By Brad Silverberg The tech world is wild and woolly once again. Pick any category -- security, browsing, Internet search, or music -- and you'll find dozens of new offerings or very public catfights. How do you sort through it all? How do you tell a ripple from a tidal wave? How do you anticipate what the players are going to do? And how do you decide on your own course?
Maybe I'm getting jaded but, despite all the changes in technology over the years, I think the fundamentals of how businesses get built and compete with one another haven't changed. In fact, rather than overcomplicating or starting from scratch, one can make sense of today's tech market dynamics and determine the right strategy by following simple logic based on old-fashioned fundamentals.
THREE STEPS. Over the years, I've used a framework articulated by two longtime colleagues, Rich Tong and John Zagula, and found it very effective. Tong and Zagula have captured this framework in their new book, The Marketing Playbook: Five Battled-Tested Plays for Capturing and Keeping the Lead in Any Market. It's based on years of personal and collective experience across a multitude of changes in both technology and business. I will borrow liberally from its "playing field" concept here.
The concept involves understanding today's tech market via a simple analysis. And I mean simple. It has only three parts:
A: The way things are.
B: The way things could be.
C: What needs to happen, or the gap you need to cross, to get there.
Businesspeople often neglect to do their ABCs -- or to do them often enough to keep current. That's hardly surprising, given how cluttered and complex the playing field seems nowadays. Yet a quick ABC analysis can save a lot of wasted effort and help zero in on the right strategy. Here are some examples of how.
First, looking at the gaps in the industry as a whole can inspire a compelling mission and a vision of change. In an inversion of the original software-centric Microsoft (MSFT) mantra of a "computer on every desktop," Marc Benioff's view of the opportunity for customer- and sales-force-management software led him to create his company, Salesforce.com (CRM), which was publicly dedicated to "no more software." Here's how Benioff and his staff plugged their situation into the ABC template:
A: Software is everywhere but costs too much, is overcomplicated, and isn't used. On top of that, tech budgets are getting squeezed.
B: We see a future in which the corporate world is without software -- at least in the traditional sense of a package shipped to customers on a disk -- and without its hassles or up-front capital requirements.
C: We need to drive across the gap by using simpler software that's delivered over the Internet. We need to take it all the way through the mid-market and to an initial public offering.
This mission worked so well that others are trying to do the same thing.
Bringing the ABCs to the plight of customers can help pinpoint the opportunity for a breakthrough offering. Apple's (AAPL) iPod is a perfect example:
A: The entertainment industry's muddled approach to the Internet is causing confusion, clutter, and complexity.
B: We see a future in which music is made available to anyone, anywhere. (Here, many essential ingredients of change had been brewing for some time, such as digitizing data from traditional analog sources, miniature hard-disk drives, and even Napster's controversial music sharing.)
C: We need to drive across the gap by offering the simplicity, elegance, and fun people really want.
Now, just discovering that folks want a better mousetrap doesn't mean you will reap the rewards of building one. You are not alone. There's this thing called competition. Doing the ABCs on rivals helps sort out the positioning that will overcome their strengths and expose their vulnerabilities. Just look at all the recent buying, selling, and jockeying in the corporate software sector known as enterprise resource planning:
A: Companies are becoming a one-stop shop for big corporate customers, firing up the competition among big suites of software sold by giants such as Oracle (ORCL), PeopleSoft, SAP (SAP), IBM (IBM), and Microsoft.
B: We see a future in which the software-suite musical chairs continues but with a smaller and smaller number of chairs for companies to sit in. Thus, PeopleSoft should buy J.D. Edwards, and Oracle should gobble them both up just to stay in the game.
C: The survivors need to cross the gap by targeting weaknesses and exploiting strengths: Oracle selling the "unbreakable" suite; SAP aiming at breakable PeopleSoft customers unhappy with the Oracle takeover; IBM heading to market with its strong capability for supporting customers; and Microsoft pushing the waiting game with its expected Longhorn, the next version of the Windows operating system.
Finally, even if you have discovered a great opportunity, defined a killer offering, and found the other player's Achilles' heel, you still have to execute. So, turn the ABC lens on your own capabilities. It will help define a plan that capitalizes on your strengths and shores up your weaknesses. Take a look at Google's (GOOG) ABCs:
A: The company is benefiting from its status as the darling of the Internet.
B: We see a future in which it inherits customers' trust and extends its offerings to a broad suite across all functions and activities, so that users spend their most productive time with Google.
C: We need to leverage the loyalty of Google adherents to test new products in a quiet, gradual manner, avoiding attention from competitors.
It will be interesting to see how this all plays out. Of course, the playing-field analysis, or ABCs, is just the beginning of crafting the right playbook for your business. You still have to figure out your strategy, technology investments, team composition, marketing, and many other things. But learning the lay of the land seems like a good place to start. And keeping it simple, while challenging, is the only way to stay on track. Silverberg is a founding partner of Ignition Partners, a venture-capital firm based in Seattle, and is the former head of Internet and Windows development at Microsoft