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| Home - Industry Article - Aug 03 Issue |
The Multi-Enterprise Market
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Getting new innovations “across the Chasm” requires that complete whole products be provided to pragmatic buyers. You can fulfill core product demand only once the market is viable and humming. Until then, you need to convince the world that your technology is part of a completely baked solution that solves real-life applications, no matter what part of the puzzle you provide yourself. When the whole product is a network of users that might not be inside the company, the rules of the game change dramatically because the complete whole product does not exist until the network exists!
The end-users themselves are now part of the solution which you must deliver!
As in the past, successful market development requires clear focus. Solving 80% of everyone’s problem often isn’t good enough, but solving 100% of the need in one smaller market will allow you to create leverage. Penetrate one market and then leverage to the next and the next. When your proposed solution is a network, the classical way of thinking about target markets and solutions can lead you down a blind alley quickly.
Typically, the ideal target buyers for new innovations are those that have an urgent and mission-critical problem. In a networked world, the ideal target buyers are also those who can exert strong influence on others in the network to adopt. The classic example is in the automotive industry, where the major OEM’s regularly force technology standards down their supply chain to streamline supply costs. Independently, suppliers may have little reason to adopt new technology because the value proposition is not as compelling in a small company environment. But when the OEM demands it, it is simply a “tax” that must be paid as a cost of doing business.
Unfortunately, most businesses don’t work that way. Often, the most you can hope to get from a buyer is a ‘hunting license’ to approach suppliers. When the buyers do not have a desire or the power to force technology standards outside their own departments or companies, the real whole product can’t be created until a whole other adoption process happens. Now you may say, “Well, that is the customer’s problem after-all.” But the reality is that it is your problem too. If customers are not successful in deployment, the multi-enterprise solution will eventually be seen as a failure no matter how capable your technology is. Your strategy must be to insure that this network adoption occurs.
Because of the complex nature of this market development problem, it makes tremendous sense to segment and prioritize your targets by network, rather than by industry or department. Your real target customer is not only the economic buyers that pay for your products and services, but the extended network that must be part of the solution. Putting capabilities and services in place to drive and monitor adoption into your customer’s customer can be tremendously valuable to them while driving your own market development.
If you are not so fortunate to be able to rely on your customer to force network adoption, then you have two other choices available:
a) Find a value proposition that will allow you to independently sell to other members of the network. First segment your opportunities into target communities. Then, target companies/users within these self-referencing communities (the network nodes) with solutions that will stand-alone. This is equivalent to selling local area network solutions before you attempt to promote a WAN. Only after you have been able to deploy these individual LANs with a single data, programmatic and network communications standard can you seriously provide a multi-enterprise solution that extends beyond into the partner or supply chain. Once the LANs are deployed, the network community can then begin to reap the cross-organization benefits that come from having a whole product.
b) Deploy the network infrastructure yourself. This is the equivalent of getting rights to put up towers along a highway, so the cost of doing this will be non-trivial. Again, segmenting and prioritizing which user communities or networks you want to deploy will help tremendously. The ideal scenario is to do this once or twice to create an initial network Keep in mind that Metcalf’s law applies here- the value of the network is the mathematical square of the number of nodes deployed. That doesn’t mean that your network has to be ubiquitous. It just means that the people signed up need to be the people your target buyer cares about. In this world, target marketing is king.
Regardless of the situation you find yourself in above, until a complete solution that includes a critical mass of users is formed, the market can not scale. By segmenting and targeting networks of users, you can target and deploy a small network of users to prime the pump. After this initial multi-enterprise network is deployed, you can select follow-on market network segments where the whole product solution required by the new target market includes the network of users just deployed. The goal is to create a machine that fuels network market development. By prioritizing in such a way you avoid having to incur the cost of network development again and again while never achieving critical mass to drive demand.
Information Technology for the multi-enterprise is a clear trend. Process improvement across the virtual enterprise remains a major opportunity. Both require that a network of users be part of the solution for one another. But in this networked world remember that Metcalf’s law has a legitimate opposite: no network, no solution. No solution, no market. No market – well… you get it. At least one thing seems to have remained constant. Focus still remains the key challenge.
Mike Tanner is a Managing Director at the Chasm Group, where he provides advisory and consulting services in the areas of new venture development, market development strategy, operational planning, portfolio investment strategy and market positioning. Mike holds board seats for Apexion and Savi Technology, and sits on the advisory boards of Entivity and Unicru. He can be reached for comment at: mtanner@chasmgroup.com
 
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