(This post originally appeard on LinkedIn here)
Last week we described the maturation process a Disruptive Offering must go through to achieve market leadership. In this post I look at typical problems we came across over the last 35 years in doing it ourselves and coaching customers.
Pitfall #1: Getting stuck in a niche market
Here the Disruptor wins first customers for their Minimum Viable Product (MVP), but then gets dragged into customer-specific feature developments. This can happen when the Disruptor is in desperate need for cash and therefore develops whatever the customer is asking for, or when they lose the requirements of the target market out of sight. The result is an Offering that is a fit for a very small segment of the Total Addressable Market (TAM), in its extreme form for just one customer, preventing the Disruptor from scaling.
To avoid this a Disruptor must frequently reassess its TAM definition and segmentation and analyze customer requirements for their general TAM relevance.
Pitfall #2: Getting stuck in a sales channel
For reaching Go-to-Market Fit (GMF) the Disruptor must develop effective and efficient sales channels to address the TAM. When entering the market the Disruptor usually focuses on one sales channel, e.g. direct sales, resellers, web. If the Disruptor misses to add additional sales channels they will miss out on customers the original sales channel doesn’t effectively reach. A good example is an API-based Offering sold over the web to developers successfully but missing out on buyers with less technical capabilities.
To avoid this a Disruptor must reassess the sales channel definition as part of the annual planning processes and implement new sales channels to reach additional market segments.
Pitfall #3: Not resolving channel conflicts
Diversifying sales channels to address additional TAM segments sooner or later results in channel conflicts. To manage these a Disruptor must have a clear preference, e.g., partner-first, and an incentive system encouraging the intended collaborative behavior. Leaving the root cause of channel conflicts in place will inevitably lead to suboptimal TAM coverage and thus reduced market share.
To avoid this the Disruptor needs an engagement model clearly defining roles and responsibilities across direct sales, partner sales, and partners, together with an incentive system encouraging collaboration across all channels.
Pitfall #4: Letting Marketing build Solution Packages
A Maturity Level 4 Solution Package must lower market entry barriers for Mainstream customers and achieve economies of scale for customers rolling out the Offering across their entire organization. Solution Packages must be built for customer value and not for short-term vendor margin maximization. Not passing on economies of scale to customers will reduce the reach of Solution Packages and thus damage market share.
To avoid this Solution Packages must be owned by the Portfolio Manager in charge of the TAM segment the Solution Package is built for, and supported by Technology, Partner, and Delivery Management.
Pitfall #5: Entering a Strategic Alliance with a vendor mindset
Strategic Alliances by their very nature are symbiotic relationships aiming to promote both parties’ core business. The Disruptor therefore must embrace their role as an equal partner, not a vendor. Behaving as a vendor will allow the other party to change the scope over time, prevent direct and honest feedback to the partner, and as a result fail the basic concept of a Strategic Alliance.
To avoid this Strategic Alliances must be sponsored and monitored by the Disruptor’s C-Level, and Program Management must be empowered to veto scope creep shifting power to the alliance partner.
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