Who moved my market?
Often I hear interesting stories while working in the business trenches. These stories teach me a lot about the art of doing business. Here is one that I like in particular.
Karl had an idea and decided to create a business with it. He had lots of professional experience and a long career working for many large organizations. He thought it was time to sharpen up his entrepreneurial skills and start his business. Looking at the right places, he found useful information that allowed him to build his business plan.
The elaboration of the plan wasn't easy; soon he realized that he needed some deep understanding of his competitive landscape. After spending a couple months researching his target market, Karl thought he finally got all the information required. With that, he was able to derive his financial analysis, forecast sales and staffing requirements.
Time passed and he suddenly got very busy setting up his venture. If finding the right people was a difficult task, never mind convincing them about joining his business initiative. Getting money to start and stay in business was also a time consuming effort. But he was positive and overcame these obstacles one by one.
A year later, things were starting to happen and, finally, the first version of his product was almost ready. So much effort and time was invested to get to this point. Now it was time to go out to the streets and get the product sold.
Karl had an unpleasant surprise. In reality his market research done many months ago was outdated. Times have changed dramatically and the product he designed wasn't in demand any more. His market had evolved and moved.
Speaking to an industry advisor, he learned that another company had entered the market three months before. Using an aggressive positioning strategy his competitor had captured many of his potential customers. Karl was shocked with the news.
While working on his product, he didn't realize that his market was shifting and that new competitors were entering the market. It was too late to back up and chose a different approach. Had he leaned about the competitive landscape earlier, he could have adapt his strategy and competed head to head in his market.
Watching Your Market
In a recent conversation with Karl, he provided me useful advice to avoid his situation:
- Always check your plan against reality: don't disconnect yourself from the market place and this may cost you your business.
- Use an agile product development cycle: don't wait to until you have a final product to get feedback from potential customers, interact with them as you go.
- Have good advisors: talk to people who have been around your industry for a while. They will tell you what happened in past economic slowdowns and help you get prepared.
