few. In this big-data era, it’s easy to crunch the numbers quickly to extract insights about how customers use – or don’t use – products and services. Procuring and sifting that data can now be done by a grad student in less than an hour. Matching a product or service profitably to observed and expected trends is enabled by low-cost computing and an appetite to create a need that big corporates are neglecting.
What the early disruptors and those in this millennium share is:
- A clear choice of which market space to contest – ideally one where the big boys are not or, if they are there, where they have not capably captured share.
- A clear business model.
- A clear focus on an unmet consumer need, with observations, insights and technology aligned to do things better, faster, cheaper.
So if you want to be a successful chief executive or chief marketing officer, you can shape your industry and extract value provided you’re clear about where and how you play.