If you're considering entering a market or introducing a new service in one, you've no doubt perfected your offering, fusing industry insight with technical proficiency. What could possibly go wrong?
Plenty. Especially if you aren't as rigorous at understanding potential buyer markets as you are at creating that product or service. Strategic growth has two other equally important components, and only by focusing on all three of them can you expect success. The following are pitfalls to be aware of and avoid.
Pitfall No 1: Falling in love with your robot. No, I'm not talking about "dating" droids. I'm referring to the tendency for tech company founders and accounting pros to become so enamored of their service that they ignore the fact that the offering is just one element of a successful three-part growth strategy. Equally important are the best markets you need to discover, and distribution channels — how you and your targeted buyers in those markets find each other in great quantities. If you don't have the exact right combination of the three, like a combination lock, you won't achieve your growth objectives.
I first observed this falling-in-love dynamic in the tech sector and have witnessed it for the past 25 years in accounting. When the focus is on the sheer wonderfulness of the offering, with scant attention paid to its attractiveness to the potential buyer, it's a sign someone has fallen in love with their robot. Consider this — what is your market and where do your targets congregate? What's the value proposition? Is it compelling enough for someone to pay for it? How are you different from the other alternatives?
Pitfall No. 2: Doing one thing at a time. With AI nipping at our heels, gone are the days when you could take months (sometimes years) figuring out your growth strategy through trial and error. Accounting and accounting tech firms need a go-to-market strategy that keeps pace with the swift development of their AI-driven services, rather than trailing behind.
Even though for years we chugged along at a safe, comfortable clip, today it's all about speed and concurrency. If your service development is racing ahead in the lefthand lane while your GTM is struggling to catch up on the right, it's time to evaluate how you're attacking the discovery of your strategy. Conducting 100 strategy interviews (I've historically named them "Research Calls") over six to nine months is far better than trial and error over a two-to-three-year period. Also, well-crafted early adopter projects in the most likely markets will get you there faster.
Pitfall No. 3: Thinking in the singular. Too many leaders select one market to start out with, often using the wrong criteria. For example, CPAs might conclude that their best bet is the steel industry in California, without having conducted strategy interviews or parsed demographic data. Their reasons are typically something like, "We have somebody living there" or "We have a couple clients there." This is not a best practice. As my friend Saul Reibstein, formerly of CBIZ used to say, "This is a tactic looking for a strategy!"
Similarly, accounting tech firms often assume the CPA market is their best option without the validation mentioned above. When I ask if they've investigated non-accounting firms, corporate America, or other adjacent markets, the answer is most often no.
Start with markets (plural) that you think you should be in. It's equally important which markets you opt out of, as those you opt into. Every clue keeps you on the best path. That's what I did when determining the best market for my consultancy 25 years ago. It's also the strategy I pursued more recently to identify potential board seats.
How do you vet out these markets? Once you've identified the ones worthy of further study and exploration, get more specific by sub-segmenting them. For example, if your target is health care, then subsegment by various practitioners (e.g., cardiologists, radiologists) and/or institutions (e.g., home health, skilled nursing facilities). Sub-segmenting is essential to improving your chances for success.
Pitfall No. 4: Ignoring size. Many readers know that fishing is one of my interests. Let's say we are heading out for a day on the water. In considering which fish to catch, we learn that the lake has 10,000 large-mouth bass (one market sub-segment), and only 5,000 bluegills (a different market sub-segment). Other things being equal, fishing for large-mouth bass is the better choice. The exception is if the lake can't accommodate the large number of anglers fishing for large-mouth bass. In that case the better choice is to go where competition isn't so keen, and that's fishing for the bluegills.
In the health care example, once you've narrowed your search to specialty physicians in a particular geography, it's critical to determine the number of fish in the lake — how many cardiologists, radiologists and oncologists are practicing there. When launching a consulting business, I considered accounting, law and three other professional services firm markets. Research revealed that accounting was a market with thousands of firms and practitioners and the fewest strategic growth consultants (none at the time), theoretically creating the greatest need for my service.
The third element in your growth strategy is distribution channels, the places and spaces where your targets congregate. In the above example, where do those 5,000 bluegills gather? On the north end of the lake in October? Or on the south end of the lake in August? Similarly, where can you find the specialty physicians you seek? Congregating around pharmaceutical vendors? At medical school alumni events? Your strategy interviews will not only reveal who you want but also where to find them in great quantities!
As you work to pitfall-proof your growth strategy, remember that it's not about the wonderfulness of your service. That's table stakes. It's also about how well your service aligns with the needs of those you should reach, and how to find them in great quantities.
