Product Strategist: Commercialization

In this post, I'll move from concept maturity that is signaled by bibliographic maturity, see http://www.noozit.com/article/.ee84ea0, to commercialization.

A concept will be either convergent or divergent. It might have been orthodox or it might have required adoption within the concept's community of practitioners. Object-oriented (OO) programming required adoption. Several different schools sprung up around object-oriented programming preaching their approaches and methodologies. Eventually, OO was, in the words of contemporary object thinkers, eventually co-opted by the functional programming crowd through the use of get and put methods. OO underwent consolidation around Rational Rose resulting in UML. The Agilests are still working towards adoption.

So the concept arrives at your door. What kind of company is your company? Do you sell technology, products based on somebody else's technology, or products that complement somebody else's product? The kind of company your company happens to be filters the concepts that arrive at your door at least in the sense of what can actually be commercialized. If you haven't gotten that far, then what kind of good do you want to form your company around. Or, is it, hey this is what I have, so let's make it work. Or, is it, hey this is hot, so let's get on board. 

If the concept is a go after those decisions or constraints are taken into consideration, you have to contextualize or position the concept, so that it is adoptable or competitive. Once you have positioned the concept, you do market research to determine whether the market exists or not.

If the market exists, then how many competitors are there? Is there a market leader?

If you are a complementor and the market exists, there is always a market leader. Next, week somebody else will be the market leader. Watch that company's competitive behavior. Complementing is a cut-throat proposition. Market leadership depends on last week's promo spend.

If you are a prime vendor, the fight for market leadership might be ongoing. You might not have the time to get into the market before a leader is selected, and the horde of fast followers enter the market. You will just look like a fast follower unless you can clearly differentiate yourself. If a market leader exists, the market has been ordered. There is a number two, three, four, five.... Take a number. Price is not a differentiator after the market leaders has been selected. It's just the race to the bottom, or the ordinary and expected path.

If the market doesn't exist, then you get to create a category, which takes time, and time is profit eventually. No doesn't mean no. It means maybe later. Later is up to you. If a market doesn't exist, no market leader has been selected, and the competitors are as invisible as you are.

If the market doesn't exist, your company may save money by saying no, and finding another idea.

If you have decided to push on in the absence of a market, find a client, just one. Research the client's vertical. Is it big enough in terms of seats and dollars? Seats are more important than dollars. You are doing the bowling ally. You are doing the bowling ally to gain market leadership once you go horizontal. That makes seats more important than dollar. In the tornado, you typically give the software away for free to gain market, so stress seats.

Build their application visualization. That application will become your first product. Build it. Deliver it. Help the client maximize the competitive advantage that they get from the application. Don't get caught up in upgrade cycles. On delivery, start the clock on the period of exclusion that you negotiated for so you could keep your IP. If you don't negotiate some provisions around keeping your IP, it will end up being the client's, and you won't be able to take it to market. Six months before the period of exclusion ends, hire marketers for a new organization that will take the application into the vertical market. Marketing requires a lead time. Do a social map of the client's social network out to a degree of three. You will sell these people before your marketing kicks in.

On delivery, you will also  need a new client to keep your programmers busy. You will need a new account management and client engagement team for the new client. Your process owners for the first client engagement will join this team. The client engagement people from the first client engagement will stay with their application and client until the application goes vertical. Then, move them from the custom application development organization to the first vertical company. 

Christensen talked about how an innovation needs a separate company. Moore hinted that each phase needed its own organization as well. I say hinted, because during the tornado you discount, and immediately on exit from the tornado, you can no longer discount. Oh, people do discount, but it's a bad habit, and it is totally unnecessary provided you are the market leader when the smoke clears. Value-based marketing cures the need to discount. For Christensen, the separations give you a newly zeroed cash structure and a new policy base from which to operate. Your ROI is higher in the separation. And, you will be more aligned with your market than if you are just doing what you always did.

Comments? Thanks.