Entering a new technology based B2B business – Part VIII

Are there any regulatory clearances to be taken to implement your product/solution

You may have heard , from time to time , issues that ride aggregator apps like Uber face , from local governments in various countries. Some countries have laws which require cabs to be commercial vehicles – private cars cannot be used for this business. In some states there are laws, where dynamic pricing is not allowed.

If you have been reading my blog thorough this whole series, I have taken up one issue at a time, that you need to keep in mind before launching either a new business itself or a new service / product line within an existing business.

While the Uber example above is a consumer related business, the issue remains the same in case of B2B businesses as well. In case of B2B business the added complexity happens because people are anyway averse to change anything which is “not broken”.

There was a time, in India, when we had to fill multiple forms and file with the government agencies, when changing the bandwidth on leased lines. So each time our requirement for bandwidth would go up, we would have to question all the concerned departments on “why” the need for more bandwidth. It was just the hassle of filling up and signing forms and then going through the government departments to close the issue.

So in case your solution requires certain government clearances, before it can be deployed, then figure out how it will be done, without the customer having to go through the hassle of applying to government agencies. If the customer is expected to do it, then rest assured, you have brought a resistance point in your business.

Make the process as frictionless as possible. As an example, drones need clearances from multiple agencies, before they can be deployed by commercial entities, because they can hamper aircraft traffic or can cause national security issues etc.

So some companies came up with drones which had a limitation on the height they could achieve and now drones are being used to spray pesticides on crops, in so many parts of the world, without having to take permission, because they don’t have the ability to cause any challenge to aircraft traffic.

Whenever regulatory issues are involved, either find a way to solve it for the customer or better still create the product or solution in such a way that the regulator doesn’t need to get involved.

In all sales, especially more in case of B2B, you have to remove all points of friction, which can make a customer avoid taking the solution. That will be the only way, you will be able to scale.

Till next time then.

Carpe Diem!!!

Entering a new technology based B2B business – Part VII

B2B, Marketing, Marketing Stamina, Technology

What other solutions are available to solve the same problem

If you are reading this series of blog posts for the first time, then I would suggest you start with Part I of this series, so you are able to get the sequence of activities. You could also read this one and if you find it interesting, you could read the whole sequence.

So if you prefer to read this first, the idea over here is not about starting a brand new business only, though that could be the case. The idea is to have a checklist , when you are starting a new service line or launching a new product etc. in the technology domain or a new business, so that you try to cover all the bases, so that there are fewer surprises, when you are out there in the market.

Generally in most B2B cases, companies have been doing business for years. In most cases, the problem that you are trying to solve, may not be a unique problem. The solution that you have developed may be unique, but the problem, may not. If that be the case, then, chances are, that companies have already found a way to solve the problem.

Then the question that you need to ask yourself is, if the solution that you have developed so unique that it gives them benefit, which is multiple times, what they are already getting.

This is an important point, when you are doing business in B2B. Customers in B2B have way too much inertia. Therefore when you ask them to change, in their mind they come out with all kind of reasons why this solution that you have brought will fail. And no manager worth his salt will like to fail in B2B. The peer pressure is way too high.

So if the benefits you are offering with your solution are a magnitude higher than what they presently get, then they may be willing to listen to you. If not, then , they won’t even be bothered to listen to you.

So keeping an eye on what is happening in the market at the moment and how customers are presently solving the problem is critical.

If the benefits you offer, are say 3X of what they are presently doing, then, they could start discussions. Having said that, however if the direct cost of getting these benefits is 5X, the present cost, then again, you are not going to be able to move ahead.

The other thing that you need to keep in mind is that there will be some early adapters, who like to try new things, but “crossing the chasm” as Geoffrey Moore calls it, is another ball game. Basically reaching critical mass is tough when you are getting into a new market. You need to have the tenacity aka Marketing Stamina, to carry the product from the early adapters to mainstream and then late comers.

Tenacity both in terms of “having the finance” to sustain the business while you pick up more and more users, as well as the patience to be “at it” consistently. A lot of times, persistence does the trick, more than anything else.

So look out for all the ways people are presently solving the problem and figure out how you will counter the customers objections to your solution.

Till next time then.

Carpe Diem!!!

Entering a new technology based B2B business – Part -VI

B2B, Marketing, single target market

What is the smallest size of the addressable market

In the last episode I wrote about the technology infrastructure that is needed to ensure that your market entry is successful. If you have not read that post, I would highly recommend that you read it here.

If you have determined, that the technology infrastructure exists in the overall market, then the next step is to identify what is the minimum size of the addressable market.

So why is this important?

All the investments that you make for entering the market, have to be justified by the returns. Let’s take a hypothetical example of the overall market size of the market being $100 and the market that you can address out of that is $60. Now you won’t be able to win all the business in the addressable market. Let’s assume you want to dominate the market, then a 30% market share is generally the maximum you can get. Which means you can make upto $18/-.

If the investments that you make are more than $6-$10, over the time period to get a revenue of $18, then you may just about break even or make a profit, depending on your profit margin. If however the investment needed to pick up the $18 of revenue, is $50, over the same period of time, then you are entering a losing game.

If you go through my earlier posts, you will read about my philosophy of “Riding the Elephant” if you are a small technology services company. By riding the elephant (symbolism of a large product company), you can penetrate a larger piece of the market because the elephant will help you get there faster.

The downside in this approach is, however, that the “elephant”, may itself, not succeed in penetrating the market. If however you have made investments on the technology that the “elephant” is bringing without first figuring out the minimum addressable market then you can end up making a huge loss.

It has happened to us in quite a few instances and that is why today this forms a major portion of our evaluation criteria.

You also have to look at a holistic picture, when you are taking a business decision. Maybe this product or service that you are bringing to the market, itself does not have a large addressable market. But because of the image this technology entry will give you, you may gather customers in allied areas, who would not have come to you, otherwise. Then this decision becomes an investment decision rather than just a product line decision.

So while this is an important part of the checklist for getting into the market with a new product or service, the overall decision should be based on the direction you want the business to take.

Till next time then.

Carpe Diem!!!

Entering a new technology based B2B business – Part V

B2B, Marketing, Marketing Ecosystem, route to market

What is the Technology Infrastructure Needed

In the last 4 episodes of this blog, we have focused on multiple things, while wanting to get into a new technology based B2B business. When I say a new technology based B2B business – there are 3 components –

New – new could be for you , as in a new product or a new service that you are launching OR it could be new for the market itself
Technology – the key emphasis over here being that it’s something which is related to technology driving the sale of this product. The technology could be existing or it could be a net new way of using technology
B2B – so we are not selling to a consumer, the sale will typically have multiple stake holders and there could be budgets involved, which the customer will need to have, to be able to procure this item from you.

The reason I brought this issue up, in this episode, is because if the product or service is “new” for you, but has been existent in the market for a long time, then people will be aware of the technology infrastructure they will need to have. For example people have been so used to using mobile phones, now, they know they will need to carry a charger with them or a battery pack because the battery of the mobile phone can die down with usage.

However if the technology, that you are wanting to bring to the market, is new, then for you to be able to sell it successfully, you will need to see if the market already has the technology infrastructure. A simple example has been the electric car. We have been hearing about the electric car for close to 20 years. But figuring out the light weight Lithium Ion batteries and public infrastructure to charge these batteries has been a big challenge for the mass adoption of electric cars. Another assumption of course, which has not been accounted for, is the availability of electricity to charge the cars. In a lot of developing nations, you still have long durations, when electricity is not available. You may have the best electric cars in the world, but people will not buy the cars if they perceive a challenge in operating the car.

In B2B this challenge is further exaggerated, because multiple people are involved in the decision making and No One wants to be the one with a failed project. That is the most fundamental thing that needs to be addressed in a B2B market.

Whoever is the manager / director/ CXO that you are talking to, at the back of the mind they all have one fundamental question – I hope they can make it work, based on the claims they are making

If the customer you are going to, with your new technology (let us call it level N) and they don’t have technology at level N-1, then they have to think in terms of first coming to N-1, even before they can think of buying your product or service. When they will reach N-1, they would have put in the infra that can be leveraged by your technology. If the technology is new and the base infra that you need is also net new, then you have to fight the battle at two levels, which is much more complex and with a very low chance of success.

Having made the above statement, a lot of people among you may come out with the argument that the mobile phones – when they first cam out needed the “new” phones and new towers, since they didn’t work on “wires”. Well for the mobile phones to succeed, the telecom companies had to invest int he infra, not the consumer. For the consumer, it was just about having a different kind of a phone and it dramatically increased convenience – which is another variable, that I will take up in another episode.

A lot of times my sales people tell me, that the customer was “Wowed” with our solution, but after spending three or four calls, the case is not moving anywhere. One of the key reasons when cases get stalled or prospects stop responding to your calls for a technologically superior (new) product, is the fact that they don’t have the base technology which they can use to migrate to your technology. Leap frogging one technology generation, can be very dangerous and most corporate people don’t want to take that risk.

So one of the base qualifying criteria for you, when you enter into a market with a new technology is to identify the N-1 technology that will be needed for your prospects to have a smooth transition to your technology.

I can give multiple examples from my failures – we thought of coming out with a Virtual assistant with an avatar to which you could ask questions or get a job done, exactly like a person assigned to you. But for that the microphones had to be so good that they would transmit the sound clearly. Most people didn’t have that and we failed.

Sometimes it could be a combination of technologies involved at stage N-1, not just a single one. Taking the same example that I listed above, we also need to have good internet connections and good cloud usage. Since a lot of people did not have a large bandwidth, they were not able to perceive, how this solution would get deployed in their environment.

I hope with this episode of my my blog, you have been able to also get some “Aha” moment on why some of your cases got stalled, even though, initially the customer was ga-ga on your new technology platform.

Till next time then.

Carpe Diem!!!

P.S: In case you are launching a new technology based product/service in the B2B market and you have a time constraint, just ask me for the list by sending me a mail on animeshjmathur@gmail.com.