Channeling Buckminster Fuller

“To change things, don’t try to fight the existing reality. Build a new model that makes the old model obsolete.” – Buckminster Fuller

A couple of posts ago, I laid out the four types of business climates one faces when launching a new product:

1. New product for a brand-new market, ala the iPod
2. Emerging market with several players vying for market share
3. Seasoned market with major players (ala the current car industry)
4. Seasoned market with one to three entrenched players who dominate the market

I also recounted a few cases where dominant, entrenched players were displaced by a quantum leap forward in technology.

The industrial revolution happened seemingly overnight, thanks to our history books. The fast pace of industrial development, from horse and buggy to fully enclosed cars, in reality took about forty years, from 1885 to the mid-1920s. The first production automobile, the Model T, was released in 1908. Enclosed cars that protected occupants from the elements and become a truly viable form of transportation occurred less than twenty years later.

In comparison, the personal computer revolution started in 1975 with computer kits, and 1977 saw the breakthrough Apple II and TRS-80. It’s now forty years later and we’ve gone way beyond the viable personal computer level. In reality, we hit the point of viable personal computers in 1992 with the release of Windows 3.1—although some will argue that Apple beat Microsoft by a wide margin.

There’s a point to this comparison. The cost and effort of inventing technology in the launch of the Industrial Revolution meant that it was harder for competitors to leap ahead. Serious hardware had to be built: parts designed, forged and cast, machined, assembled, etc. These are what’s called “long lead” items, meaning there’s a lot of lead time from concept to completion.

In the Information Technology Revolution, all it takes is a few geniuses sitting down at a keyboard and racking their brains and pounding their keyboards to create quantum leaps in technology.

My last couple of posts focused on how to enter a market with entrenched competitors, what had to be done to overcome the market dominance of major players who own the market.

While it will take decades for a Tesla to unseat a Ford or Toyota, the same is not true in the software world.

The flaming ascents and crashes of major software vendors makes a 4th of July fireworks display look pale in comparison. Why the crash? Their entrenched market position was obliterated by another company’s quantum leap forward in technology.

The fast pace of technological advancement means there are always quantum leaps forward, which results in two things:

1. The seasoned market with one to three dominant players is effectively moot. These market types are treated like a brand new market. The exception is when the market segment and players are at the level of a Microsoft, Apple or Google.
2. Never, ever, ever sit on your laurels. If you’re not advancing rapidly with quantum leaps forward in technology yourself, chances are very high you’ll be relegated to the also-rans in a couple of years.

There’s a movie called “Paycheck” starring Ben Affleck and Uma Thurman. In the beginning, Affleck’s character develops a new monitor that doesn’t need the monitor. In effect, he’s created a holographic image generator that displays the monitor display in the air. Talk about a quantum leap forward in technology!

There are a whole bunch of Really Smart Software Guys in the world. On sheer numbers alone, that’s a whole bunch of creativity ready to create and invent really cool new stuff. They’re not constrained by who the competitors are, they’re not limited by rules and restrictions. In many cases they’re not restricted by corporate bureaucracies.

They’re really doing what Buckminster Fuller said, “To change things, don’t try to fight the existing reality. Build a new model that makes the old model obsolete.”

That means that there are a large number of people trying to leapfrog entrenched competitors.They have no fear, no respect, they’re hell-bent on creating and developing cool new stuff that will blow customers away.

This isn’t a business climate for the faint of heart. This isn’t a business climate for the conservative.

It is a business climate where innovation—smart innovation—triumphs. It is a business climate where quantum leaps in technology strike gold.

Innovate wisely and win. Don’t innovate and you’ll be competing for the leftovers.

If you’re the market leader and you do innovate, don’t sit on the innovation to protect your entrenched market position. If you’re not going to market with quantum leaps forward in technology, someone else will.

If you’re considering taking on an entrenched competitor, bring to market the technological quantum leap.

If you’re the entrenched competitor, you’d better be “quantum leaping” yourself before some Really Smart Software Guys beat you to it.

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Unseating an Entrenched Competitor: A Case Study

Kodak. If you’re in the ballpark of my age bracket, you know that Kodak owned the market for film and developing. They were the entrenched #1 player. They dominated the film market and had a pretty nice business selling cameras and even projectors.

Their PR was excellent, people thought highly of them, they could seemingly do no wrong.

Today, they’re a struggling giant on the verge of extinction.

What happened?

Digital happened. Who needs film when you’re taking digital pictures? When digital camera companies are innovating at the speed of light, with several major players coming out with digital cameras of all types, in stiff competition with each other, providing more and more features and improving the picture-taking quality, what chance does a company have with film technology?

In an ironic twist of fate, Kodak created the first digital cameras and sat on the technology because they didn’t want to usurp their revenue stream for film.

In hindsight not a smart idea. The secondary lesson is that if you’re the entrenched player in the marketplace, you can’t sit on your laurels because sooner or later someone else is going to come along with a quantum technological leap and render your product(s) obsolete. Especially in today’s world.

Which highlights the main point of this post: to unseat an entrenched competitor you need a quantum leap forward in technology.

The key to this isn’t coming out with the “next generation” evolution, which is a euphemistic way of saying the next gradient step of development, but a leap forward that wipes out the need for the previous product.

Wireless replacing landline telephones. Smartphones replacing BlackBerry. Uber replacing the taxi.

If some Really Smart Guys ever got together and figured out a common-sense high-speed rail transportation system, the airline industry will be in serious trouble.

Case in point: I go back and forth between suburban Detroit and suburban Chicago. If I drive, it’s 5-6 hours depending on traffic. If I fly, it’s forty minute drive to the airport plus the parking shuttle, an hour flight plus get to the airport 90 minutes before the flight to get through security in time, get off the plane, trek through the airport, get my rental car, drive to my destination. Travel time? 5-6 hours, unless the plane is late.

Amtrak is about four and a half to five hours, plus an hour drive on the Chicago side with a cab or Uber, plus my drive time to the train station and a few minutes wait. And no security!

If there was a high-speed rail between Chicago and Detroit, say with a stop in Battle Creek or thereabouts, two hours travel time, smooth, price comparable to the airlines without the headaches of TSA and so on, what a game-changer that would be.

That investment is astronomical, new track, new right-of-way, station modernization at each end, fast ingress and egress from the stations which probably means new stations. Which is why some Really Smart Guys are needed to figure out a better way to travel.

That is an example of a quantum leap forward that obsoletes existing technology.

We’ve heard of “out of the box thinking.” It’s defining what the problem is and a better way to solve it–or sidestep it altogether.

Going back to the Kodak example, what is the benefit of digital? The answer is, anyone can do it, it’s a one-time expense for the equipment (not counting batteries!) and you don’t have to pay an arm and a leg for ongoing pictures. Digital opens up picture taking to anyone and everyone. Plus the camera quality is so incredible that anybody who can point the camera in the right direction can take a decent picture.

Built-in market need: taking and sharing pictures is something everyone wanted to do. Film developing restricted that to those who were willing to pay for it. Digital opened up the taking and sharing of pictures to the previously untapped market of the entire civilized world.

Digital obsoleted film and the company that dominated the film market.

The moral of this story: Identify the market need, figure out a better way to solve the problem, market it well, solve all the innumerable little details, and you’re going viral.

Dislodging Entrenched Competitors

In a number of case studies where companies that were THE dominating player in their market were effectively annihilated, it was due to a quantum leap forward in technology.

Ironically, several companies also had the opportunity to acquire or bring the quantum leap technology to market and declined, in effect having a hand in their own downfall. There’s another lesson to be learned here, which comes into play after going viral and I’ll cover that in future blogs. This post and related posts are designed to focus on going viral and what it takes to accomplish that.

There’s an old adage in real estate investing: Find out where people are going, get there ahead of them and wait for them.

The same principle applies when you’re developing a quantum leap forward in technology. What will people gravitate towards as a natural tendency or inclination?

For example, the train over the stagecoach. Cars over horses. Calculators over slide rules. People had a natural inclination to transition from one to the next. And what about something more current?

Tablets over laptops. Thin, lightweight laptops (the MacBook Air) over normal laptops. Smartphones over flip phones. In each case it’s a quantum leap forward.

Great innovation trumps entrenched competitors—when that innovation aligns with what people will gravitate towards.

Did you know that Western Union had the opportunity to buy the telephone? It’s true—in 1879 Western Union turned down the opportunity because they didn’t think it was financially viable. At the time, Western Union had the telegraph industry covered.

Instead, Bell Telephone grew and prospered into one of the world’s largest corporations (AT&T) and became not only the dominant player in the market, but a monopoly.

Interestingly enough, today the land-line telephone is going the way of Western Union as the smart phone and VoIP (Voice over IP—i.e. the internet) is resulting in fewer and fewer people owning a traditional telephone. Until the quantum leap forward in wireless technology came along, the only way this market dominator was displaced was by the US government in an antitrust suit.

A comparable example today is with Microsoft and the famous Windows operating system. Apple and Linux are the only other operating systems available for desktops, laptops and servers, they’re nowhere near displacing Microsoft and nobody else is even attempting to break that stranglehold.

If desktops and laptops go the way of the telegraph, then and only then will Microsoft’s dominance of the operating system market dissolve.

How do you displace an entrenched competitor like Microsoft? A quantum leap forward in technology. Something that obsoletes the need for servers and centrally-controlled desktop pcs and laptops in the business world. Home computers and laptops that don’t require the compatibility with the user’s work computer.

The mobile device market is a whole new kettle of fish, opened wide by the iPhone and iPad and copied by Android. Android and Apple have taken a huge chunk of the tablet OS market and dominate in smartphones as well. They’ve become the major dominant players in this market segment. Google knew they couldn’t take on Microsoft with a pc-based OS, so why try? Instead they went after the mobile device OS market.

That’s why Microsoft is working so hard on Windows 8 (and the soon to be released Windows 10), cloud computing and beyond, battling for smartphones and tablets. Who will own the future?

And who can break the hold any of those three companies have on the OS market for all types of devices?

Just like the telephone over the telegraph, the smartphone over the telephone, the smartphone over the Blackberry, it takes a quantum leap forward in technology to displace an entrenched competitor. While the examples given are with mega-corporations having a huge impact on a world-wide basis, the lessons apply to markets of all sizes.

Small markets with one or a few dominant players act just like the major markets.

The only way to go viral over entrenched competitors is to develop and bring to market a technology that is a quantum leap forward that obsoletes the existing offerings.

In effect, you’re creating (or recognizing and serving) a whole new market. It’s not for the faint of heart!

The Need for the Quantum Leap

There are a few business scenarios where one tries to go viral (and of course variations of these):

1. New product for a brand-new market, ala the iPod
2. Emerging market with several players vying for market share
3. Seasoned market with major players (ala the current car industry)
4. Seasoned market with one to three entrenched players who dominate the market

Each of the above requires a completely different Go To Market strategy to obtain dominance.

Geoffrey Moore’s two books, Crossing the Chasm and Inside the Tornado, do a great job of defining the approach to tackle 1 and 2 above.

Chasm

With mature markets that have not only long-since crossed the chasm, they’ve gone on to the Late Majority and Laggards stages, competitors are competing on price instead of outdistancing the competition with value and benefits. A great example of this is in the US auto industry. Major players are seeing market share nibbled away by Hyundai and Kia. These two companies are providing comparable features at a cheaper price and have carved out market share approaching 10% of the US market. Products in this category are a commodity and are part of the mainstay of everyday life or the normal world.

Cars are in this category, computers and laptops are in this category, food, clothing and household items are in this category.

While tackling this market segment can be accomplished using a sound strategy to build a company with solid, steady growth, it’s not a strategy to go viral. Unless you’re Walmart and you’re underpricing the competition significantly, or doing what Office Max and Office Depot did to office supplies a couple of decades ago. (This is a case where major advancements in organization and volume discounting drove costs down, in effect taking over a late majority market by price domination.)

Scenario #4 is even tougher. The dominators in the market are so entrenched that customers don’t even begin to consider alternatives, even at a cheaper price. The only thing available is fringe business, table scraps here and there.

Is it suicide to try to enter a market that is dominated by a couple of entrenched players? Normally, yes.

There is one strategy that can not only take on an entrenched player, but blow them right out of the water.

The strategy: a Quantum Leap forward in technology. This applies not only to software and computers, examples are prevalent throughout history.

In the early days of the automotive industry, Henry Ford dominated with the Model T—until Chevrolet came along with an inline six cylinder engine, which blew the doors off of anything Ford was making. A quantum leap forward in technology.

Henry’s response? The V8. No, he wasn’t the first to build a car with a V8. But he was the first to build a car with an economical V8 in mass quantities. The result? The V8 blew the doors off the Chevrolet and Ford re-established itself as the market leader. Incidentally, the hot rod craze was an indirect result.

In the computer world, the best example is BlackBerry. BlackBerry at its launch was a quantum leap forward, providing email service anywhere executives went, which then filtered down to pretty much everyone in the company with a need for remote communications.

BlackBerry became THE entrenched player in the market place. No one, even with comparable or even incrementally better technology, could touch them.

Then the smart phone came along, first with the iPhone and then Android. Business people began carrying two phones—their Blackberry and their personal phone because the smart phone could do it all—surf the web, email, text, maps, take and send pictures, videos and even video conferencing. And you didn’t need any fancy hardware to support it! The BlackBerry became the second device, and when corporate email could be directed to smartphones, there was no need to carry two devices.

BlackBerry has yet to recover.

It was a quantum leap forward in technology that displaced an entrenched competitor.

The moral of the story: Actually, there’s two.

One, if you’re really seeking viral growth, don’t take on entrenched competitors with a “Me Too” product.

Two, and the big one, If you’re going to take on an entrenched competitor, bring to market a quantum leap advancement in technology that results in customers flocking to your solution.

A quantum leap forward in technology in effect creates a whole new market where YOU are striving to become the entrenched competitor.

Enjoy the ride.

Determining Where a Market Segment is on the Technology Adoption Curve

The Technology Adoption Curve is a mainstay in high-tech and any marketing person should know this curve cold and what it represents.

Chasm

This curve was recognized before Geoffrey Moore detailed the chasm and how to cross it; Moore’s books brought it to the forefront.

If you’re planning and strategizing on what product to bring to market, you need to identify your target market and where that target market is on the adoption curve.

If there are five main categories of market (as identified in the above graphic) and each market type requires a specific Go To Market Strategy, knowing where your target market falls is critical. How do you identify where a market is on the curve, particularly one that has been around for a while? Assuming the market is beyond the Early Adopter stage, how do you determine if it’s Early or Late Majority or even Laggards?

There are several key indicators. I found two to be pretty accurate. The first is the kind of advertising that is prevalent in that industry and what’s being advertised.

Take televisions. New technologies are constantly being developed and this market goes through the curve at a rapid pace. Starting with flat screen then HD and plasma and LCD then LED and now there’s 3D and Ultra HD.

Prices range from a couple of hundred bucks to many thousands.

The smaller sized TVs fall in the Late Majority and perhaps even Laggard categories. How so? The main advertising focus is price. Knock-off brands abound, offering sets at bargain prices. The feature set is pretty constant from brand to brand, from the number of connectors to screen size, etc. The cheaper sets are less crisp, the more expensive better resolution. There’s a ton of brand names no one’s ever heard of.

The advertising? Price dominates.

At the other end, the major brands have the latest gee-whiz technology with prices in the several thousands of dollars. Do they lead with price? No—they lead with the new technology. Humongous size that is bigger than all the rest. Curved 3D screens with ultra bright and crisp resolution.

Late Majority and Laggards lead with price. Early Adopters and even Early Majority lead with features. Early Majority typically includes price, but you’ll see prominence given to the brand, the distinguishing features.

The second key telltale is customer attitudes. How do they treat the products in that market segment? Are they shopping for the best price? Or are they shopping for certain features or attributes first?

A few years back I worked for an antivirus software company that was seeking to break into the ranks of the players. With the apparent maturity of the antivirus market, we were concerned that security software was becoming a commodity, which meant that we would be competing primarily on price.

We interviewed a number of business customers and potential business customers, all in the IT departments of their companies. Why did they choose their product? How did they view the competition? How did they view us? What was important to them in security software?

We found three main important criteria—and none of them was price. Price was a factor, as they had budgets and expenditures to get approved, but price was not their reason for considering a brand of security software and ranked low on the list. Price was sometimes a closing tool, but it wasn’t what they needed as their first priority.

Despite the time that antivirus software has been around, it became obvious that this market still manifested the characteristics of Early Adopters. Following the formulas for tackling market verticals was the answer.

By far, the most important criteria is customer attitude. Advertising is a barometer—but if the companies in the market are all advertising price (treating their market like Late Majority or Laggards) while customers are still focused on features, there’s a gaping hole to be filled.

The company that fills that marketing void with the correct marketing content will capture the attention of the customer. Why? Customer wants A, 18 companies advertise B, the 19th company advertises A. Customers will buy from the 19th company.

(As an additional note, if you haven’t already, study Crossing the Chasm and Inside the Tornado by Geoffrey Moore so you understand the Technology Adoption Curve.)

You still need good product, the right marketing and PR and great support, as I’ve covered in my previous blogs. Identifying where the market is on the Adoption Curve allows you to develop a killer Go To Market strategy that is laser-precise.

Nail your market segment. Know what customers want cold, then develop, market and sell it to them. You’ll be reaping the benefits of the viral curve.

A Matter of Perspective

In an art class in high school we learned how to do perspectives. One-point and two-point perspectives. In a one-point perspective, you put a dot in the center of the page and all lines go to that point.

This is like looking down a city street and the lines of the street and sidewalk and buildings all go towards that one dot, vanishing in the distance.

In a two-point perspective it’s like looking at a building on the corner of a city street with one street going to the right and one going to the left. Each of those streets vanish into the distance towards their respective points.

In business, many folks suffer from one-point perspective. They focus on one thing. In many ways, focusing with total dedication towards one goal is a great thing. But from another “perspective,” it’s deadly.

That perspective is what you’re going to do for the customer. Many people get tunnel vision on the product they want to make, the product they want to sell, the problem they want to solve.

The question is, is that a problem the customer is aware of, a problem the customer wants solved?

Put another way, are you focusing on a solution in search of a problem?

Are you so focused on your software, your solution, that you lose sight of how it will be received in the market place? Do you lose sight of how your customers will use the product? Do you lose sight of the problem the customer is trying to solve?

This IS a matter of perspective—are you looking at it from the perspective of the customer, or the perspective of the engineer/developer?

If you look at it from the perspective of the developer, your product will vanish into the distance, your sales and market share dwindling to nothing, never to be seen or heard from again. Another great solution in search of a problem, in search of customers who don’t need it or don’t know they need it.

The answer is multiple perspectives. Look at the market for your product from ALL angles—from the customer perspective, the reseller, the distributor, the sales team, the media, and yes, even the developer. When the multiple-perspective approach gets ingrained into an organization, into the process of how to identify, define, develop, market and sell a product into a marketplace, you have a shot.

If you tunnel-vision on what you want to make, the odds are against you. Expand your perspective, expand your horizons, consider all the perspectives.

Create a product that meets customer needs—and the customers’ awareness and perception of those needs.

An important point to emphasize is that a customer may have a need and not know it, which means no customer demand for the product. Sometimes you have to draw your customer’s attention to that problem, to that need, to achieve that “Aha!” moment when they desire your product.

Are you just looking at it through your eyes, or are you looking at it from the customer’s eyes? Provide customers what they need and want and you’ll succeed. Look at the problem from their perspective and figure out how you’re going to solve what they need and want and present it to them.

It’s all a matter of perspective. And the customer’s perspective is the most important of all.

Afraid of the Competition?

I am not afraid of competition.

By my own experience and observation the successful companies are not either. I’m not saying that this is how they became successful, but it sure is an interesting coincidence.

I think competition is great! Sure, they’ll take some market share, but the fact of two or a handful of competitors in a market segment is a benefit: it establishes an evolving market or makes an existing market bigger.

One supplier gives customers a choice of “Do I buy this solution or not?” This is at best a 50-50 proposition. If the question becomes, “Do I buy company A’s solution or company B’s solution?” then the need for the solution becomes embedded in the customer’s mind. That 50-50 proposition just went up to the 75-80% or better range and I believe I can out-perform and out-sell any competitor in a head to head battle. The result? I’m performing better than that 50-50 proposition.

The back and forth between two rivals generates interest and attention, and the focus is on “which is better?” instead of “is this any good?” The cola war between Coke and Pepsi helped both companies. The question was no longer, “Should I drink Coke?” or “Should I drink Pepsi?” Instead becoming, “Should I drink Coke or Pepsi?” The customer became predisposed to drink a cola product and the question became, “which one?”

There’s only two scenarios where I can imagine being afraid of the competition:

1. They’ll use their massive financial reserves to squash me like a bug, either with marketing spend, PR, slashing pricing, legal attacks or any combination.
2. A technically inferior product that cannot compete.

To eliminate #1, if you’re going up against an entrenched competitor with deep pockets, the business plan needs to account for that possibility. If the competition is contemplating the bug-squash method of removing you as a competitor, it’s a pretty good indication that your product is a direct threat to the deep-pocketed goliath. If you’re that much of a threat to them, you have leverage in the marketplace that you can take advantage of.

In other words, you must be doing something right to scare the heck out of a bigger player—so use that to advantage!

By elimination, the only thing that really scares me with a competitor is having a technically inferior product.

A technically inferior product means I’m ripe for a competitor to steal my business away. A technically inferior product means I can only grab fringe business. A technically inferior product means less customer demand. A technically inferior product means slow growth at best, more than likely declining sales and inevitably out of business. Going viral is out of the question.

If my product is roughly the same as a competitor, I can beat them with Marketing, PR, incredible customer service and a great sales team. The rivalry will generate press and publicity and customer awareness, which is beneficial to both companies.

I say embrace the competition. Take advantage of the inherent dynamics that drive growth in the entire market segment. Get passionate about winning, build a better product, then market, sell and service better than anyone.

If you’re afraid of the competition, what you should really be afraid of is your own inability to build, market, service and sell great products.

The software business isn’t rocket science. There are enough success stories of what consistently worked and what didn’t that the formula is pretty straightforward. Don’t be afraid of your competition—know their strengths, know their weaknesses, know what the customers want, then build a better product and beat their pants off. And have fun going viral!