Today I am continuing the newsletter series exploring using customer insights to define a strategy. You can read the fist post here, where I described my belief that a good strategy describes:

1. What is the game we are playing - what markets, customers, competitors

2. What are the rules of the game - how do we execute, what are our resources to play, how do we prioritize

3. What does a winner look like - what is our competitive advantage

4. How do we continue learning - what signals are we looking for to adapt and pivot as our customers and the market reveal new information

Today I want to discuss how market and customer insights are critical to defining the first two elements of a strategy - defining the game you are playing, and what the rules of that game are. One of the leaders I had the good fortune to work for during my career was Pat Byrne, who was passionate about this approach to strategy. He once described this as uncovering your “proprietary customer and market insights”. The use of the term “proprietary” to me implies exclusive understanding and knowledge that your competitors (and possibly even your customers) don’t have.

What game are we playing

I don’t believe you can define a meaningful strategy until you have a deep, shared understanding of what market you want to play in. Once you are clear on the game you are playing, I have found that focusing on the customer jobs to be done and problems they are trying to solve is the best way to evaluate the relevant market segments rather than simply looking at the historical market segments. This helps you think beyond the definitions and boundaries that others have defined and forces you to think more broadly about the market segments you feed you have a right to play in.

Perhaps you have a strong incumbency in a mature, slow-growth market where you want to extend the life of that market segment. Or maybe there is a new market segment that no one has publicly defined yet but you see emerging due to new technology, regulatory, or consumer trends. Perhaps you want to create an adjacent market that effectively increases the addressable market for a service or capability you are already delivering to a different market segment. Or maybe it is a combination, where you want to continue serving a mature market as a way to create the new adjacency.

Once you’ve defined the market segments - or the game you are playing - I have found Mekko charts to be one of the most powerful tools to understand and communicate the strategy around those markets. Admittedly, creating Mekko Charts requires a deep understanding of the markets, and the order and relationship between market segments and realistic understanding of greenfield vs brownfield in those segments is required for this visual to be useful (perhaps that is why they are not used as often as I think they should be). I could go on and on about why I think Mekkos are such a powerful tool to create and share market understanding, but that is beyond the scope of this post (of course feel free to reach out anytime if you’d like to discuss more).

What are the rules of the game

Defining the rules of the game - the market segments you want to play in - is where you the ability to truly create proprietary knowledge for a really amazing strategy. However, too many times I see meaningless statements like “be the market leader in XYZ” or “disrupt the ABC space”. I much prefer strategies that describe what unsolved customer problems will be solved, or how we will facilitate a customer job to be done in a truly value-added way. Maybe the value-add is simply doing what others do but more cheaply…I’m not saying that isn’t a valid strategy for certain businesses. But creating truly long-term and sustainable growth requires solving that problem in way the customer didn’t realize was possible and that you have the unique assets - be they people, intellectual property, technology, network effects, etc…. - that is difficult or impossible for anyone else to replicate quickly.

Many books have been written and many consulting companies created claiming they have the secret sauce to helping you understand your customers better. Trust me, I’ve worked with many of them and while there are absolutely bits and pieces that each has to offer what I’ve found is that the most important element - which also happens to be the most difficult for many people to do - is stay far, far away from what you think you know. As Rik Dryfoos said in the interview I did with him recently “You need to fall in love with the problem, not with the solution”. What this means to me is staying intensely curious on the pain points the customers describe, what success looks like to them, and what the barriers or roadblocks to achieving that success are today.

If you are able to stay 100% in curious, empathetic listener mode you will uncover many hidden nuggets of pain points and jobs to be done that the end users probably don’t even realize can be addressed when they are talking to you. But that non-threatening, empathetic listening mode uncovers those truly proprietary insights. And when you are able to assimilate that from multiple customers and users, and find the patterns, that is when you can really define what the rules of the game are that play to your strengths and unique assets. And while this sounds simple, it is one of the hardest things to do and so many teams can’t forget everything they already know about the solutions which prevents them from uncovering those proprietary insights.

There is obviously some dependency in defining the game you want to play and what the rules of the game are. This requires some iteration between these steps and the best strategies are continually evolving as you learn more and continue refining and evolving these unique customer insights.j

But I don’t want to jump ahead to the next couple of posts in this series, where I’ll discuss:

• How a strategy should inform product roadmaps and prioritizations

• The importance of KPIs and metrics in executing on a strategy

• Tying it all together into goals and objectives for execution

Follow along and comment below if you want to learn more about this topic I’m so passionate about.

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