A friend of mine made an astute comment the other day.
We need to think about “in the market” models, rather than “go to market” models.
I think this nicely captures the shift we’re seeing in the market; businesses are moving away from offering products which (hopefully) will sell, and adopting models founded on successful long term relationships. This is true for both business-to-consumer and business-to-business relationships, as our success is increasingly dependent on the success of the community we are a part of and the problems that we solve for (our role in) this community.
For a long time we’ve sought that new widget we might offer to the market: the new candy bar everyone wants. It’s the old journey of:
- find a need,
- fulfil the need.
Our business models have been built around giving someone something they what, and making a margin on the way through. Sometimes our customers didn’t know that they had the need until we, or their peer group, pointed it out to them, but we were nevertheless, fulfilling a need.
Recent history has seen the more sophisticated version of this emerge in the last few decades:
Give them the razor and sell the razor blades.
which has the added advantage of fulfilling a reoccurring need. Companies such as HP have made good use of this, more-or-less giving away the printers while pricing printer ink so that it is one of the most expensive substances on the planet (per gram).
Since then, companies (both B2C and B2B) have been working hard to reach customers earlier and earlier in the buying process. Rather than simply responding, after a customer has identified a need, along with the rest of the pack, they want to engage the customer and help the customer shape their need in a way that provides the company with an advantage. A great example of this are the airlines who enable you to buy a short holiday somewhere warm rather than a return trip to some specified destination. The customer gets some help shaping their need (a holiday), while the company has the opportunity to shape the need is a way that prefers their products and services (a holiday somewhere that the airline flies to).
The most recent shift has been to flip this approach on its head. Rather than aligning themselves with the needs they fulfil, some companies are starting to align themselves with the problems they solve. Needs are, after all, just represent potential solutions to a problem.
Nike is an interesting case study. Back in the day Nike was a (marketing driven) sports shoe company. If you needed shoes, then they had shoes. Around 2006—2008 Nike started developing a range of complementary products – web sites, sensors integrated into clothing, etc. – and began positioning the company as providing excellence in running, rather than simply fulfilling a need. The company grew 27% in two years as a result.
Rolls Royce (who I’ve written about before) are another good example, but business-to-business. They shifted from the need (jet engines) to the problem (moving the plane) with huge success.
While these companies still have product and service catalogues, what’s interesting is the diversity of their catalogues. Rather than structuring their catalogue around an internal capability (their ability to design and manufacture a shoe or jet engine), the focus is on their role in the market and the capabilities required to support this role.
As Andy said, they have an “in the market” model, rather than a “go to market” model.
1. Andy Mulholland @ Capgemini↑
2. Giving away the razor, selling the blades @ Interesting thing of the day↑
3. What I like about jet engines @ PEG↑