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.

A Quick Brainteaser: Can You Tell the Difference? (Bonus Round: The Cupcake Challenge)

Let’s start with a picture of this child. Take a close look.

Differentiation Brainteaser 1We’ll be coming back to him in a moment. But first, we’re going to play a little game called the Cupcake Differentiation Challenge. Feast your eyes on these tempting cupcakes.

B2B Differentiation Brainteaser: Cupcake ChallengeThey are all red velvet cupcakes, but each is made from a different recipe containing different ingredients and flavors. The game is this: You must pick the most delicious tasting of the bunch. If you succeed, you win $100,000. If you don’t, you owe $50,000. You can’t sample them in advance. You have to pick based on just looking at them. How would you do it? (This is all hypothetical, of course. Don’t send an attorney to collect your winnings.)

What’s that, you say? They all look the same? You can’t know which is best without trying them first? Yes, it does feel like a high-stakes crapshoot. A little stressful, eh?

Gee, I wonder who else goes through this. Oh, that’s right…It’s your buyers every time they are choosing between you and the multitude of other offerings exactly like yours.

Now let’s go to a different shot of that little boy you saw above.

B2B Differentiation Brainteaser 2 Oops, that’s not the same little boy. It’s his identical twin. Without scrolling up and cheating, can you discern what makes this little boy different from the other one?

 (Jeopardy music playing in the background)

How long did it take? Or did you give it a try and quickly give up? Did you simply find it impossible? (If you’re still looking, scroll down for a side by side comparison.)

The differences in many identical twins are so subtle that you have to have intimate knowledge of them and be around them quite a bit in order to pick up on what makes one different from the other. In fact, often they, their parents and perhaps their closest friends are the only ones who can discern the differences.

If your offerings and/or company aren’t clearly and obviously unique at a glance, your customer will see you and your competition as identical twins. Even if there are differences, your prospect has neither the time nor the inclination to do a detailed exam and comparison to discover them.  The prospect is going to take a quick look, decide that you are identical to one another, and buy based on price. They are not going to invest the effort to actively seek out the differences. Or they will find irrelevant, arbitrary differences that influence them – your competitor shares the buyer’s favorite hobby or alma mater, or some other arcane factor. Your odds of winning business become a game of price and random chance – not a good basis for achieving sustainable growth.  Not a basis at all for growing margins. You are merely another face in the crowd, another me-too.

On the other hand, if you pop out – if you’re truly unique in your ability to solve a particular and pressing customer problem — you will get the buyer’s attention. More importantly, you will get the broader market’s attention, and buyers will start seeking you out. In a crowded market, this is an important first step toward sustainable growth and margins.

I’ll talk more about how to clearly differentiate yourself in upcoming posts.

B2B Differentiation Brainteaser side by side

Is this what your prospect sees when looking at you and your competitor?

Are You On Your Way to Market Dominance?

Take the Test:

  • What does your companyiStock_000017605136Small stand for? Can you state it in one sentence? One word?
  • Would we get the same answer from each of your employees? Clients?
  • Why should a prospective customer turn to you instead of someone else?
  • What can you say about your capabilities that no one else can say?
  • Do your proposals, marketing materials, website, etc. have a unique voice?
  • Do you have such a strong market position that clients actively seek you out, and you are able to name your price?
  • Why should a talented recruit select your firm over another?
  • Why would someone pay a premium for your stock?

Very few B2B companies today can answer these questions in a manner that clearly sets them apart from their competition. A large part of the problem is that companies are afraid to place their bets — focus on a specific well-defined market space and offer a specific set of solutions aimed at solving specific problems. But this is necessary, if they are going to build a defensible market position with a footprint so unique that no competitor will be able to match it.

As you work on your strategic plans, positioning, messaging, offerings, etc., aim for the answers to these questions, and you’ll be on your way.

Best Candidates for Market Dominance

I’ve been doing B2B market dominance strategy and execution for (gulp) 25 years now, and I’ve seen a pattern in the types of companies that are good candidates for market dominance and those that will never get there without an “attitude adjustment.”  Ditto for the executive leadership.  I’ve found that the best candidates for market dominance share certain characteristics. Take a little look in the mirror to see where you stand.

 Best Candidate Companies for Market Dominancewe-choose-to-go-to-the-moon

  • Seeking high growth
  • Intent on creating dominant market position
  • Fighting increased competition and shrinking margins and/or are intent on achieving higher margins
  • Provide services in rapidly-changing environments (industry, technical, business)
  • Forward-thinking, progressive
  • Results-oriented, action-oriented, have a sense of urgency
  • Have smart people, a “team” culture, quality orientation

Best Candidate Individuals for Leading a Company to Market Dominance

  • Visionary leaders
  • Accountable for strategic results
  • Responsible for growing the business
    • Increased revenues
    • Increased profits
    • Market penetration
    • Identification and penetration of markets
  • Focused on the Future
    • Long-term vision
    • Long-term positioning
    • Long-term client value
    • Getting from “where we are” to “where we want to be”
  • Results-oriented, action-oriented, have a sense of urgency

Think through whether your company and executive leadership seem to possess these characteristics. If so, you are great candidates for pursuing market dominance. If not, you have work to do.

What’s It Like? (Walk a Mile in…)

Try this exercise to see what it’s like to be one of your prospects:iStock_000006437321Small

  • List five of your closest competitors
  • Pull from each company’s website the one short paragraph (1-3 sentences) that best summarizes what each does
  • Do the same for your company
  • Remove the names and make a list of the paragraphs, mixing yours in among them
  • Give them to a colleague who knows the market well, and see whether they can identify the companies the paragraphs came from

This is what a prospect encounters when shopping for your services, software or products. Do you all sound the same? How distinctive do you sound?

Where Are You on the Commodity Curve?

One quick way to gauge the health of your long-term prospects as a business is to determine where you sit on the Commodity Curve.  This is a little model I developed over a decade ago to illustrate what happens when you fail to adequately differentiate in an increasingly competitive market. It’s not rocket science – Econ 101 and business strategy courses cover this in depth. But after watching clients and other companies conveniently forget this basic tenet, I developed an illustration specific to the situation.  Consider this just a little reminder.

It’s very simple: If competition is increasing and you don’t adequately differentiate yourself, margins drop.  The red line below is the typical scenario when there are a lot of look-alikes in the market.  The blue line is the company that stands apart from the competition by offering something unique that’s in high demand.  By being unique, there is little or no direct competition. The company can name its prices and actually increase margins while others are lowering their prices.

How unique are you? Your margins will give you the answer.

Commodity Curve for blog post

It Stinks to Compete on Price

Falling Prices AheadThe implication of the trends discussed in my last post, Hey Stop Copying Me! is that many business-to-business products and services are struggling against commoditization and must, by default, compete on price. When you boil down all the problems and challenges affecting the health of these companies past, present and future, it comes down to commoditization. That is the fundamental threat.  And it becomes even more dire in the face of a sudden drop in overall market demand, such as in a recession.

Don’t just take it from me, though. Hear it from your peers.

I’ve formally and informally interviewed thousands of senior executives in the sectors I listed in Who’s at Risk.  I’ve asked for one sentence or phrase that sums up their biggest business problem. The refrain has not changed in twenty years. Here is what they say:

  • “How to escape commoditization — It’s become very difficult to differentiate ourselves from the competition.”
  • “How to protect our margins —   We have to be competitive, and clients are pressuring us to reduce our prices.”
  • “How to establish awareness in the marketplace — We are a well-kept secret, but it’s been hard to stand out from the crowd.”
  • “How to improve our business model to do ‘repeatable projects,’ so we can leverage our experience and reduce delivery costs.”
  • “How to attract and retain the right people.”
  • “We are completely skill constrained, because we’re competing with so many companies that need exactly the same skills.”
  • “We have a lot of business…it’s just not necessarily the right business — it won’t build our future.”

Commoditization is a gigantic issue that plagues executives everywhere, and almost no one worldwide is immune in today’s global economy. For example, the United States has seen thousands upon thousands of even high-skill jobs move to India, because labor is so much less expensive. But in a dramatic twist of fate, even India is feeling the squeeze.  According to Quantum Information Services, “Increasing competition, pressure on billing rates and increasing commoditization of lower-end application development and maintenance services are among the key reasons forcing the Indian software industry to make a fast move up the software value chain.”  In other words, for the types of businesses we’re talking about in this blog, someone will always find a way to look like you or be cheaper.

Find out why in the next post: Where Are You on the Commodity Curve?

Service providers: I’m interested to hear from you. Can you relate?  What’s your biggest business problem?