Part 7 of What a Go-To Does Differently: Adapts

This is the seventh installment of a multi-part series to talk about what a Go-To does differently from the me-too pack:

Now what?

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A Go-To Constantly Adjusts and Adapts

The world is continuously changing, and a Go-To keeps an eye on the horizon to constantly adapt to market conditions, evolving customer needs, and other factors that impact a company, like the economy, politics, regulatory policy, technology and so on. It even reinvents itself, when necessary.

A Go-To maintains humility and a healthy paranoia. I remember being in meetings with the senior leadership at Accenture when it was flying high with record growth and profits, and you’d have thought from the conversation that the company was on the verge of going out of business. The executives in the room understood that Accenture’s fortunes, like those of any company, could turn on a dime. The team took the same earnest attitude toward its strategic planning activity as a struggling startup does.

A Go-To also understands that, regardless of how unique its current offerings are, it will face competition. The market will invariably begin to fill up with me-toos going for a slice of that pie, so the Go-To must watch its back and work to stay ahead of the pack.

Technology companies, in particular, can’t stand still for three seconds before a competitor pops up or market conditions change. Oracle started as the only relational database company, but of course competitors came along, followed by new technologies. Though Oracle, by far, still maintains a solid leadership position in that space with nearly 50% market share, it is no longer the same company. It has built on its strengths to broaden into many technology and software solution areas, including numerous specialty niches, such as inventory management for communications service providers.

As of this writing, Apple, Google and Microsoft are the world’s three most valuable brands according to Forbes, but you’d never know it from the healthy paranoia pulsing throughout the headquarters of all three. None look the same as they did in the early days, and they all know that their offerings could become obsolete at any moment. They are always working intently on their next innovations.

A Go-To understands this: Companies that don’t change or don’t change fast enough often perish. As Andy Grove put it in his book, Only the Paranoid Survive:

…the person who is the star of a previous era is often the last one to adapt to change, the last one to yield to logic of a strategic inflection point and tends to fall harder than most.”

In recent years, some stalwarts within their markets, like IBM, have suffered for not embracing the trend toward cloud computing quickly enough. Over the next decade, it will be companies that don’t embrace the Internet of Things trend.

To really bring this point home, consider the S&P 500 Index. According to an Innosight 2012 study summarized in the briefing, “Creative Destruction Whips Through Corporate America,” an S&P company is replaced every other week; and whereas companies in 1958 stayed on the index an average of 61 years, today the average tenure is just 18 years. In the decade leading up to the study, over half of the companies had been replaced.

What This Means for You

Whether you are part of a large company or a startup, be sure you are constantly monitoring market changes and trends on the horizon and then analyzing how they might impact you. Look at what you need to do to adapt. The “Creative Destruction” paper I referenced above offers some pointed advice applicable to any company and talks about how P&G is doing it successfully, and I’ll be sharing additional tips in forthcoming posts.

Subscribe to the blog and stay tuned for some tactical how-to guidance.

Part 6 of What a Go-To Does Differently: Results

This is the sixth installment of a multi-part series to talk about what a Go-To does differently from the me-too pack. Remember that a Go-To is the market leader – the first name to come to mind when folks in the market think about a particular business problem and who can fix it.

The next thing a Go-To does differently profoundly affects customers.

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A Go-To Sells and Delivers Results, Not Products or Services

When you are pitching your offerings, it’s not enough to talk about the problem and what should be done about it – a Go-To also actively solves the problem for customers and delivers a result.

  • A Go-To provides, not just a product or a service, but the complete solution required to give the customer a business outcome.
  • A Go-To leads the customer on a journey and measures success in terms of business results delivered.
  • A Go-To’s sales activity is not transactional and “lead” oriented – it’s long-term relationship and account oriented.
  • A Go-To seeks to be the customer’s trusted business partner and has the customer’s long-term interests at the center of what it does.
  • A Go-To approaches the market with a set of targets it sees itself as best suited to serve and cultivates a presence among those targets – it builds a community of believers in its point of view and approach to solving the problem.

If you in need of a meal, Target will sell you the pieces – food, plates, utensils, etc. – and send you on your way.  A fine restaurant will sell you a complete, satisfying dining experience. Taking that several steps further, the Go-To local restaurant will do this and be a gathering place for birds of a feather, know your name, know your food sensitivities, make a custom dish at your request and send you special offers.

The most important dimension of this is that a Go-To doesn’t market a laundry list of generic services or talk in terms of “capabilities” the way most service providers do. It doesn’t sell functions and features the way most product companies do. Instead, it sells impact. The best ones offer a very specific, and sometimes even quantified, value proposition. It talks in terms of specific business outcomes – e.g., how much more quickly, less expensively or more profitably you’ll achieve your business goals and at what cost. A Go-To already understands your business problem and walks in with a prescription for solving it. A Go-To doesn’t answer your question of “What do you do?” with “What do you need?”

If customer dissatisfaction is a problem, would you rather buy software (or software as a service) that will track customer dissatisfaction, or would you rather buy an offering that says, “We’ll increase the net promoter score of your unhappiest customers by __% within six months”?

Would you rather buy from a public relations (PR) firm that charges a monthly retainer to execute a nebulous publicity program or one that says, “We’ll charge you $XX to achieve 100% aided awareness and 60% unaided awareness among your top __ prospects within the next year”?

If part of a large company, would you rather buy from a firm that says, “For a set fee of $__ thousand, we’ll review the bills you are receiving from your communications service provider and let you know if/when they are overcharging you,” OR would you rather buy from the company that says, “We are confident that your communications service provider is over billing you by at least __%, but don’t pay us a dime unless we find something. If we do, split the savings with us.”?

Side Benefit: Results Orientation Will Lower Your Costs

Because it is so focused, a Go-To is able to do all of this through efficient, behind-the-curtain operational excellence. It has a low cost of delivery relative to someone doing the same thing on a one-off basis through tools, processes and, technology. A Go-To hires and trains people focused on its area of expertise who can jump in and immediately add value. And it has a “trusted partner offering superior results” value system and culture.

Unlike retailers in the mid-1990s who jumped into the online channel as a side business, Amazon made the online channel its only business, initially focusing just on books. In fact, its operation was so efficient that, rather than create their own online channels, companies like Toys R Us, Target, Sears Canada, and Lacoste contracted with Amazon to run their retail websites. Another major key to Amazon’s success is its fulfillment operation, which reduces its shipping, inventory and other operating costs. Wired Magazine once called it, “the world’s most nimble infrastructure for the transfer of things….”

This fascinating video shows just how efficient their operation is, using robotics and analytics to fulfill an order with barely any human involvement.

 

What This Means for You

Use the above as a checklist. Where is your company currently falling short, and how can you redefine your offerings to be outcomes oriented rather than selling capabilities or mere products? Is there anything you can do to quantify your value proposition? Are you currently transactional, or do you take a longer-term view of your customers’ businesses and play a more ongoing, impactful role? And what can you do to create community among your customers – what can you do to build a following among them and between them?

If you’re struggling, there is more on this topic to come. Subscribe to the blog and stay tuned for some tactical how-to guidance.

Part 5 of What a Go-To Does Differently: Evangelizes

This is the fifth installment of a multi-part series to talk about what a Go-To does differently from the me-too pack.

What next?

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A Go-To Evangelizes a Prescriptive Point of View on the Problem and Builds a Following

Once it has declared ownership of the problem, a Go-To develops a prescriptive point of view on what companies need to be doing to solve that problem and widely evangelizes that point of view. Guy Kawasaki would describe it as a “cause.” This is not a sales pitch. The point of view is a genuine perspective on what needs to be done, with or without the Go-To’s help.

The Stanford Technology Ventures Program (STVP), which is part of the Department of Management Science and Engineering in the School of Engineering at Stanford University has become the Go-To for technology entrepreneurship education, as evidenced by (among other things) the fact that the National Science Foundation chose it over numerous other institutions vying for a rare $10 million grant to help engineering students across the United States become more entrepreneurial and innovative. STVP firmly believes that all students can benefit from learning entrepreneurial leadership skills regardless of their major or intended career.

STVP faculty, staff and affiliates travel extensively and maintain close relationships with other leaders and influencers in technology entrepreneurship education and research. Almost everyone in entrepreneurship education around the globe knows or knows of STVP Professors Tom Byers, Kathy Eisenhardt and Tina Seelig, who are fervent evangelists of STVP’s point of view. They are so prolific in their “market,” that all of them have won numerous awards for their work and impact. Kathy Eisenhardt’s research is so influential that she was noted in 2008 as the most-cited research author in strategy and organization studies for the past 25 years, ahead of renowned Harvard management professor and author, Michael Porter.  Byers and Seelig won the prestigious Bernard M. Gordon Prize for Innovation in Engineering and Technology Education for their influence in this area. Presented by the National Academy of Engineering (NAE), then-president William Wulf said the NAE created the award as “essentially the ‘Nobel Prize’ for engineering educators.” All of them have written books regarding STVP practices and insights.

A Go-To understands the value and power of engaging audiences’ emotions with storytelling and drama. The problem provides dramatic tension as the villain, and the prescriptive point of view saves the day as hero.

In the early days of Salesforce.com, Marc Benioff clearly saw installed software as a villain. He firmly believed that software-as-a-service was the hero that could come to the rescue. Everywhere he went, he got up on his soapbox and delivered the same impassioned  message: Companies are better off with software-as-a-service instead of buying enterprise software packages that require dozens of people, millions of dollars and many months to install or even modify, once installed. This point of view was espoused in every facet of Salesforce.com’s activities and interactions with the market.

A Go-To understands the soft-sell power of thought leadership. 

When Frank Vain of private club industry consulting firm, McMahon Group, stands up in front of an audience of private club general managers, he doesn’t talk at all about McMahon Group. He educates the audience on the core problem facing the private club sector and McMahon’s research-based point of view on what club leadership teams can do to solve this problem. By the time he’s done openly and freely sharing his expertise, he’s essentially given a credentials presentation while keeping the audience hanging on his every word. It’s like standing outside a restaurant giving free samples of your most delicious dishes. Customers can’t help but want more.

A Go-To also understands the power of building a following, so that others in the market place start doing your selling for you.

In a prior post, I referenced my involvement in selecting the McMahon Group for a private club member research project. While meeting with us, Frank Vain didn’t sell us on buying services from McMahon Group, our own general manager did! Another example is Apple, which has an entire army of rabid fans who spread the Apple gospel on its behalf. Mozilla, proud provider of Internet browser, Firefox, actually engages its users in helping to maintain and improve the product through the Mozilla Project – they work for free, because they believe in the cause: choice and control online.

STVP has created a “community of believers” throughout academia, who also share its passion and belief in STVP’s philosophy. For many years, STVP led a series of annual conferences in Europe, Asia, Latin America and the U.S. to bring together entrepreneurship educators from across these regions to advance entrepreneurship education. STVP would share its approach and encourage others to to the same.  Professors around the globe have tremendous respect for STVP’s approaches and its role as a thought leader in this field. More importantly, there is incredible bonding that took place among the participants. There was a deep sense of camaraderie and mutual support. STVP provided these events as a service to their peers, but the events paid immeasurable dividends back to STVP in terms of what it learned, brand building, and other opportunities the events created for STVP.

Now, to you.

What does your company stand for? What do you believe your market needs to be doing differently? And how might you build your following?

[If you’re stumped, subscribe to the blog – I’ll be posting a how-to series on this later.]

Part 2 of What a Go-To Does Differently: Beachhead

This is the next installment of a multi-part series to talk about what a Go-To does differently from the me-too pack. Part 1 talked about how a Go-To focuses. The next thing a Go-To does differently is build from a base of strength.

A Go-To Builds a Strong Beachhead Around a Central Theme Before It Broadens

Rather than a hodge podge of messages, products, services and activities, a Go-To builds its brand around a central theme/market, and every fiber of its being revolves around that theme until the company has enough of a dominant position to broaden from there into adjacent markets. Its activities aren’t all over the map. They are highly, highly focused.

  • Oracle gained its footing as the Go-To for relational database technology before broadening into applications a full ten years after it was founded.
  • Salesforce.com built its foundation as a salesforce automation application before broadening into other sales and marketing applications.
  • Accenture is a $30 billion company today but started in the early 1950s as a tiny consulting division of the accounting firm, Arthur Andersen, to meet audit client demand for financial and manufacturing process automation. The bulk of this division’s business was focused on these two areas well into the 1970s.
  • Facebook was initially only available to Harvard students; once strong there, it allowed students from just eight other universities to join. Not until it had a firm foothold in those markets, with others asking to join, did it open itself to most universities and corporations before finally allowing anyone 13 and older to sign up. Even with Facebook’s lightning-speed growth trajectory, this progression took two and a half years.

Look around. Just about any large company you can think of started with a beachhead.

51susyutxjl-_sx330_bo1204203200_Geoffrey Moore discusses the importance of a beachhead in market dominance strategy in his seminal strategic marketing book, Crossing the Chasm, which I highly recommend as a marketing primer to newbies and as a great refresher to everyone else. Using a D-Day analogy, he explains the importance of focusing your scant resources to secure a stronghold and then building from a base of strength. Much of what he talks about are principles many MBA students learned but have proceeded to ignore at their peril. It’s truly excellent and is a quick read well worth your time. Buy your own physical copy, mark it up and keep it near your desk for frequent reference.

One of the metaphors he references in explaining market dominance strategy is the use of kindling to start a fire.

The bunched-up paper represents your promotional budget, and the log, a major market opportunity. No matter how much paper you put under that log, if you don’t have any target market segments to act as kindling, sooner or later, the paper will be all used up, and the log still won’t be burning…this isn’t rocket science, but it does represent a kind of discipline.

— Geoffrey Moore

The key, then, is to figure out a beachhead – which market will you seek to own first before broadening?

Part 1 of What a Go-To Does Differently: Maniacal Focus

This is the beginning of a multi-part series to talk about what a Go-To does differently from the me-too pack. Firms that achieve Go-To status in their chosen markets follow a particular set of strategies that me-toos typically don’t. Let’s look at the first thing a Go-To does differently and how entities like Intel, Lego and the Apollo Space Program put it into action.

A Go-To Has Maniacal Focus

A Go-To focuses on a specific market that is large enough to provide opportunity but specific enough to allow the company to concentrate its finite resources in order to capitalize on synergies. Focus is not “a” way to gain market traction but “the” way.  Andy Grove, the longtime Intel CEO who transformed the company from a me-too chip manufacturer into an innovative Go-To for microprocessors, had this to say in his book, Only the Paranoid Survive:

A question that often comes up at times of strategic transformation is, should you pursue a highly focused approach, betting everything on one strategic goal, or should you hedge?…I tend to believe Mark Twain hit it on the head when he said, ‘Put all of your eggs in one basket and WATCH THAT BASKET.’  It’s harder to be the best of class in several fields than in just one…Hedging is expensive and dilutes commitment. Without exquisite focus, the resources and energy of the organization will be spread a mile wide—and they will be an inch deep.

— Andy Grove

How Focus Won the Cold-War Space Race Against the Russians

Having the honor of sitting next to Apollo astronaut Dick Gordon at a business dinner some years ago, I asked him for the most significant lesson learned from the Apollo Space Program. “The power of focus,” he said. “Anything is possible when you have a very clear desired outcome shared by everyone and around which all action revolves. In our case, it was the moon.”

apollo-program-cost-go-to-moonHe explained that prior to Apollo, the United States (representing the free world at that time) was losing the space race to its Cold War opponent, the former Soviet Union. U.S. space exploration consisted of a hodge-podge of initiatives, none of which worked together. There were numerous independent projects in progress, spread among multiple government agencies and contractors, involving thousands of people and investments of billions of dollars per year.

“The only driving theme was speed, to be the first at something, anything,” Gordon said. “All of that time and money was being expended while the Soviets kicked our butts with one historical achievement after another.”

In his bid to win the Space Race of the 1950s and 1960s, John F. Kennedy didn’t go broader, he went narrower. He said, “…I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to the Earth.” With those four words, “man on the moon,” he instantly focused the resources of all involved in the space program on one specific goal, one specific domain.

He didn’t do it quietly either. He launched it with a grand gesture in the most public way possible. He made a historic speech to Congress on May 25, 1961 that the entire world heard. He put a stake in the ground with a proud declaration of a singular goal. No one knew at the time how to do it; but if achieved, this feat clearly would establish the U.S. and the rest of the free world as the dominant force in space.

Sun Rays Vs. Laser Beams

img_3155The book, Focus: The Future of Your Company Depends On It, by legendary marketer, Al Ries, is now considered a marketing classic and makes a strong case for focus. It landed on my radar screen while reading an article years ago in Inc. Magazine about Bill Gross, the famed serial entrepreneur and founder of startup incubator, IdeaLab, in which he was extolling the virtues of focus, raving about how the book had changed his mind on the topic and also his fortunes. Here is an excerpt from the book’s introduction that sums it up:

The sun is a powerful source of energy. Every hour the sun washes the earth with billions of kilowatts of energy. Yet with a hat and some sunscreen you can bathe in the light of the sun for hours at a time with few ill effects.

A laser is a weak source of energy. A laser takes a few watts of energy and focuses them in a coherent stream of light. But with a laser you can drill a hole in a diamond or wipe out a cancer.

When you focus a company, you create the same effect. You create a powerful, laser-like ability to dominate a market. That’s what focusing is all about.

When a company becomes unfocused, it loses its power. It becomes a sun that dissipates its energy over too many products and too many markets.

— Al Ries

How Going “Back to the Brick” Saved Lego

In 2003-2004, Lego was in a state of crisis, with falling revenues following a long period of thinkstockphotos-178473803stagnation.  When new CEO Jorgen Vig Knudstorp came in, he declared Lego would go “back to the brick” by concentrating on core products and core customers. As detailed in the book, Brick by Brick, the company cut back on many of its brand extensions, cut the number of brick designs by 46%, and re-narrowed its market focus to kids ages five to nine. The next year, sales increased 12% and LEGO had come back from a $292 million loss in 2004 to a pre-tax profit of $117 million in 2005.

Recap: The Power of Concentration

Focus lets you concentrate your resources. It lets you concentrate your message, so that it speaks directly to your targets’ pain points and needs in their own language. It helps unqualified prospects self-select out, before they waste your precious selling energies. It tells employees what you don’t do, so they stay focused on the right priorities.

So make it your mantra: Focus, focus, focus.

Market Dominance Case Study: Owning a (Large) Consulting Niche

mcmahon-good180I’ve talked a lot recently about the advantages of being the Go-To in your chosen market and have offered up a couple of high-profile examples. But there are plenty of examples in specialty markets the average person isn’t exposed to. An example is McMahon Group in St. Louis, the Go-To for private club strategic planning and consulting, and I experienced the power of their Go-To status while playing the role of buyer.

thinkstockphotos-628711134I was once helping a premiere private club that was falling prey to the same tough trends impacting all private clubs across the U.S., if not the world – an aging membership, flat membership numbers that would decline if the club didn’t change, and less-than-optimal utilization of club facilities and programs – despite this being a club that was highly respected. I was on the long-term planning committee tasked with addressing this problem. One of our first steps was to seek out a firm that could help us conduct a member survey and determine a plan of action based on the results. In this situation, you can imagine how price sensitive the club was. However, results were more important. We could have sought out a generic market research firm. Afterall, how hard is it to put together a bunch of questions about how and why members use club facilities and what they felt was missing from the member experience? Heck, we could have done it with a free online survey tool.

We weren’t just after a survey, though. We were after a long-term plan that would improve the club’s future. We needed expertise. As it happens, there is an entire sub-specialty of private club market researchers and consultants we could turn to. Who knew? The club leadership agreed that it made perfect sense to hire a firm that understands the unique issues and trends impacting private clubs, even if it was going to cost a little more. We knew that member feedback and input was just one piece of what the club ultimately needed, and we wanted a firm that could help us ask the right questions, interpret the feedback appropriately and guide us toward best actions.

thinkstockphotos-512814378Then it became a matter of selecting the firm. The private club sector, like most industries, is a tight community at the upper leadership levels. Just like any industry, club managers all belong to one leading professional association, see each other at meetings, read the same publications, network with each other, and progress from club to club as they climb their career ladders. As a result, the general manager already knew of the top three consultants in the business, telling us that one, in particular, was the Go-To; so we interviewed all three. Two were impressive – they had great credentials, stellar reputations, and “trusted partner” status with their clients; had done many similar projects; obviously had deep expertise in this specific area; and offered strong teams. The cost of their services was also extremely reasonable and competitive. We knew they could each do a great job.

thinkstockphotos-77739477The third firm, McMahon Group, was all of that and much more.  In addition to the above, it was the thought leader in the field. McMahon didn’t just serve the industry; it led the industry by proactively investing in, conducting and sharing private club trends research, not just on where the industry had been and where it currently was, but also on where it was going. When we had lunch to interview the company’s president, Frank Vain, he humored us by listening to our litany of the club’s challenges and problems; but he could have told them to us himself, because they were no different from what he saw at every club McMahon Group works with.  He was finishing our sentences. And further, he laid out the trajectory we were on. Most of all, he prescribed the solutions right then and there – told us exactly what we needed to do.

In talking to Frank, it was clear that McMahon Group lived, ate, and breathed private club trends and operational excellence best practices. This is all it does. It knows everything going on in the industry. It knows all of the key players.  At its own expense, it studies and watches the trends on everyone’s behalf and warns the industry of what’s coming on the horizon. McMahon has taken spiritual “ownership” for understanding and solving the industry’s most pressing problems. And when you hear it talk about the industry, you can tell this company cares.

In the end, we hired McMahon, even though it was about twice as expensive as the other options. The reason is that we felt the club would get great value and an accelerated
path to results – we knew McMahon would not just execute a survey to tell us what the members wanted but would help the club quickly take the optimal actions as a result. We weren’t buying market research services – we were buying a treasure trove of expertise, experience and wisdom. It would help the club solve the problem – and fast.

That’s exactly what happened. We did the survey. It told us precisely what Frank had told us it would at lunch that day (yes, we could have saved a lot of money by letting him just give us the answers…but we needed to hear it from the members). The action plan ended up being exactly what he had prescribed during that same conversation. As a result, membership growth and club utilization have soared. The Club has since been thriving and doing better than ever, even through the “Great Recession,” when many clubs suffered badly.

The private club sector might sound like a small, limited market for a company like McMahon Group to target, but it’s about a $26 billion market consisting of 14,000 clubs in the U.S. alone.  McMahon doesn’t have to capture much of that market to have a great business. And by capturing the top end of that market and charging a premium price for premium value, McMahon has built quite a profitable business with a reputation that precedes it. It is, indeed, the Go-To in its space.

Give some thought as to what your company can do to establish this kind of reputation and make this kind of contribution to individual customers and your industry as a whole.

More on the Advantages of Being the Go-To

I recently posted twelve reasons it’s better to be the Go-To than a me-too and then four examples of Go-To brands. Here’s just a bit more on they advantages of being the differentiated Go-To.

The greatest advantage is that you compete less on price, if at all.  In fact, you can usually command much higher prices than the competition, because you offer a unique approach and can promise stellar results. The buyer considers the benefits you offer to far outweigh your cost.

Another big advantage is that you are no longer part of the pack – you stand out. You are the first name that comes to mind when the buyer has a particular problem. And that buyer often will proactively seek you out, particularly when time is of the essence (as in the case of C. C. Myers when the freeway melted).

Often selling costs for a Go-To are much lower, because you’re not starting from ground zero in a sales situation. Your reputation precedes you, so you don’t have to work as hard as a lesser-known competitor to establish your credibility. You don’t have to prove yourself as much. You can cut right to the customer’s situation at hand and how you can help.

As the Go-To in a particular field, you wield great power and influence in the marketplace. You aren’t just part of the fabric of the industry, you sit at the top of the pyramid. You help set the direction of the industry. You have a vision others want to follow. As the Go-To, you are in a position to fundamentally alter the direction of the market.

Doesn’t all of this sound much better than scraping for business as a me-too and being pushed to cut your price?