P O R T O L A . S T R A T E G I E S
Point-of-View
Summary
A savvy understanding of market relevance can be a powerful tool for establishing your company as the dominant force in the markets you serve. Whether manager or marketer, continue reminding yourself: If we haven't sold the problem, our solutions are irrelevant.
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Establishing Market Relevance
Leaders grow markets. Followers grow share....
Don't sell soap; evangelize hygiene.
It doesn't really matter how unique your product or service is. Unless its value is tied to a perceived benefit, nobody cares. Customers simply want to know, "Is it going to solve my problems or make me money?" If not, it is irrelevant.
At Portola Strategies, market relevance is one of our Architecture of Identity's five Axes of Leadership – fundamental dimensions of your business through which you establish and demonstrate market advantage. We believe that market relevance can be used as a powerful tool for building industry leadership. And, more importantly, getting the marketplace to buy into your vision builds relevance for your products' value propositions.
For example, in 1995, when a little-known company called "Yahoo!" approached me and my team, founders David Filo and Jerry Yang had a simple, yet profound vision: "Create a single place on the Internet that connects all people with anything or anybody they need."
The main challenge facing Yahoo! was market relevance. At that time, nobody really knew much about the Internet. The value of the Internet was only understood by a small number of people. Yahoo!'s business success required vast numbers of people making the Web an important part of their lives.
Yahoo!'s market entry came at a perfect time. The Web was just beginning to shift away from an academic and techno-centric environment. We felt that the Internet itself needed a voice, a champion – someone who could pick up the baton from academic pioneers such as Tim Berners-Lee and Vinton Curf and rally consumers and entrepreneurs onto the Web.
This was an ideal opportunity for Yahoo!. David and Jerry embodied the spirit of what eventually became "Internet culture." They were young, entrepreneurial and smart. It was easy for an entire generation to identify with their insight, drive and vision.
The communication strategy was simple: Establish David and Jerry as the primary spokespersons for the Internet. In practice, when they spoke to journalists, they explained how the Internet was going to change people's lives. They didn't get sidetracked on technology or the ins-and-outs of finding things on the Web. Instead, they focused on the practical benefits that people could derive from being "on the Net." By evangelizing the Internet, they built demand. They made the Internet relevant.
Keep It Real
You can leverage your company's vision by using evangelism to build relevance for your products and services. However, don't get too far in front of the market. Keep it real.
Oscar Wilde once said, “If you’re going to get booted out of town, get in front so people think it’s a parade.” The secret to leveraging vision is staying just far enough ahead that it looks like your company is leading the market. If too much is revealed at once, you run the risk of creating a perception that the market is not ready for your product. On the other hand, if your vision is too narrow, you will simply look like a niche player.
The challenge is to continue telling and adapting your story. You need to show that your company is the leading force educating and growing the market – solving real problems for real customers.
At the end of the day, market relevance needs to be tied directly to return on investment (ROI). Coming out of the dot.com bust, it is more crucial than ever to promote market relevance to head off the presumption that you are irrelevant.
By demonstrating thought leadership, a company directly impacts another one of the Axes of Leadership: sustainability. A company's key constituencies need to believe that your company is going to be around next week. Customers want to feel that their vendors know what is coming around the corner and are able to continue standing up to competitors. People like to bet on sure things.
One of the things we are finding out in today’s "get real economy" is that investors, customers, partners, employees, analysts and journalists all gravitate toward sure bets. Companies assume leadership by getting in front of these key constituencies and explaining the relevance of their products and services. Using a "gift of knowledge" approach, they provide value business insights by evangelizing hygiene instead of just selling soap. As a result, they build the perception that they are market builders; not market exploiters.
Building Markets
Relevance is particularly important for companies in emerging markets. For example, Web Services vendors still need to spend a lot of effort educating the market. By contrast, power utilities sell an easily understood commodity, electricity. Customers understand what electricity is and why they need it. One could argue that what power companies need to make relevant is "conservation" – an anti-product.
Companies can apply a wide range of approaches to build relevance for their products and services. For example, as Web Services first emerged as a new technology trend, venture capital group Partech International chose to host the first investment-centered conference on Web Services. Partech's goal was three-fold:
The event assembled a broad range of industry stakeholders, including: large "standard drivers" such as IBM and Microsoft; newly-funded vendors such as Avinon, Bowstreet and Informative; IT pros from companies such as Dollar Rent-A-Car and J.P. Morgan; potential investors; and, senior journalists from both technology and business publications. This daylong series of presentations, product demonstrations and roundtables enabled all participants in the emerging Web Services "ecosystem" to meet and share information for the first time.
How did Partech benefit? As the market better understood Web Services and the venture firms’ role in the space, Partech portfolio companies benefited from the exposure and new entrepreneurs were attracted to the space – creating additional investment opportunities for the venture capital firm. Leveraging the conference, Partech demonstrated its leadership by proactively educating and growing an emerging market; not simply jumping on an established trend.
Activities such as information-centric seminars can be a powerful tool to educate your key constituencies and position your company as the lead player. But, markets are grown on many fronts simultaneously. If what you do represents a larger industry trend, you have the opportunity to leverage relevance to build brand identity – positioning your company as "one to watch."
Tools for Building Relevance
To get started, your marketing and communications teams need to start thinking outside the product superiority box (another one of the five Axes of Leadership). You can gain insight into your overall business by asking your teams to answer questions such as:
Once you have articulated a market relevance strategy, start using some of these basic tools for building relevance and establishing your executives as thought leaders:
"Thoughtware" CD – Tape interviews with your CEO and turn them into audio CDs that can be distributed to key constituencies to give a more in-depth view into your company's overall vision and business strategy;
Market-centric Studies – Validate your relevance and product superiority by creating Customer Case Studies that demonstrate your ability to deliver value and solve real customers’ problems;
Evangelism-based PR – Encourage your corporate communications team to think beyond the day-to-day blocking and tackling of product communications and get them pitching trend stories that position you as a trend maker, not a trend follower;
Bylined Articles – Place thought provoking articles in the business and industry press on current topics of interest and industry trends;
CEO Newsletters – Email weekly or monthly newsletters to customers, analysts and investors to regularly demonstrate your insight and industry understanding. Make them “gifts of knowledge,” not blatant product pitches. Keep them short. It is better to send out one concise piece that people can easily digest each week, than a monthly tome that nobody reads.
In conclusion, both emerging and established markets require some flag waving. It is just like sales: if you haven’t sold the problem, your great solution is irrelevant. Establish the perception that you are the market leader by defining industry standards in ways that marginalize competitors, getting in front of issues; and, driving conversations.
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By: William Ryan, Founding Partner, Portola Strategies
© Portola Strategies, 2003