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Upsetting the Category

After years, often decades, of battling over market share and swapping customers back and forth, many companies lose perspective of their market. They know their market too well, ironically, which cripples their vision of new ways their categories could potentially grow or be disrupted.

Instead of upsetting the category with genuine innovation, they make the grave oversight of looking only at their direct competitors and the channels where they sell today as the only forces that matter.

This lack of insight is the symptom that the large telecoms suffered when they did not see Skype enter the market to quickly claim the largest market share of international calls. Same story for hotels and airb&b. These monolithic industries refused to look at the fringes of technology and consumer desire because they judged the market only by the factors on their spreadsheet. The hubris! They could not conceive of a credible threat that did not share the same capital-intensive issues until it was too late.

This narrow view of reality is riddled with blind spots. Out of nowhere, a new player can enter the market and you will not see it coming. Perhaps they move down the value chain from a premium channel or they are the first in your category to offer a compelling, pure direct-to-consumer business model. Or, worse, a new brand with superior technology moves into your space over night and without notice. Or, they turn a product category into a service-led one.

If you had your sights myopically set on your channels and your traditional category factors you would have missed all of the warning signs that your business was under attack.

You may have only noticed the more obvious signs. Brand erosion. Flat or declining market share. Price flattening. Category commoditization and price wars. Perhaps you surmise you have a marketing problem?

In reality, you have a market problem, not a marketing problem. The whole category has shifted and you cannot push any harder to squeeze the same return you did years ago. The old tools no longer work. Your business model has to transform.

Markets are more dynamic than ever. Every category suffers more disruption and has to comprehend and respond to new threats from directions that did not exist previously. The rate of decline of previous market leaders has sped up to a crippling speed.

The cure of this lack of vision is to see beyond the category, your competitors, and your current market factors. The old game of incrementalism between friendly competitors is long dead. Now, new threats are changing the very game of business and the nature of markets and industries.

To compete you have to broaden your sights. Expand your range of competitors to those on the fringe and focus on the people for whom you create products or services. Know your end customer needs and motivations more deeply than anyone can. Invest in this learning, and you’ll be able to deliver value in ways that no one can disrupt.

About the Author: Michael Graber is the managing partner of the Southern Growth Studio, an innovation and strategic growth firm based in Memphis, TN, and the author of Going Electric. Visit www.southerngrowthstudio.com

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