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Page 168 GO IT ALONE!
I met an entrepreneur who pitched his new calendar company to me. By my count, there were already six large firms doing what seemed like the same thing. So I asked him, “Why does the world need another calendar company?” He replied that this was a huge market, so there was always room for another player. He described what seemed like minor differences in his service versus others’. My reaction was that those differences in service were probably not of real value to the typical user—and existing calendar companies would probably add these features anyway. From this perspective, the basis on which he planned to compete against established entrants was (1) either imperceptible to potential users, or (2) he was failing to take account of the likely competitive response to his entry into the market. As a consequence, he was unlikely to compete successfully. With many existing entrants in the market, it is essentially impossible for a company without a highly differentiated product or service to succeed even if the market is huge. Now, there is a relevant corollary here: If he had said to me, “Yes, there are six existing companies, but none of them serve the market for traveling business women because . . . and this market comprises about ten percent of all the potential users,” then I would have been far more intrigued. Here, the entrepreneur would have been segmenting the market and so he could dominate a specific segment. He would have been saying to a specific group of people, “This service is made to meet your specific needs. Here’s why it’s best for you.” Define your market—even if it is a small segment of a much larger market—so that you have something distinctive that will attract members of that segment and allow you to dominate that arena. Distinctive services win. Me-too entrants fail.
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GO IT ALONE! Copyright 2004 by Bruce Judson. Reprinted by permission of HarperCollins Publishers. All rights reserved.
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