Growth Comes from the Edges

As I start to get my head back into blogging after Christmas, I came across this quote from a Seth Godin Post on Dec 25. His discussion centers around companies who try and emulate extremely successful competitors, and why this is not a great strategy.

I recently did some work with a large grocery store chain, and in one meeting I was in someone made the comment that we should be like Walmart. Seth's post states the issue with this type of thinking:

• they already did what you are setting out to do (no reason for people to switch)
• these companies were cutting edge when they first introduced their business model (and hence why they became successful)

Taking best practices from successful competitors is one thing, but you need to bring your own value-add to the market place. Just like great music or movies often come from the fringe, so do great ideas, and this is what will drive growth. Emulating your competitors to create growth is a failed red-ocean strategy. Ideas and growth from the edge is blue ocean.

Lesson In New Economy Marketing

New economy marketing and marketing in general is a huge interest area of mine these days, and I have been on a quest to learn as much as possible over the past year. During this discovery process I found Seth Godin and his blog. A marketing guy with not only good information but an interesting perspective in his area of authority. So after reading his blog for a while, I bought his most recent book (my first book from him) ‘small is the new big'.

Unfortunately, this book is difficult to summarize, since it is a compilation of his thoughts, but I highly recommend it because it is much more than a marketing book. For me it was a book about entrepreneurial thinking, and motivation. I bought the audio version to listen in the car and actually found myself frustrated listening it. The content was great because it spurred so many thoughts in my head. Unfortunately, just as I would try to expand on one thought, Seth would be on to his next riff, and my mind would be forced to shift also. (Aside: It would be great if my iPod could be paused and take voice notes which I could tag to a bookmarked location in an audio book). I finished it yesterday on the way into work and it is likely that I will buy the print version, so I can go back and tag pages and rethink about the ideas that were flowing when I listened. In addition to this book, I have also downloaded some of his e-books and, and recently sent him an email about a riff I had. (Which he responded to within a few hours)

What I realized is that I just participated in my own lesson on the topic I have been researching.

• I got a reference to Seth through some blog post (I can even remember where)
• I read his self generated/free blog content that is updated regularly, and sold me on his topic authority
• I decided to buy a book (that is really just a collection of his free blog posts)
• I have read it and recommended it to others
• I have downloaded his e-books, and will likely buy other books
• I sent him an email and got an got an actual (non automated) response.

He has built an authentic relationship with a customer who didn’t even know of him a year ago. He generated a few dollars from a book sale, but the real value downstream revenues from word of mouth marketing. Marketing cost to him = just his time, and passion.

Creating Rifts in a Flat World

If you have read Thomas Friedman's "The World Is Flat" you know all about this concept, and how you need to think about these concepts as you move your business forward in the new economy. Jim Carroll points out however that once people, companies or even countries get this concept, they have spent so much time focused on cost and efficiencies of the flat world they they often don't know where to go next...when flat becomes the status-quo. He suggests that this is exactly the time to put a ripple in the flat world with innovation. He then suggests some ways to ways to go about this:

• Focus on brand
• Go big on quality
• Get Religious on time-to-market
• Go deep with market knowledge
• Increase value
• Focus on agility
• Seek partners
• Go upside down
• Stay motivated

The interesting thing is that for the most part, this is exactly what start-ups do innately. That is precisely why they are coming into existing markets, transforming them with new ideas and often crushing existing players. While the existing players are still trying to figure out how to play in a flat world, the new players already there, and purely focused on innovation, because that is all they really have to compete with. As Seth Godin preaches 'small is the new big'. Act small - think big.

Cheaper = Red Ocean Strategy

Seth Godin points to an angry note from a reader who was upset when she asked him to help persuade her bosses that the best way to grow their resort was to lower the prices, and he responded that she might better raise her prices and create a remarkable experience.

Seth's view from a marketing perspective: Cheaper is the last refuge of the person who is not a good marketer.

My view from a business strategy perspective: Cheaper, by itself, is admitting that you are competing in a commoditized market; Cheaper says that you are willing to accept smaller and smaller margins; Cheaper says that your customers only care about cost. Cheaper says that you want stay in a red ocean, and admitting that you have no vision to create a blue ocean strategy for your company.

Cheaper can be part of a disruptive business model and strategy if it is a component of an overall customer value proposition that is often combined with 'better' and 'faster'. If you find yourself thinking about the cheaper strategy, its time to re-invent your business or move on.

Status Quo...

We all know these folks - the ones who love the status quo and will try anything to keep it that way. Seth Godin has a great list ways people defend the status quo.