An agile way to think about markets


Industrial economy command organizations operated in protected markets. They approached these markets with a core discipline of preservation, based on a mindset of scarcity. In the open markets of today's digital economy, we need a new approach. Today's agile organizations approach the market with a core discipline of evolution, based on a mindset of abundance.

How command organizations think about markets

The traditional approach in the industrial economy was to think of markets at the national level, in very aggregate terms (often just 3-4 large segments), with the assumption that there were pretty homogenous customer needs within each segment, served by a limited number of (often 3-6) major competitors. The strategic goal was preservation - to preserve that status quo as long as possible, through mass marketing and high barriers to entry. The underlying mindset was that of scarcity - the assumption was that customers had little information, there was only so much demand, and there were limited resources with which to address that demand. It was imperative to limit access by other competitors, and secure as much market share as possible. This approach to the market environment was a key contributing factor to the command organization model (if you’re trying to control the market, keep it the way it is, and preserve your dominant share, its best to do that by command-and-control). How agile organizations think about markets

In today’s world, this approach is increasingly irrelevant (with the caveat that it does still characterize certain industries in certain regions). Today, everyone - customers, suppliers, employees, investors - operates with more information, greater access and more choice than ever before. The market ecosystem in almost all industries is now truly global, and is evolving very dynamically, every day. This means we can no longer think in terms of preservation - we have to think in terms of evolution - new customer segments, new customer needs, new resources, new suppliers, all coming into being all the time. In this environment, its far better, as McKinsey research demonstrates, to think in terms of granular customer segments - there may hundreds in any primary market domain - many of which have unmet, or only partially satisfied, needs. There really is an abundance of opportunity for every company. Its also true that most resources are not in fact scarce (other than non-renewable natural commodities like minerals, oil, gas, etc.). It just requires us to think differently, to see how many opportunities are out there, to tap into the abundant capital, human, intangible and digital resources now available, and to design innovative business models able to create value in new ways. Today, thinking and acting based on the recognition of constant market evolution with a mindset of abundance must become one of the five core disciplines for any organization that wishes to be agile. How to shift from a command to an agile approach

Like any change, its best to do this one step at a time, typically starting with a small-scale experiment. For example, an established company wishes to launch a new product. Instead of doing traditional market and competitive analysis of the market as it currently exists, use lean / agile / design thinking / open innovation techniques to uncover true customer needs, to identify the large range of true granular segments, and to unearth the wide range of resources (primarily external) that can be tapped. Do so with a very explicit agenda of moving from skills focused on preservation based on a mindset of scarcity, to skills focused on evolution, based on a mindset of abundance. Provide some initial training on this new approach, and ensure these new practices are embedded in the day-to-day work of understanding the market ecosystem for this new product. Challenge the thinking continually, and anchor the market analysis in a recognition of evolution based on a mindset of abundance. This will lead the team to begin to see a much richer and more exciting set of opportunities for this new product. This demonstrated success builds momentum to try the approach elsewhere, building a constantly expanding pool of people across the organization thinking and practicing the discipline of evolution, based on a mindset of abundance. The cumulative organizational energy this releases is enormous, as more and more people begin to recognize the almost limitless possibilities available to the organization to grow and impact the world.


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© 2016 Michael Lurie