Little nightly thoughts
by Business Exploration

Dear Fellow Innovator,

In this era of stagnating economy Companies of any kind and size are struggling to understand where to find a Customer. This need is so urgent that failing to do so, is bringing the business down on a slippery slope, from which recovery it's almost impossible.

what to do to not loose momentum?

No matter if you are a Big Corporation or a Small Medium Business you need to face 4 critical moves to stay alive and kicking.

  1. Inject new technology
  2. Upgrade or Downgrade to Market
  3. Hack the Business Model
  4. Invert Go To Market Direction

I. Inject new technology

This move responds to the commoditization of the solutions on the market. As prof. Christensen has shown us, the race for better unit contribution margin has led to the exploitation of many technological trajectories.
Competing players are all ending up bringing on the market over-performing solutions that allow the customer to choose vendors poorly on the base of price, thus destroying the marginality.

The only way to move out from this trap is to jump on the next technology's trajectory.
Here prof. Altschuller tell us what to do with his TRIZ methodology: look for technologies that can "dematerialize" the solution's system. The TRIZ methodology it's powerful, but needs practice. (If you need a hand, one of the max experts and passionate in Italy is my friend Marco Tatti of Magyc.)

II. Upgrade or Downgrade to Market

Given that your market is no more "receptive", the only other option is to move into another market. Ok. But which one?
I want to build up on a couple of recent experiences I made.

1st case: Moving upwards to a more structured market

One is a project where a supplier of jet engine components was stacked into his reference Energy market. This market is close linked with the GDP trend, where a growing economy pushes for more energy consumption.

The Energy market and its supply chain is more and more market controlled. This means that the past drivers of sales ( the need for Countries to build an energy infrastructure ) is less of importance. The market is now leading the dance and commoditization is taking its tall.

For this company the solution has been to move away from its orginal Energy market and point to a more (infra) structured one: the Aerospace and Defense.

Aerospace and Defense trends are underpinned by political, not by market logics. And this drives a continuous push towards excellence. To support high performance, the Aerospace and Defense market shall continuously expand, deepening and upgrading its market's infrastructure, thus creating an environment where excellence can still emerge.

The challenge here is to be able to manage the infrastructure ( systems, norms, regulations, networks, relationship etc ) complexity.

This is the reason why, on my opinion, highly (infra) structured markets are receptive to the themes of Internet of Things. Iot is a way to manage complexity in autopilot.

One way to move out of your market is to look upwards to the adiacent, more (infra) structured markets. But be ready to handle an added layer of complexity.
(If you need a hand, you may be intrigued by the Internet of Things platform Zerinth, developed by a bunch of "young big brains" guys of the Pisa University. An enabling solution for all those companies that need to quick jump into the interactivity of Iot and M2M technology. Zerynth is registered in USA and has operations on both sides of the Atlantic Ocean.)

2nd case: Moving downwards, to a less structured market

The second case I want to offer to your attention is the support I give for a couple of years to an e-commerce startup targeting the Arabian market: Italy's Got Style

The goal of the founder was to find a non saturated market for an Italian fashion e-commerce. This was not an easy task given that this very market spot is taken by a strong player like, a company listed in the Milan Stock Exchange

The idea was to target a quite unpresidiated market: the Arabian one.

Arabia has more than a difficulty for a western entrepreneur: different culture, norms, regulations, business networks, calendar, shopping seasons, shopping habits, you can add

But the Entrepreneur was a Lebanese young guy with an incredible personal story and an Italian academic background. A perfect fit to build a bridge among the Italian Fashion and the Arabian lifestyle.

Targeting the Arabian market however, has required a lot of in situ experiments and discovery. The Kingdom of Saudi Arabia is a fantastic place of opportunities, but is till in its infancy in terms of infrastructures. Just to name a few gaps (perhaps advantages?):

  • streets have no names
  • cash is the preferred method of payment
    ( if not the only one, considered the target consumer)
  • Internet is available, but through smart phones,
    because cable connectivity and therefore computers, are not deployed.

Building an e-commerce to win this market niche requires to fully understand and maneuver into the market: not giving per granted infrastructures we normally use for our business models.

The lack of infrastructure proved to be an opportunity. But to exploit it, it requires a first hand experience that can be acquired only living the local reality. ( if you are thinking to make a bold move to places like Iran, Nigeria, India, Turkey and China, I may have some friend there who can help)

III. Hack the Business Model:

Let's assume that the reason for loosing momentum is not a market fault. It's your fault. Probably it's time to hack your business model.
I see at least two main drivers for business model obsolescence:

  1. Go to market obsolescence,
    on the front seat. ,
  2. Value Chain obsolescence,
    of the back seat. ( if not the only one, considered the target consumer)

Let's start form this one:

A) Value Chain obsolescence is caused by "Know-How Streaming" technologies

the race towards more intangible solutions has pushed the separation of hardware and software to the extreme, thanks to two new technologies, both enabling: Know-How Streaming.

The first Know-How streamer is 3D Printing.
There is plenty of literature on the web. my point here is that 3D printing is enabling the adoptions of "iTunes" alike business models.
iTunes allow you to listening to music without owning it.
Today OEMs are very intrigued by the idea of "streaming" their product know-how to our 3D printer, so that we can e.g. get the replacement part we need, without stocking high value inventories, but just low value materials

The second Know-How streamer is Drone Technology
Here I require a bit of mental elasticity, but think to Drones as a de-coupling technology, exactly as 3D printing.
What a Drone does, is to decouple information from location.
Drones are an enabler of know-how streaming, just as 3D printing but in the opposite direction. From a place to a base, instead from a base to a place.

B) Go To Market obsolescence is caused by sharing economy models

Also on the front end of the business model the quest for de-materialization is disruptive. De-materializing the front-end of the business model means that "owning" something is going to be substitute by "using" something.

It's about to reach the latest frontier of intangibility by externalizing the cost of ownership

The sharing economy is hacking more than a business model. is hacking entire industries.
Uber, Air B&B, are big names, but this is happening al around you.
Even a close friend of mine has started a venture where you can "rent" a driller from your neigh borough to hang that great New York Picture, instead of having to buy a full set of tools. (You can try it on LocLoc )

IV. Invert Go To Market Direction

The final move to not to loose momentum is inverting your go to market direction.

I talked extensively of why and what is happening in my old post:
"Why your marketing does not work anymore and how to fix it"

Just to recap, I add here a graph taken from Google Trends that gives an idea of how much the smartphone technology has disabled the Get-Keep-Growth customers' acquisition mode of many companies in the last 3 years.

Content Marketing, Digital Marketing and Social Media Marketing, since the advent of mobile internet (just a couple of years ago, in terms of adoption) have reversed the go-to-market flow.

Now you need to attract clients, and stop to chase clients.

If your business model does not forecast an inbound marketing strategy and implementation, you should stop wonder why your Customers are no more in the place where you used to find them.

To recap:

If you are stacked in a stagnating market niche, you should probably take into consideration to revisit your business model along one of these 4 directions:

  1. Injecting de-materializing technology,
    to recover marginality
  2. Move to a market with a different infrastructure,
    in order to take advantage of different fundamental business principles and un-chain from your old customer base
  3. Rethinking the way your company retains its share of value generated,
    rethinking the way your company retains its share of value generated
  4. Reversing the marketing flow,
    using content marketing to attract the customer, instead to hunt for customers.

I hope that these 4 moves may help you find again a customer base.

In case, just let me know the results.

To talk about this, contact me at the numbers below.

Flavio Tosi is an expert in designing marketing plans targeting the Oil & Gas, Energy and Aerospace industries. His ideas about innovation go to market have been featured on "Impiantistica Italiana" -the ANIMP official organ - and adopted by SMBs, Startups and Spin-offs in Italy, Austria, France and U.A.E.

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