State of the Media

Wisdom and Ignorance part 4: The reality of leadership

In the last post I talked about how just about every company, in particular startups, believes they are truly leaders in their field, even though, in reality, they do business in the same way as everyone else; they create products and services that have little differentiation from the rest of the field; and ignore the majority of customers in the market to go after the same 5 to 10 customers everyone else goes after.

There was a book that a lot of people quote, as the basis for marketing practices, called "Crossing the Chasm" by Geoffrey Moore. In it, he rightly states that you need to find a need that no one else is meeting and take leadership in it, but there are two issues that the book's adherents miss. First, Moore's premise only works for disruptive innovation and most startups and even established companies make small advances in standard technology (make it smaller, faster or cheaper). Second, Moore's definition of leadership means the innovation actually has to be seen by the market as leadership while most startups believe that if they say they are a leader in enough press releases then the market will believe it.

Drew Lanza at Morgenthaler stated as much in my interview with him a few weeks ago. And he doesn't seem to think making small advances is a bad thing. The venture community will fund companies that can make money by being competitive. Not every company needs to be a leader. If you can, that's great, but it is not necessary to be successful.

So let's just put it out there. There are rarely leaders in any industry; just groups of companies waiting for someone to choose a direction for them to all go. 99.999 percent of every industry is doing business in the same way everyone else is. The chance that any one company is actually a leader is very small. What you need to do is create the perception that you are doing something valuable. That takes time. That takes relationship. That takes conversation with the market. That takes the ability to be able to listen to the market, not just talk at it. And it takes a decision to not be part of the herd. The question is, how do you do that?

Next Week: Leader? Who says?

Wisdom and ignorance, Part 3: Mine is bigger than yours

I have about 30 years as a communications consultant. I've worked with hundreds of companies massive and miniscule. I have pitched business to or researched thousands. In all that time and research I've learned pretty much every B2B company believes…

• … they are doing business different than everyone else,
• … they are doing business better than everyone else,
• … they are a, or the leader in their field,
• … there are only 5-10 potential customers for their product.

There are some basic problems with those beliefs, because, with rare exception, every company waits to see what some other company is doing before going in a particular direction. And before the other companies move in that same direction they wait to see if the first mover is actually successful. Until they are successful they first mover is widely derided as being delusional.

Case in point: Apple and the iPod. When the iPod first came out, there were all kinds of critics. "Apple is a computer company, what do they think they are doing." Apparently they knew well what they were doing and the sales of the iPods has turned into a boon for their computer sales as well. The iPhone is on the verge of doing to the cell phone market what the iPod did to the music industry. Did you know that more than 70 percent of the smart phone browser market is now owned by Apple's Safari? And that 29 percent of the smart phone market is owned by Apple now? That's after only 8 months on the market! Everyone is following Apple now with products that have the look and feel of Apple products. Even Microsoft.

In reality, most companies in a given industry go after the same 5-10 potential customers and ignore 500 to 1000 other customers they could have. Even if there are companies in the industry that don't compete technologically with each other, they compete with each other for the ever decreasing budget of those 5 to 10 companies. With the trend toward consolidation, those 5-10 companies will be 2-3 in 10 years which means the identified market for most tech companies is shrinking. A few companies get this and do whatever they can to get a paying customer, preferably one that pays the full price. These rare companies will succeed more often than those concentrating all their sales efforts only on what is in the sales VP's contact file. These companies are stepping out in a new direction rather than follow the crowd. And a few others might follow them. Keep that in mind: if you think you are a leader, turn around. If no one is following you're not a leader. You're just taking a walk.

Technology companies used to advertise heavily in the media. That's no longer true. They started to advertise heavily during the dotcom boom because dotcom companies were getting all the attention. Some electronics industry companies started calling themselves "dotcom" companies, just to get attention, even though they had little to do with the industry.

I had a friend who was a TV weatherman and right before the bust he decided to launch a competitor to the Weather Channel's website. He made a presentation to a big VC firm to get funding. When he was done with the presentation, one of the Vcs turned to his partners and said, "Gentlemen, when my local weatherman starts a dotcom company, it's time to get out of the market." My friend didn't get his funding, his company went under, and the VC fund sold all their holdings in dotcom companies, six months before the bust.

My point is, if you go after a market that someone else has had success in, you are not a leader. If you try to improve on an accepted technology, you are not a leader. And if you follow marketing practices that give the same result that everyone else is getting, you are not a leader. You are part of the herd.

There is really nothing new under the sun. The only hope you have is to get other people to believe you are something new. You don't do that by telling them in your news releases that you are a leader. You don't do that by spreading your news release, copied pretty much word for word from another news release, all over the Internet. You do it by getting someone who knows how to communicate with your market. And in most cases, that person doesn't work for you.

Next, the realities of leadership.