Emerging markets can mean many things to many people. For the purpose of this blog post I am defining Emerging Markets as a Market in which “said company” is yet to enter. In my previous Executive Positions at both Servicemesh and CSC (Computer Sciences Corporation) I was accountable for emerging markets and effectively developed a strategy which provided a level of acceleration for entering emerging markets. I would like to outline a simple process below that has worked for me for 20 years and can greatly enhance your chances of success and avoid one of the biggest problems for an Enterprise Start Up being “Death by Growth” :
- Define the Strategic Intent: This step is often overlooked but is the first most critical step in entering new markets. Many companies big and small and partcularly start ups on an accelerated growth trajectory fall into new markets and then spend so much time paying the price for not having a strategic plan to capitalise on becoming a leader in that market. I call this problem “Death by Growth” and it is very real. When looking at the Managed Services Market while at Servicemesh we made a strategic decision that entering this market would not only provide us with a lucrative additional indirect revenue channel it would also accelerate the company into new geographies without a need for heavy investment away from the corporate head office which made a lot of sense given the speed in which the company was growing and the limited resource we had available.
- Research the Market: This is another step which is often overlooked and the reason being is that it is hard and there are no shortcuts. Hiring a contract analyst for a few weeks to conduct this research is priceless another approach could be handing to an intern as a project. However, if you are considering either of these options ensure you take the time to develop a research brief, otherwise you are likely to get back a completly useless analysis that means nothing to you.
- Make a Strategic Decision you want to enter that market: falling into a market is never a good idea for any business. While it might look like a good idea at the time and you might even have a prospective customer telling you that it’s lucrative for you if you enter that market it can quickly dilute your attention and your key staff’s attention away from the rest of the business plan and executing on that plan. It’s key that one the strategic intent is developed and the research completed a research brief or presentation should be prepared for the Executive Team and socialising this concept with the Executive team is critical to success and in particular ensuring it can be accelerated.
- Define the offering for the Market: This should be done with the Executive Team in a formal planning session. The reason being, making a strategic business decision to enter a new market is going to have a serious drain on the company’s resource. As a CEO of a start up or a Corporate Development Executive it is imperative that the entire Executive Team and even their direct reports are engaged in defining the offering for the Market. Just because your product has a great fit for a particular market does not mean it will extend well to other markets. Defining the product fit is critical to accelerating any emerging market program. For example at Servicemesh we made a strategic decision to enter the Managed Services Market or MSP market. This market included large multinational services companies such as CSC, Dell, HP, IBM, Rackspace, Savvis etc and Regional MSP’s which where largely Telecommunication Companies that had a Managed Services Division. The company had experienced stellar success in the financial services vertical. However, to translate this across to the MSP market was a completely different value proposition with a completely different set of problems to solve. Even within the market large global MSP’s had different problems to solve that regional Telecommunication Companies. Without clearly defining the offering up front to meet the strategic intent we where going after we would not have uncovered some serious deficiencies in the product that would prevent us from being successful in this market space and ultimately meeting our goals.
- Test the Offering and Your Assumptions: Once the offering is defined it is critical to test that offering at many levels. You want to make sure that you have made the correct Product Management Assumptions, Financial Assumptions and Assessment of the Problem you are trying to solve. Once again using the example above we tested the MSP offering on Dell being our example of a large global MSP and Swisscom being a regional telco. We found in doing this many of our assumption where incorrect and the way we approached the Emerging Market needed to change. Fundamental to this was the discovery that many global MSP’s are very Opex focused in terms of running their businesses, Regional Telco’s are Capex focussed. This dramatically changed the way we needed to go to market within our defined “Emerging Market.” It also in turn dramatically changed the margins and cost benefit analysis of the market as well as the product management strategy. I cannot emphasise enough the need to take your time through this step. The market is not going anywhere and if you are truly innovating then no-one is coming after you. (Just yet anyway.) If it takes six months to thoroughly test your offering take that long. Your first 2 customers are the most important when entering any new market.
- Develop the Program: If you have moved through the testing phase effectively you should now have enough insight to develop a Program. Developing a Program is critical to accelerating your pace and capitalising on your first mover advantage. It also allows you to create a business within your business. You want to do this and you want to do this as quickly as possible. Waiting to see if your idea is going to be successful by just getting a few more customers is to do so at your peril. If you have followed the process to get to this point you are not going to be wrong and you will scale fast. I have been involved in developing many Programs throughout my career and some extremely successful ones. You want your program to be simple, easily consumable, easy to understand and ultimately be fair to all customers. The last point is probably the most important. I have seen this happen all to often where offerings are not developed into programs and the next thing you have is customised solutions appearing throughout your customer base which for a start up is “Death by Growth”. Get your program in order means getting your house in order which means providing the platform in which to accelerate from.
- Final Note: Finally a few points from experience. a) Never give exclusivity to anyone for any reason. There are ways around this. Exclusivity might seem an easy way to get what you want but it will bite you hard if you have followed this process. b) Your Executive Team won’t like this: they are all stretched, they are all working with constrained resources and being human beings they won’t like change. Be prepared for it. Prepare for some horse trading in various areas and most of all be mindful that you are introducing strain on the organisation and that strain needs to be pro-actively managed. c) This is not a linear process. Falling into the trap of believing that once you have worked through steps 1-6 the job is done. This process is cyclic and should be reviewed in the early days after every new customer acquisition and as you accelerate on a regular basis. You will find markets within markets that pop up all the time and you will need to work your through the process each time.