And why, done right, positioning is also a major product opportunity — using AI or not.
Positioning refers to acquiring space in the mind of the customer.
Often CEOs see an amazing organization from the inside but struggle to be seen in their market as equally amazing. Why?
Throughout my career as a Silicon Valley-based CMO, I’ve worked for many companies that were able to enter their markets and grow at an unusually fast pace. I’ve also been asked to advise companies that had difficulty finding their way in the market to help them pivot—sometimes pivot their product strategy or simply right-size their GTM motions.
The failure rate of new startups is 90%. Why is it that some companies get positioning right and others get it wrong? We know it’s about execution but everyone doesn’t know about the execution of positioning.
If you are a CEO, there’s no doubt that you are familiar with the term. Most business executives understand it as part of the branding and identity process. What many don’t know – perhaps for lack of experience – is that positioning, done right, sits at the foundation of corporate strategy, from the conception of the product, through the launch of the the company, at pivotal moments, and at the time when the company feels ready for an exit (M&A, or public offering).
How would the success rate of startups improve if a greater number of companies had developed their ideal positioning?
What CEOs need do is embrace the art and science of positioning. It begins with identifying a team well versed and experienced in positioning. The startup journey involves the execution of managing the company through a series of often very diverse success gates, key milestones in the company’s journey—the leadership, team and funding need to be matched to achieve success through these gates.
Positioning, the perspective through which the world views you.
It’s very important to be honest with oneself as this journey is embarked upon.
What is my company’s true opportunity?
A key subset of positioning focuses on the strategic aspect of positioning: positioning for value and valuation.
I say value and valuation because positioning is both the value of your organization that you unlock for your customers and the valuation you create for your organization.
Regardless of what the company’s reason to position – or reposition – the process begins with an honest reflection of what you are and what you can be over time in the mind of the customer. What is the big opportunity that, if achieved, could fulfill the aspirations of the company?
To be clear, it’s the busy, overloaded mind of the customer (or future partner, acquirer) you are battling for, as the legendary marketers Al Ries and Jack Trout argued in Positioning: The Battle For Your Mind. But you can’t own a piece of that mind without knowing who you are and an honest reflection of what you’ve got.
Being successful owning that mindshare is often best accomplished by creating or redefining a category. It also helps if you ride on the back, surf a mega-trend.
Positioning begins by looking inward, understanding your mission and how your product delivers upon that mission. It then extends to the packaging of the product and into the company ecosystem: customers, partners, media, analysts, employees.
Enabling your ecosystem can dramatically redefine your market position.
And if positioning fails, maybe it’s the product strategy that needs to pivot rather than the positioning.
Let me provide an example of positioning today for a software company — the App vs the Platform question many start-ups ponder.
An app company services its users. This is a very good business. Apps can live on different devices using the cloud to share data. Apps can be for all types of markets.
In today’s digital world, the App Market is like a big store full of software tools and games for your smartphone or tablet. Imagine it as a giant toy store, but instead of toys, it’s filled with little programs that can do all sorts of things on your device.
The Power Of The Platform
A platform company is the foundation of the app market. It doesn’t make individual apps but provides the tools for many app makers to thrive. This creates a “one-to-many” relationship, meaning one platform serves countless app creators.
The magic lies in the variety of apps. Platforms open doors to unlimited markets, offering apps for games, productivity, and more. This diversity unlocks greater value potential for the underlying platform company and creates value for each new app customer.
How does it work?
First, the term, API—well known in software companies—is a technical term, application program interface, and it simply means your product or service is open to working with others
With evolution of the API – Integration is expected.
So the shift to being a platform creates a super power given to the platform by its app customers
The API is the interlock between app and platform that allows the organization to shift from one market into a platform company with unlimited potential across unlimited markets serving developers and end users.
During the transition to today’s modern messaging era, there was a time when the internet didn’t have voice as a feature, this was called internet telephony, it was red-hot—it’s ecosystems included dozens of startups, telephone company giants looking to protect their turf, and internet behemoths like Google look led to innovate. While many startups vied for the attention of the consumer market, the two companies I help senior leadership positioning at pivoted from being app companies to becoming platforms for the many developers behind many apps. This in turn got the attention of the giants. One company was acquired by British Telecom, the other one went to Google.
It should be noted that this was the upswing of “platform positioning” in Silicon Valley, when startups began observing and imitating the platforms that Microsoft, Google, and others had built. But platform positioning persists to this day.
How does AI impact one’s strategic positioning?
Startups can be classified based on the eras they belong to, and these eras often overlap within the web evolution:
- Wave 1: The era of internet startups.
- Wave 2: The rise of mobile-first approaches, the app economy, cloud computing, and social media.
- Wave 3: The era of AI, decentralization, and edge computing.
In today’s landscape, many companies find themselves innovating and positioning themselves within the context of Wave 3, which represents the latest web wave.
Positioning within the latest web wave often leads to higher valuations, driven by strategic product considerations that align with the innovations of this wave.
AI is now as expected an API has been for a product company.
As you focus on your your startup journey invest in spending time to think about your structural composition and the market choices you have as it just may impact how you write your code.
Lesson: positioning is not just for the moment. In the minds of its best practitioners, it’s a lasting commitment.
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