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« Recessions Need Market Creation | Main | ARTICLE: Understanding Risk in a Strategic Context »
Monday
Dec122011

One era to the next

The history of positioning dates back to Al Ries and Jack Trout's book Positioning: The Battle for your Mind. They describe the ‘50s and '60s as a product era, the '70s and '80s as an image era and the '90s and '00s as a positioning era. In the early 1990s they helped corporates switch into a positioning strategy. But they never created material for the smaller business, which we then developed and which has worked well for our clients.

So what’s the era of 2010 onwards? Once you've created a niche market position, logic says you need a distribution channel to get uplift in your revenue stream.

Distribution era into Product era

But we don't think the next era is distribution because we've already seen it occurring during the '00s. Channels to market have changed for ever and many companies now get more than 40% of their revenue online, even those that previously had traditional business models. From these observations, we believe businesses are now moving beyond the era of distribution. Just as you still need a clear position, you still need to understand your distribution channels, but the online evolution in the past 10-20 years means mid-tier and SME businesses no longer need to wait ten years to apply the lessons of large corporations.

In the early '90s there was no LinkedIn, Google, eBay or Facebook. These companies really blossomed in the '00s and so if 2000-2010 was the era of distribution, what's happening now? Larger companies such as Facebook are starting to focus on product in an attempt to commercialise their massive people databases. As companies such as Twitter and Skype begin investing in product the big question becomes, "How to commercialise the distribution channel?"

We saw a good deal of freemium activity in the 2000s, which opened up distribution channels. But these companies didn't make much money and are now wondering how to commercialise. If they start charging, customers will probably move to another provider. Membership channels seem to have a limited seven year life-cycle before members start reaching for the latest, greatest next thing.

As we move into the product era we are launching our new IP, ACM - architecture, content and marketability, to help clients gain an early mover advantage.

Architecture, Content, Marketability

Using an analogy to explain our new IP, would you buy a book about the differences between men and women? Probably not because the differences seem obvious. The book describing how men and women are different is called the content.

Moving up a layer from content into architecture provides a formula to hold the content in a contextual space, like a map. If a library scattered books at random, you’d be confused. A library provides architecture, a map to find the science, biography and fiction books. In the same way, if the book has architecture it helps you find your way around.

To extend the analogy, let's say men and women don't really understand each other. When you come home and your partner says, "X..." you normally say, "Y...". They say, "X..." and you reply, "Y...", which generally goes nowhere. This book will teach you how to say, "X..." back to your partner.

The example shows how architecture works in practice. It’s a model, framework or formula that clarifies the benefits and explains why you need the content. It's the big "Aha! That's why!" moment where everyone understands.

A kitchen designer might say, "I could speak all day about kitchens." That’s the content. But what's the architecture – formula, model or framework – to help you understand "kitchens"? How do you know why you need to buy a kitchen design from this supplier, rather than anyone else? And in far less than a whole day.

Come and get it!

Moving into marketability, no one wants to buy a book called Men and Women are different. But suppose it's called Men are from Mars and Women are from Venus. Yes, it's a bestseller. Marketability gives you that punch through.

Distribution channels like Facebook and LinkedIn have masses of content, but no architecture to explain the benefits. If these channels want to commercialise then they must provide product, like the "X..." and "Y..." conversation. Without marketability to commercialise a product suite, the channels Facebook, LinkedIn and eBay can't sell.

Where a business is not leveraging its biggest revenue stream, but has all the pieces in play, then it's probably missing out on getting product into the channel. This is not about building more content. It's about taking the content and building the architecture and marketability around it to leverage the content into the marketplace.

Architecture takes you beyond "Why?"

If we asked a potential client, "Do you want to buy business coaching?", it wouldn't be very helpful. By asking instead, "Do you want to make more money? Have more family time and less work stress?" the Shirlaws coach has explained what we sell simply and quickly. This approach usually interests the potential client far more than a generic question about "coaching".

These interesting questions are our architecture, which is so much more than simply describing features and benefits. Clients can see immediately how to access the benefits through a massive "Aha!" moment because a description of benefits alone is not enough.

Now is the time to begin preparing your business to enter the new product era.

 

 

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