James put out the cigar slowly while the other hand played with a glass of whiskey. We had met at their request to discuss the strategy in his business, a start-up factoring services as well as financial and business advisory. James was in a dilemma about which market to focus, whether it should integrate all efforts (and resources) of the business in a generic focus on several niche markets in various industries (pharmaceutical, medical, SMEs in general) or to venture into a more specific (industry-related) approach and try to specialize and build expertise in a single market.
"Without doubt there have been companies that have managed to develop products and / or services that attack a wide range of clients in various industries or have started in a vertical segment (niche- specific) and then migrated to a horizontal market" I said. "But they have been the fewer. Surely the successful cases in Mexico can be counted on the fingers of one hand," I assured while I drank some cold beer that I had just been served. Santiago seemed restless, just shrugged.
I told James that the topic of conversation reminded me of the content posted in a book by American author Michael Cusumano (The Business of Software) in which the scholar, after decades of research and close collaboration with medium and large enterprises, had reached several interesting conclusions among which were:
- The companies that had managed to successfully migrate from a vertical to an horizontal market is because they had managed to acquire a significant competitive advantage (whether technological, financial, government). The obvious case is Microsoft, where competitive advantage is to have created a platform, in this case the Windows operating system, from a vertical (market for PC `s) to be the dominant entity by means of a single product (Windows). This competitive advantage could never be surpassed by their rivals and allowed Microsoft to offer and develop (migrating) products and services to a mainstream market.
That is why today Microsoft develops applications for business, educational, government as well as align those with its own infrastructure (servers, cloud computing) and recreational services (Hotmail, X-box, Messenger and Skype recently). A single dominant platform (Windows) successfully allowed the company to dominate or compete strongly on other markets. "The typical case in Mexico would be Telmex" I replied. At that time James burst out laughing and only commented: "That example is so obvious that is not even worth discussing."
- Another point of discussion, according to Cusumano, is the ability of a company to build a product or service capable of attracting a larger number of customers who come from a different background. "It's easy to think that a CRM app can be used by any company, whether it is dog-food provider or a shoe´s retailer" - I said. "But in Mexico would be difficult to adopt such approach if it is not designed to meet the specific needs of the industry itself," I added. "Logic would say that the tool would be useful for any company, considering that all companies perform sales efforts and manage a sales force, but if it is a true logic is not necessarily a correct one"- I ended it.
- In Mexico, most are very specific markets, partly due to a little professionalized culture in business, which have been developed empirically and not based on established processes as any basis for a particular industry. "I think the try to develop a service under a generic platform that aims to fulfill different needs under one single platform but the latter can drive you crazy and require enormous amounts of time and financial resources , and still you need to see the reaction and speed of market adoption (if it does happen!) "I explained quickly as I realize that the concern of Santiago increased.
"What would you do If you were in my position? "He asked with a hidden intent. "I think I´d first try to develop a specific service to an industry and see how it reacts: if you give advice and provide financial factoring to manufacture companies just focus on them, then try to identify the reason your customers value your service and then you could begin to analyze whether the model is replicable in another niche market such as the medical industry or insurance and thus I believe you can make small adjustments and successfully migrate to those markets "- I nodded.
"I think the temptation to try to do too much and try to be all things to everyone is very strong idea but I think you could easily get lost walking down the path"I said, but not before finishing my beer.
Santiago turned his head slightly as he raised his right hand holding his glass of whiskey, now empty, while looking for any waiter at the place. "I think we need another drink," he mentioned it without remorse.
http://www.clarensyst.com.mx/
- Another point of discussion, according to Cusumano, is the ability of a company to build a product or service capable of attracting a larger number of customers who come from a different background. "It's easy to think that a CRM app can be used by any company, whether it is dog-food provider or a shoe´s retailer" - I said. "But in Mexico would be difficult to adopt such approach if it is not designed to meet the specific needs of the industry itself," I added. "Logic would say that the tool would be useful for any company, considering that all companies perform sales efforts and manage a sales force, but if it is a true logic is not necessarily a correct one"- I ended it.
- In Mexico, most are very specific markets, partly due to a little professionalized culture in business, which have been developed empirically and not based on established processes as any basis for a particular industry. "I think the try to develop a service under a generic platform that aims to fulfill different needs under one single platform but the latter can drive you crazy and require enormous amounts of time and financial resources , and still you need to see the reaction and speed of market adoption (if it does happen!) "I explained quickly as I realize that the concern of Santiago increased.
"What would you do If you were in my position? "He asked with a hidden intent. "I think I´d first try to develop a specific service to an industry and see how it reacts: if you give advice and provide financial factoring to manufacture companies just focus on them, then try to identify the reason your customers value your service and then you could begin to analyze whether the model is replicable in another niche market such as the medical industry or insurance and thus I believe you can make small adjustments and successfully migrate to those markets "- I nodded.
"I think the temptation to try to do too much and try to be all things to everyone is very strong idea but I think you could easily get lost walking down the path"I said, but not before finishing my beer.
Santiago turned his head slightly as he raised his right hand holding his glass of whiskey, now empty, while looking for any waiter at the place. "I think we need another drink," he mentioned it without remorse.
http://www.clarensyst.com.mx/
www.clarensyst.blogspot.com
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