Minimum Viable Segment: A Smart(er) Approach to Growth


In a recent engagement we focused on identifying the minimum viable segment (MVS) for a NewCo the client was contemplating launching.  We were assessing the viability and sustainability for new services and set out to identify the group of customers who would have a strong and immediate need for the offering.  The benefit of this exercise is that it clarified the NewCo’s thinking about core features and it simplified its product development efforts.  

Minimal Viable Segment is essentially the smallest subset of a target market that can sustain a product.  It involves an in-depth analysis of customer demographics, behaviors and needs to  find the most receptive group for a product.  

The strategic benefits of defining a Minimum Viable Segment are compelling:

  1. Focused targeting: Zeroing on specific customer groups, for example, professional photographers for photo editing software ensures relevance and engagement.  
  2. Efficient Resource Use: A targeted approach leads to better use of capital and resources. 
  3. Fit and Relevance: Tailor product features, tweak marketing messages and dial-in the user experience to fit the needs of the segment.
  4. Feedback and Iteration: Gather the voice of the customer and enhance the product features.  Who better than, for example, the professional photographer, to provide feedback on the usability of product features and to define what else is missing.
  5. Brand Advocacy: Identify early adopters who can champion the value of your product, boosting its visibility.
  6. Reduction in Market Risk: Minimize the risks of new products or new markets by running market tests before a full-launch.
  7. Scaling Framework:  Be guided by the MVS when contemplating how to scale to larger markets.
  8. Tailored Message: Speak directly to the target market and have a resonating message to validate customer acquisition assumptions. 
  9. Specialization Advantage and Know-How: Not quite competitive advantage, but develop specialized market knowledge not readily available without significant investment.
  10. Inform Long-Term Strategic Planning: Key learnings should be applied to expanded segments and more importantly to future expansion efforts.  

By more thoroughly understanding market dynamics and customer behavior through rigorous analysis, risks can be mitigated and know-how can be developed to add to incremental growth.  A thoughtful and rigorous MVS analysis accelerated the client’s ability to segment, target and position its new offering.  It saved time and resources.  More importantly, they received timely and accurate feedback on the product offering that allowed them to enhance and to expand the final product offering.  Long term, this approach provided them with the tools to assess new market entry with minimal investment on future projects.

Three Mistakes in Strategy Development


no_way_signEvery business executive recognizes that strategy is important. However, it is also challenging to make predictions about unpredictable future events. Roger Martin, in a recent Harvard Business Review article (Jan/Feb 2014), offers some advice on the three most common mistakes in creating a business strategy.

First, business plans are not a strategy. Planning involves detailing expected initiatives and operational improvements. Business plans forecast sales and revenues for the next annual cycle. Strategies, on the other hand, may be less certain in nature and should focus on the long term. Instead of describing specific initiatives, a strategic focus will identify market opportunities.

Second, strategies aren’t perfect. Whereas business plans for the next annual budget cycle should be accurate, strategies allow room for new information. A business plan must forecast revenue and costs to help manage capital, investments, and human resource processes. Strategies look further into the future and try to envision a company’s footprint in an emerging marketplace.

Finally, the third mistake companies make is to not have a strategy at all. Logically, these firms ask, if the future is not controllable, why should we try to anticipate it at all? Of course, failing to consider the future is a recipe for disaster. Firms that fail to develop a business strategy are often short-lived.

Business strategies must focus on the long-term viability of the firm. This means framing opportunities and risks in the marketplace. Strategic outlooks will examine customer needs and satisfaction far more than cost-cutting conditions. Decisions are made based on the company’s fit and alignment in the industry rather than a quarterly metric.

Creating an effective strategy is tough work. It’s easy to fall into the trap of substituting a detailed operation plan for a strategy. Yet, focusing on tough decisions and anticipating industry trends and risks will better prepare your business for long-term success. For more information on creating an effective, long-term business strategy, please contact us.

Implementation Is the Next Step in Strategic Planning


46fda804fa21b4a8c242cf63558a688bStrategic planning is just an abstraction without proper implementation. Implementation is where, as the saying goes, “the rubber meets the road.” The rubber would be the strategy, and the road the path to growth.  Implementation, like a professionally crafted storyline involves the who, where, when and how.

So, if your strategic plan is on a solid footing, your management team can get it on the road with all the resources and organizational buy-in it requires for the successful journey. That journey is what implementation is all about. Therefore, implementation is a carefully crafted process that ensures the strategic plan will be more than a plan. It will become part of the organizational culture because:

  • It involves specific ownership and clear statements of responsibility.
  • Implementation plans are communicated to your staff with a clear statement of how they contribute.
  • Implementation is treated as a separate and special program not to be bogged down in daily business operations.
  • Goals and actions are sufficiently focused and realistic in scope so as not to be overwhelming.
  • The plan contains no fluff or meaningless statements of vision, mission or value statements that promote lip service but no buy-in.
  • The planning document is understood not to be an end in itself, but is at the forefront in every aspect of the strategic planning process.
  • There is highly visible accountability and ownership along with measurable progress tracking.
  • The accountability for implementation is coupled with actual empowerment and delegation of authority — the means and tools to implement the plan.

Implementation allows the organization to transform the abstract to action with buy-in and practical implementation techniques.

How to Communicate Your Strategic Plan to Employees



Your strategic planning efforts are only as good as how well you communicate the plan to employees.  Here are some areas that you can focus on for communicating a strategic plan to increase the likelihood of success.

Place the objectives and definitions in context. It’s not enough to say that your quarterly strategic plan is to increase revenue by 10%. Your employees will nod sagely, but they may not have an exact idea of what they can do to meet this revenue plan. By placing it in the context of the larger company mission or shorter term goal, the individual employees start to see the picture more clearly and their role within it. So the next time you bring your department heads together, give them more context as to how their departments can meet these goals. For instance, acquire several new customers with incremental revenue targets.

Talk about the significance of content. Content that incorporates the strategic plan – websites, blogs, client communications – creates a consistency in messaging. Focus the quality, completeness and depth of your company and team’s content within the context of the greater strategic plan.

Highlight the benefits of the strategic plan openly. When you talk openly about the benefits of the strategic plan, the employees know what they are getting behind and why. This allows them to feel more comfortable with, and even excited about, the way things are going.  When you talk about benefits, don’t just gloss over the details. Actually give details about how the strategic plan at hand is going to benefit the company, the community, and everyone involved in the process.

Clear up misconceptions along the way.  Misconceptions can arise from understanding the definitions of key metrics to the company culture you are striving to get achieve. Explain things, hold town-hall like meetings and respond quickly to misconceptions that may arise.

Strategic planning is more successful when the entire company is engaged. By communicating the goals, values, and mission repeatedly to team managers, they can craft a plan to motivate employees.  When you follow up by integrating the ideas into company culture it not only serves as a reminder for the goals, but also motivation as to what the company is striving forward to.

Leveraging A Platform Strategy for Growth


Screen shot 2012-02-10 at | Feb 10 | 2.40.01 PMIn a classic tome on new product development (Revolutionizing Product Development, Free Press, 1992), Steven Wheelwright and Kim Clark describe an “aggregate product plan.” Today, we refer to this approach as a platform strategy.

A platform is a set of core building blocks or a common technology that allows a company to develop a series of products and services. The core architecture is shared across derivative products in a number of ways. For example, Pillsbury has perfected a process to make refrigerated dough (the platform). Utilizing a platform strategy, the company then develops and sells derivative products into a number of markets: bread, cookies, and biscuits. Similarly, Toyota incorporates quality through automobile engine design (the platform) into a number of products across a variety of market segments: value (Scion), mass market (Toyota), and luxury (Lexus).

The advantages of a platform strategy are countless for a business. First, the firm can optimize their capital investment by leveraging the core technology across several market segments and for a long period of time. Of course, lower capital investment for product derivatives leads to streamlined operations and higher profitability.

Second, introduction of new product launches are managed in a more controlled manner. Timing of commercialization of derivative products is known and planned based upon the platform strategy. Upgrades and feature additions are also logically planned and leverage the core technology.

Next, markets can be segmented to take advantage of the breadth of a platform and to overtake the competition. Often the platform concept allows a firm strategic advantage due to overall market share. Consider the example of Pillsbury once again. If a competitor introduces a new refrigerated pie crust dough, Pillsbury’s platform expertise and market knowledge allows the company to respond rapidly to regain competitive strength.

Finally, a platform strategy allows a firm to focus on customers, markets, and technologies as core capabilities. Too many start-up firms fail because they have no framework to introduce follow-on products and service. Leveraging a platform strategy builds in future upgrades and product releases based upon the firm’s known expertise.

A platform strategy is a great way to leverage a company’s core strengths. To learn more about how you can add a platform approach for business growth, please contact us.

Risk Management is a Strategic Planning Tool


deadWhile strategy tends to focus on long-term goals and designing a new vision for the firm, risk management is a useful tool for strategic planning. Competitive threats to a business need to be recognized and acted upon in order to successfully implement strategic decisions.

Strategy may be defined as the mission, vision, and values of a firm. Strategic planning involves a roadmap to deliver competitive products and services, new technologies, and improvements to markets and customers over a three to five year period. Risks are identified as unknown events or uncertainties that can negatively impact the firm.

For example, Russell Walker, author of “Winning with Risk Management,” identifies two categories of risk: explicit or implicit, and finite or persistent. In the former case, explicit risks are known and recognized as part of the business strategy. Implicit risks are unknown but are typically accepted as part of the cost of doing business. A finite risk is represented by a bank loan, for instance, in which a maximum loss is known in advance. Persistent risks have long-term impacts and may be quite complex in nature.

As further examples, an implicit risk is one that cannot truly be separated from the act of implementing the business strategy and conducting the business of the company. For instance, accepting the uncertainty of shipments during periods of bad weather is an implicit risk since the shipments must go on yet the direct cost to the business of delayed delivery is difficult to calculate.

Finite risks, like the category of explicit risks, are known and capped with a maximum investment. If a company goes bankrupt, a stockholder’s loss is finite and limited to the amount s/he has invested. The investment itself was considered strategic while the downside is restricted within a range of the investment. The finite risk can be managed by the amount of the investment, for example.

Perhaps most troubling from a strategic standpoint are the persistent uncertainties. These risks can linger for years and can have impacts over a very long period of time. Often, persistent risks are manifested through liabilities, such as environmental or regulatory impacts. Consider examples of asbestos and silicone implants that were strategically important innovations, but left persistent risks with companies long after production was halted.

Strategic planning should be an endeavor to find the best market path forward. However, the most competitive firms will continually analyze the markets, technologies, and customer data to manage potential risks.

Capital Allocation in a Disruptive Environment


3255362514_f7b1aa860c_oDisruptive technologies are reshaping what we do and how we do it. There is always the possibility that a recent disruptive technology presents you with the chance to launch new initiatives.  Disruptive technologies oftentimes bring about a shift in the competitive landscape; acquisition opportunities may abound with longstanding competitors becoming vulnerable and promising startups may provide a solution or offering that complements a company’s capabilities.

With these extraordinary conditions come unique opportunities, challenges, and risks.  Making informed decisions regarding your capital allocation (even if that means doing nothing) is the key to capitalizing on these opportunities, addressing the challenges, and mitigating potential risks whether you are the disruptor or the one being disrupted.  We recommend companies employ a consistent and uniform process for evaluating, analyzing and filtering which opportunities to pursue.  Sophisticated organizations have a strong game plan that evaluates scenarios whether they be acquisitions or licensing deals or the sale of assets so that when a market opportunity arises they are prepared to act.

Capital allocation strategies in a world with accelerating disruptive innovation are as unique as the companies pursuing them. No single strategy will be right for every company but having a framework and process to evaluate opportunities quickly and correctly provides organizations with a skill that may be the envy of their competition.

Four Strategy Arenas To Consider


3730930783_ab689cc8eb_oMost organizations recognize that having a clear strategy clarifies the goals and objectives of the firm, leading to higher rates of success. On the other hand, many companies also struggle with fully defining their strategy.

In “Playing to Win,” a new book by Proctor and Gamble CEO A.G. Lafley and Roger Martin, strategy is condensed to four key, actionable principles.

First, an organization must identify its “winning aspiration”. In other words, what is the purpose of the enterprise and why is the company in business in the first place? Further, the authors specifically stress “winning” in defining goals and objectives. Employees and management alike become more vested and passionate about succeeding when they view the competition from a winning mentality. Participating in a market just to play the game will not lead to a long-term, profitable strategy.

Next, “where you will play” and “how you will win” are integrated and complementary strategic choices. It is important for firms to identify the customers, markets, technologies, and products for their goods and services. Equally important is a decision on where they will not play. As Harvard business professor Michael Porter has said, “You can’t be all things to all people.”

Following the key choices regarding customers, geographies, and other segments, the organization must identify core capabilities to accomplish their goals. These competencies span from technical know-how to management systems and IT that support strategic decisions. A common question is “do we invent in-house or license technology?” The answer, of course, is it depends. Competency building within a firm depends on consumer understanding and commitment to speed to market.

Finally, management systems, offer support, coaching, and mentoring for work teams charged with carrying out the strategy. Employees should be trained to leverage core competencies while the human resources department reinforces the organization’s commitments by bringing depth to the available talent pool.

Strategy is a tough subject to address and it requires an investment by senior management. The categories of choices laid out by Lafley and Martin should help any organization begin to clarify its strategic objectives.