“The trouble is” said the CEO of a client firm, “we’ve run out of executive cycles, we just don’t have the bandwidth to look at these new opportunities”.
Strangely, the same week, the CEO of another client firm said to me “we know that we have to make plans for the next generation product, but we are just too busy right now”.
Both the companies are SMEs and they are both overwhelmed by the needs of the current customers and markets.
In 1991 Gary Hamel and C. K. Prahalad defined “The Tyranny of the Served Market” as “business units … hampered by overly narrow business charters”[i], they then go on to talk about how cleverness at Motorola and Sony has avoided this. I don’t think any of my SME clients feel “hampered by overly narrow business charters”; their problem is far more real.
A typical history for an SME charts the heroic efforts of their founders to create, and bring to market, innovative product. The early employees take up this heroic challenge and go out into the market to “do whatever it takes” in order to make a success of the business. When you talk to these people about the early days they will tell you stories about staff working all night to solve customer problems, forging deals over dubious restaurant fare, recompiling the product in a back room at a tradeshow, drinking suppliers under the table, etc. I know because I’ve been there too.
As the company grows these stories become deeply embedded in the culture and new employees have to adopt the same values. At the same time the competitors are smartening up and starting to chase you down and the customers are becoming savvy and making life more difficult.
Now you may have built an SME that is profitable, but every last sinew is strained to achieve one and only one aim: to serve the market. 110%. That is what I call the Tyranny of the Served Market.
It is at this moment that you realise that one of two outcomes is inevitable:
- Your competitors products are going to overtake yours, so you are going to need to start work all over again on the next generation product, or
- The company is never going to be stable and profitable unless you build more products.
So, how to get that machine that you have just built, that organisation which is so focussed on the one and only one aim, to consider such (to it) radical ideas? It is difficult, almost impossible, without letting all those spinning plates come crashing to the ground.
It is possible, but I believe you need to take it one step at a time.
- Firstly, acknowledge, and gain executive team consensus that you are going to do something.
- Second, face the fact that it is going to be painful and cause argument as priorities in the current market compete for resources with new ventures.
- Third, accept that you have to work within your area of technology expertise or current market, and probably both. I’ve heard executives say “we could do anything” which is sadly fatuous.
- Fourth, use external resources to unlock the problem by conducting the “get the project off the ground” activities such as early market research, vendor negotiation, etc.
- Fifth, keep all the key players on board. Even if they are 100% occupied with current activities, they have critical knowledge and skills to contribute, and their backing will be needed if the eventual product is to be a success.
But, more than any of that; start. Just start the project. Your competitors are not going to wait for you to wake up, or fix the problem with your key client, they want your blood!
[i] “Corporate Imagination and Expeditionary Marketing”, Harvard Business Review, July 1991