Has a Monster entered your market? Don't let yourself be marginalized

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This pattern is so common it should get special attention in all MBA classes.

A smart technologist creates a great product and builds a company around it. He and his team continue to improve the product and get it out into the hands of people who want it. The technologist - let's call him Mike - is a thoughtful, pragmatic person who understands that you can't build a solid company without creating and constantly improving your internal processes. He learns how to manage effectively. He builds a solid company that grows steadily and stays profitable.

Then, one day, everything changes. One of the biggest companies in his industry - the Monster - becomes a competitor, either by buying a competing company or by opening up a new division. Mike quickly gets up to speed on the Monster's new move. At the very least, there are trademark and copyright infringement issues that he will have to fight. But that's just the legal activity. The real battle will be for customers. His very survival depends on winning this battle.

Mike is, first and foremost, a technologist. He honestly believes that, in a head-to-head comparison, when a customer compares one product with the other, the best product will win. So, while he keeps the lawyer plate spinning, he carefully analyzes the Monster's product, identifies several deficiencies, and starts directing his own developers to focus on creating functions that "beat" those deficiencies. As he is drifting off to another night of restless sleep, he imagines how potential customers will react when they realize how much better his product is. "That Monster won't beat me," he thinks.

I'm sorry to have to say this, but Mike is wrong. Mike has just fallen into the trap that all technologists fall into, a trap from which he will not escape.

In the last 40 years, I have never - never - seen anyone recover from this mistake. What has happened is the Monster has just forced Mike out to the margins. There is no real money there; the real activity is in the middle of the playing field, not the margins.

And, in the middle of the playing field, the real driver is momentum, something that plays right into the hands of the Monster. The Monster has momentum on its side because it is better known. The Monster has an installed base. Its large sales, marketing, and distribution infrastructure makes it easy for potential customers to find the Monster and buy Monster products. Many customers already have relationships with its salespeople or reps who can also provide the new product - and will do so eagerly. A new Monster product that is compatible with other Monster products will be an easier purchase decision for the corporate buyer than deciding to buy a "superior" product from a lesser-known company.

The Monster can be "good enough," and still make the sale. Most customers don't have the time, patience, or energy to compare every detail of competing products. All of this helps the Monster and hurts Mike, if Mike tries to fight the battle in the margins.

What can Mike do? How can he avoid being pushed into the margins? This is what I discussed with a "Mike" recently.

1. Resist the temptation to try to out-feature the Monster. This is the beginning of the end. The decision to focus on "performance nits" will guarantee your demise. Let development continue as it has been, for now.

2. Put your ear to the ground. The Monster is likely to make mistakes, because it has just entered a new market (yours), or the Monster is already making a mistake with customers. Interview Monster customers. Find out what drives them crazy about the Monster (something will - something always does, because big companies always have big flaws that no one wants to own up to or fix).

3. Figure out how to piggyback on the Monster, so you can at least be in the middle of the playing field instead of in the margins. You can probably get their customer list, either because you have a relationship with the Monster on some level, or because the Monster's customer lists are available through third-party vendors. Think about what you could offer to those customers - even the ones who bought the competing Monster product - that they would find valuable. Perhaps it is educational in nature. Perhaps it is an accessory. Don't be proud - be creative. It's better to get your foot into the door with these customers, and please them in a small way, even though they've chosen the Monster. When the day comes that the Monster disappoints them, you'll be there, ready to help.

4. Start thinking about how you could capitalize on that big flaw. The idea is to shift the playing field - to move it - in a BIG way, a way that will be very appealing to customers. As you listen to customers, keep asking yourself: "What do they really need? What could I give them that would change the game entirely - solve their big problem?" If the answer is there, it will come to you. If you capitalize on it properly - and that will take a lot of hard work and intelligent decisions - you could end up marginalizing the Monster. Yes, that's right. You could turn the entire thing on its head. You would actually move the playing field, putting you in the middle and the Monster in the margins. This is the Holy Grail, the sweetest (and most profitable) victory of all.

"Mike" is on his way to doing the right thing now, and is feeling like he has viable options for fighting the monster.

A monster-killer bites the dust

In my last post, I talked about AT&T versus MobilityPass, which offers a pay-as-you-go, international cellular data SIM card and modem. In this case, the Monster is obviously AT&T.

The Monster's fatal flaw is their lock-you-in contract, which customers despise. No one wants to get locked into a two-year relationship with a Monster, especially if that Monster charges a penalty fee of almost $200 if you exit the contract early. And, automatically renews the two-year contract without telling you. And reserves the right to change the conditions of the contract at any time. All this in the cellular industry, which changes so quickly that even a six-month contract is too long.

MobilityPass figured all this out and offers a very attractive alternative that changes the whole game. No contract, pay-as-you go usage, broadband wireless connectivity that works just about anywhere in the world. They sold me. I bought their modem and service, and I'm using it. I also contacted their tech support the other day via a webform, and they actually responded to me in less than 24 hours. The solution they suggested worked perfectly. I'm a happy customer.

Too bad MobilityPass lost their way

Since that article was published, MobilityPass redesigned its website. They went from looking like a Monster-killing example to looking like a marginalized player. They had gotten it right, and now they're getting it wrong.

Their new website design obscures the Monster-killing messages. They went from this home page:

To this home page:

MobilityPass is obviously doing well - their Monster-killing methods were working, as evidenced by their ability to offer even more products and services. Which meant they had to reorganize the site. In doing so, they have just made the mistake that Mike made. They are looking marginal rather than major. The big, Monster-killing idea has been lost.

On the old home page, they had those Monster-killing features listed right there, where you could see them ("No membership or setup fee, billing per second of use, pay as you go, no monthly fee, no contract, no commitment, instant activation"). Those Monster-killing ideas are now buried on their broadband page:

Whoever did the redesign obviously didn't appreciate how important that one monster-killing idea is to their customers. The big idea has been relegated to a minor role on the site. They may end up wondering what happened to their golden touch.

When it comes to killing Monsters, we are always our own worst enemies. Only our own customers can save us. What is important to them is what makes us successful, but only if we understand and respond to those needs. MobilityPass needs to get its "major" Monster-killing ideas back on the home page, where a prospective customer can see them immediately, so they don't end up being just another bug under the Monster's foot.