A journey of a thousand miles begins with a single step.
Laozi Lao Tzu
I had lunch with Shinwei, one of my former students who had just started a career at a mid-sized consulting firm. After I found him a bit, I presented him as if he was a bit lost. “Our company gave me a project to help them get into a new industry – semiconductors. They wanted me to design the space for them so we could figure out where we could add value.”
When I asked what they already knew about it, they threw me tons of industry and stock analyst reports, company names, websites, blogs. I’ve started reading a little bit and I’m drowning in information but I don’t know where to start. I feel like I don’t know anything.”
I told Shinwei that I was happy because he was given an amazing learning opportunity – how to quickly understand and then map any new market. He gave me an “easy to say” look, but from ShI can resist. I gave him a pen and a napkin and asked him to write down the names of the companies he read and concepts related to the semiconductor business – in 30 seconds. He quickly came up with a list of 9 names/terms. (See Mapping – First Pass)
“Great, now we have a start. Now give me a few words that describe what they do, or what they mean, or something you don’t know about them.
Don’t let the enormity of the unknown scare you. Start with what you know.
A few minutes later he drew a napkin pattern that resembled the image on the map – second pass.
Now we have some progress.
I pointed out that it now has a startup list that contains not only companies, but also a map showing the relationships between those companies. And while he had few facts, there were other hypotheses and theories. And he had many unanswered questions.
We spent the next 20 minutes breaking down that design and sketching out a second pass outline (see Map – Third Pass).
As you read more material, you will have more questions than facts. Your goal is to first turn the questions into testable hypotheses. Then see if you can find data that turns the hypotheses into reality. For a while, questions begin to accumulate faster than facts. no matter.
Notice that even with the small data set that Shenwei has, in the third pass of the mapping, in the right-hand corner, a diagram of the interconnection of the semiconductor industry begins to emerge.
Mapping the relationships of companies in an industry can help you gain a deeper understanding of how the industry works and who the key players are. Start building one right away. Realizing that you can’t fill all the connections, gaps in what you need to learn become immediately apparent.
I could see Shinwei’s confidence returning as the fog of information began to lift. I pointed out that being in an industry where there is a lot of information is a real advantage. He quickly realized that he could add data to the columns in the third pass of the map while reading reports and websites.
Google and Google Scholar are your best friends. Refine your search terms as you discover new information.
My idea was to use the sketch on the third pass of the map as the beginning of a wall chart – physically (or if he could keep it in his head). And the more he learns about the industry, the more he learns about it to update the industry’s and its segments’ communication patterns. (When he pointed out that there were patterns of the semiconductor industry that he could copy, I suggested that he ignore them. His goal was to better understand the industry by mapping it out ab initio – from scratch. If he did that, he might create a much better one.)
After lunch, Shenewe asked me to come in with me when he learned something new and I agreed. What he didn’t realize was that this was only the first step in a ten-step industrial mapping process.
Over the next few weeks, Shenwei shared what he learned and sent me his ever-evolving and improved Industrial Relations Map. (A fourth pass of the map appeared 48 hours later.)I shared the news that the dynamic is part of a ten-step industry mapping program. Others in the next few weeks he quickly responded que built on the map of the industryEpisodes 2 through 10.
Two weeks later, he presented an industry report to management that covered the ten levels below and contained an elaborate industry diagram he had created from scratch. A far cry from the original napkin design!
After six months of work on this project, he convinced the company that there is a great opportunity in the semiconductor field, and they started a new practice with him. His work won the “Best New Worker” award.
Ten steps to planning any industry
Start by visualizing your understanding of the industry. List all the new words you come across and create a glossary in your own words. Start collecting the best sources of information you’ve read.
Basic industry understanding
- Draw a diagram of the industry and its divisions
- Start with anything
- Build your learning through continuous repetition
- Who are the key suppliers for each segment?
- How does this industry feed into the larger economy?
- Create a dictionary of industry specific terms
- Can you explain it to others? Are there similarities with other markets?
- Who are the industry experts in each department? For the entire industry?
- Economists? For example, industry analysts, universities, think tanks
- Technology experts? For example, universities, think tanks
- Key forums, blogs, websites, etc.
- What are the best open source data feeds?
- What are the best paid resources?
Overlay numbers, dollars, market share, compound annual growth rate (CAGR) on all segments of the industry diagram. This informs the speed and direction of the market.
Detailed industry understanding
- Who are the market leaders? New arrivals? By revenue, market share and growth rate
- In the US
- Western countries
- Understand technology trends
- Who builds on whom.
- Who is critical as opposed to who can be replaced.
- Understand economic flows
- Who does he buy from in this industry?
- Who will buy the product from this industry?
- How cyclical is demand?
- What are the drivers of interest?
- How do companies in each segment get funding? Is there a difference in capital requirements? Ease of getting started, etc.
- If necessary, understand the flow of staff for each department
- Do people move only between their classes or up and down the industry as a whole?
- Where did you train?
A beginner’s method of forecasting is to simply project current growth rates forward. But disruption is coming fast and furious in technology markets today. Are there other technologies influencing this in neighboring markets? (eg AI, Quantum, High Performance Computing,…?). Are there other global or national economic initiatives that could change the shape of the market?
- What has changed in the last 10 years? 5 years?
- A diagram of the past incarnation of the industry
- What will change in the next 5 years?
- Is there a greater understanding of disruption?
- New arrivals?
- New technology?
- New foreign suppliers?
- Draw your industry model in 5 years
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