An IT Guide to Market DominanceBy Theresa Lina Stevens | Posted 2003-12-17 Email Print
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Is your offering in danger of becoming a commodity with margins so low that you can't grow your business. There is a formula for breaking out of the commodity trap.Without daring to reveal my precise age, suffice it to say that I've been around the IT services sector long enough to remember punch cards and the anticipation of how the personal computer would revolutionize our lives. Ross Perot still owned EDS. It was still the era of the "Big 8" and Steven Jobs was just beginning to poke his head out from under the garage doors. The world was every solution provider's oyster.
When it came to selling hardware, software, and services, the sky was the limit. Afterall, if a company had an IT department, it was usually staffed only with computer operators and maybe a team of COBOL programmers who had honed their craft by reading IBM manuals stacked on shelves in refrigerated mainframe crypts. There was very little ready-made application software on the market, so every major automation initiative was, by definition, a custom development job. Even while IBM was putting hoards of consultants on client sites for free, there was so much demand and so little internal computing expertise that the Big 8 consulting groups and other players were still growing hand over fist at 30-50 percent per year during recessions.
Now fast forward 20 years. Whoa! A lot has changed.
What does this mean for you?
If you do not have obvious, defensible, sustainable points of differentiation, even the growing economy won't save you. If you do not have a vision that defines a clear, focused position within a specific market, you are at risk. If you are not focused on a common, critical problem of urgent and paramount importance to your targets, you are probably on your way to becoming a commodity with margins so low that you won't be able to grow.
On the other hand, if you have or are developing the above elements, you have achieved the first step toward market leadership and, ultimately, dominance of your space. Add a major dose of deep expertise in your specialty area, low cost of delivery through repeatable methods, and great client service, selling and marketing. What you've got now is a path to healthy profits and sustainable growth.
Of course, all of these elements are easy to talk about but hard to execute. I know that well. I've been on both sides of the coin myself. I've suffered through the commodity, claw-and-scratch-for-business mode, as well as the much more pleasant profitable, differentiated-market-leader mode. Guess which one I recommend.
The good news is that the economy is growing again, and it is now time to climb back up Maslow's Hierarchy of Needs from Survival and into Self-Actualization by refreshing your strategy. And that is what this column is about: How to position yourself for profitable, sustainable growth in a competitive marketplace. We call it Market Dominance, and it's all about the key success factors of establishing yourself as the Go-To in a competitive market so that you can name your price and find yourself in the delightful position of having potential clients line up at your door. The big payoff is healthy margins that allow you to invest in the future and fuel additional growth. You can charge more than anyone else, because you deliver far higher value than anyone else. And your cost of sales is low, because you rarely compete for business.
The essence of the approach is this: Identify a common, critical problem that no one else is adequately addressing; develop and launch a unique, highly-effective solution to this problem; evangelize your point of view and your solution throughout your target market, establishing yourself as the top-of-mind "Go-To Source." Above all, be superior at delivering on the promise of your solution, and constantly stay ahead of the competition.
Would you like to be growing at 30-40% annually, regardless of market conditions? Would you like to have long-term contracts and a recurring revenue stream? Would you like gross margins in the 50-70% range?
It's challenging to establish yourself as the Go-To source in a competitive industry. It requires discipline and takes a lot of courage. And it does not happen overnight. But if a skinny guy from a village in Austria can eventually become the governor of California, anything's possible. Right?
Theresa Lina Stevens specializes in market dominance strategy and marketing for IT and professional services companies. She is CEO of Lina Group Inc., which helps clients gain and sustain a unique and high-profit, high-growth market position through a proprietary approach called the Apollo Method for Market Dominance. You can reach her at email@example.com or visit the Lina Group website at www.linagroup.com.