The Author of The Digital Transformation Playbook: Rethink Your Business for the Digital Age (Columbia Business School Publishing), David Rogers, is my podcast guest next week. The excerpt below was captured after the podcast and I thought of high enough value to share. Hope you enjoy!
Joe Dager: The part that I like about and I didn’t probably even talk about it enough is that you seem to have a tendency, which is a firm belief of mine, is that you can really build from understanding your core customer.
Your book sort of had the Ansoff Matrix in it, and that’s kind of how I look at things. I look at that, a customer with a regular product is our standard work, what we do, and we try to create efficiencies and affect in this and that room, and then, of course, the next is the market we explore is given new products to existing customers, and then much more difficult is giving our regular products to new customers, right? When you go to the new customers and new products – and new value, I like that – that’s when you go to that Lean Startup, that MVP type thing and now in that area and that is extremely difficult but if you understand those core capabilities and how you’re approaching those other two quadrants – there are all 3 quadrants I should say. That fourth one is as difficult, but just a jump to that fourth one is really difficult. Would you say you agree with that analogy? What am I missing there?
David Rogers: You know it’s interesting, I think it depends on what’s going on in your market. I mean I use the Ansoff Matrix, and I slightly adapt it because I’m applying it to the scenario where your current market is shrinking. It was looking at what do companies do when you can’t keep delivering the same product to the same customers. It’s declining their relevance or they no longer need it or something like that, and I gave some examples of the Mohawk Fine Papers and some of these other traditional newspapers, the Deseret News, and the Encyclopedia Britannica. They couldn’t keep saying, all right we’ll just keep delivering the same product to customers and iterating it. That wasn’t an option.
It’s the variation on Ansoff when one’s quadrant is taken out of the equation, what do you with the other three or how do you make them work? And my observation is that at least today, actually simply selling the same thing to new people is least likely your opportunity because markets are so flat and connected at this point that the idea that you’re going to have a bunch of new potential customers who could use your current value proposition that hasn’t discovered it yet is just less likely.
Really that winds up putting the onus on adapting your value proposition as the title of the chapter. Certainly you want to start by saying how can I create a new value to my current customers because that’s who knows you, and that’s who you know, and should know best. But very often, simply ding that will lead you into the fourth quadrant. Once you’re doing that right for your current customers, new customers may start to be attracted to you. My council is in the current market; usually, you do better by looking at how can I create more and better and different value for my current customers, and that will take you down the right path.
Joe: I know, and I think I read it in your book and correct me if I’m wrong but the Encyclopedia Britannica when they actually stopped printing their books, there was only…
David: It was 1% of their sales at that point.
Joe: Yeah, it was nothing, right?
David: Yeah, yeah. So It’s fascinating. And some people actually, I’ve met people who have been using it as an example of disruption. Because all they read was the headline, ‘Encyclopedia Britannica stops printing after 200 years…’ Yeah, but what about the business case? The business actually survived. And it was tough; it didn’t happen overnight, but it’s a really interesting story of exactly, by adapting their value proposition and figure out well, what can we do for this same kind of customers we’ve served, they were able to make a transition. So I think it’s a surprising and hopefully inspiring story for companies who feel threatened by a lot of change in their industry.