BCE’s new series on how organizations can position for a market rebound begins with a look at how to think about adjacent market growth:
In the post COVID-19 landscape, businesses across sectors and sizes are facing dramatically different operating environments. They have seen markets for their products and services collapse, have been forced to repurpose or evolve their offerings, and, in some instances, even stand up new products or services in new and poorly understood markets. In short, for many organizations, core business areas look dramatically different than they did just a few months ago.
Even before COVID-19, growth outside the core was one of the most common issue areas that businesses struggled to solve. It is easy to understand why: organizations develop core identities around the customers they serve and the solutions they experience success delivering. It is a positive feedback loop that eventually results in growth plateaus. Each dollar, point of share, or new customer becomes increasingly competitive.
Driving new growth through pursuit of adjacent opportunity can be challenging for a number of reasons. Internal obstacles – aversion to risk, bureaucratic processes, or lack of discipline – often plague large organizations. External barriers – opaque market dynamics, competitive intensity, or customer preferences – are major stumbling blocks for large and small institutions alike.
These issues are even more pressing today. For many companies, the cart is way out in front of the horse. It is no longer a question of whether to pursue adjacencies- their hands have been forced. Businesses must now take a considered and strategic approach to how they move forward:
- Are there markets or uses of your technology or needs that exist now that weren’t there before?
- Do companies making PPE open themselves up to new, sustained business areas?
- Do customers need/expect different services or solutions from you?
- Have social distancing and contact-free requires fundamentally changed how you deliver solutions?
Answering the questions above requires structure and consistency. Organizations require clarity on internal strengths and an understanding of market needs to be successful by working through the thought exercise outlined below:
BCE’s Adjacent Market Framework
Simply starting the process and considering alternate pathways to expand products and services is a step in the right direction. Fully evaluating each option requires careful consideration, customer insights, and competitive analysis just to determine if it is attractive. The second step is rooted in how best to enter, in which geographies, and with what type of business model.
As markets continue to adapt to the post-COVID environment, organizations can gain a competitive advantage by taking a structured approach to identifying and evaluating new opportunities. Leaders must challenge their teams to broaden their thinking around how this new reality will reshape customer needs and which solutions are best positioned for success.