For a management team, it is hard to accept that a strategy that was birthed after so much work, discussion, and compromise is leading to limited growth, or worse. That is the predicament that many SMBs find themselves in, and it can be painfully apparent especially in these times. Here is a framework that describes four common strategic traps, some of them uglier than others, identified by examining the combination of two strategic biases (see diagram).
Diagram key:
Vertical dimension: Modalities of failure to deliver the right offering.
Horizontal dimension: Unbalanced focus: excessively internal or external.
Technology drives the company
In highly inward focused companies that deliver a overly complex product, one often finds a dominating passion for technology. The management, usually characterized by a heavy technical leaning, believes in the future of a product on the basis of the technology that powers it. When the technology is unique and corresponds to a real market need, success is in the air. When it’s the proverbial solution in search of a problem, things can get ugly.
What makes this situation hard to solve is that most technologies condemned to never achieving any widespread appeal do get some customers. Most of them are highly supportive and very enthusiastic although they have a limited budget. They provide just enough hope to make it difficult for the company to try to rethink its strategy, and in this way contribute to keeping the company pointed toward a dead-end. Finding a home for a technology can be very challenging for a host of reasons including the possibility that the world may not yet be ready for it. An excessive inward focus exacerbates the challenge.
Company ignores markets requirements
The market is in need of better solutions but the company does not step up to deliver either by choice or because of myopia. Sometimes, that decision may be wise but that presupposes that the opportunities were carefully assessed. Actually, in many cases the company does not detect the opportunities at all simply because it is dedicating most of its efforts focusing on its everyday tasks and internal problems. In other cases, management is not temperamentally or intellectually attracted by the nature of the opportunity. Management is uncertain about the direction the company will take if it commits to adapting its competencies and processes to meet a more complex or different market. Therefore things are kept the way they are. The fear of change acts as a powerful motivation to persist in an inward focus.
Company can’t read the market
The company under serves or does not serve one or more accessible markets but it can’t seem to dedicate sufficient focus to make a success out of any one of them. The direction keeps changing usually due to the fact that there is a short term need to close sales with new prospects. The Sales team often plays a central role here enabled by a short term outlook in the product design function. A weak or non-existing formal marketing function can cause this situation to persist through lack of adequate research and/or market insight that leads to a whack-a-mole approach.
Key customers drive the company
This is a somewhat less ugly trap. The company has a few good customers that support some growth. Unfortunately, in many cases that growth is insufficient. The features and improvements are useful for these key customers but are superfluous for almost anyone else. The company does a good job being attentive to these customers, but every one of their requests draws the company further away from being able to score a real hit in a broader market. The trap, which is more of a dilemma, can be sidestepped by careful account management and diligently executing a plan of resource diversion toward a different strategic option.
Turning the tables
On the positive side, each one of these traps can be skillfully turned into a source of success. The vertical and horizontal dimensions here represent what seemed to be a strategic bias before the company’s vision was proved to be correct.
The difficulty lies in correctly identifying when you are stuck in the trap and having the courage to confront the cul-de-sac.
Tags: high-tech marketing, product innovation, Product Management, Strategy, technology, vertical marketing