Offering expert consulting means developing a specialization and focus that enable you to execute with distinction. The phrases “finding the niche for your product” and “product market fit” are essentially equivalent. A key definition of a market is that members reference each other’s buy decisions and therefore building up a set of references lowers your next prospect’s perception of the risks in your product or service (not just will it work or will you do what you say you can do but are you going to offer them significant value.
How Do I Move From Being Capable to Offering Expert Consulting?
Q: I have been offering a set of services to a broad range of customers who want and need it. I have found customers primarily through personal contacts and referrals but as I start to scale up I have been giving some thought to how to organize the business and present it more formally. Do you have any advice on this?
A: We see this transition from capable to expert services as the first part of a longer transition to providing system integration and ultimately full products (which may still have a significant service component). To focus more specifically on your question I have a couple of observations:
- When you say “offering services to customers who want and need it” you risk working “inside out” and defining your service process and then your customers as anyone who can use your services. It’s a mistake I made in the mid-90’s with an early web business where my clients were anyone who needed a website. Later we focused on firms that sold to electrical engineers (e.g. semiconductor firms, EDA firms) because we had a theory that EE’s were early onto the web and would use to it influence buying and design decisions.
- I think you need to distinguish between understanding a task or knowledge domain and having the ability to execute with distinction. Here are some excerpts from Chapter 57 “Building Unity Out of Diversity” in Peter Drucker’s “Management: Tasks, Responsibilities, and Practices” that offer some very useful insights on this (bold added)
Some Basic Rules
Technology-based diversification, to be successful, requires observance of same basic rules.
- The technology must be specific. It must be a “skill,” a techne, rather than a theory. Most managements tend to define “market” too narrowly. They tend to see it as “the market for what we make” rather than as “the value the customer pays for.” But many managements tend to define “technology” much too broadly. They think it means “what we can intellectually grasp.” What it really means is “what we can do with great skill and high distinction.”
- The technology must be distinct. It must be able to endow a company’s product with leadership characteristics.
- The technology in which a company has distinction must be central rather than incidental to the product or service into which a company diversifies. To disregard this rule invites frustration.
Peter Drucker in “Management: Tasks, Responsibilities, and Practices“
I think it’s always to your advantage to specialize because there are often nuances to your craft that are industry, vertical, or domain specific. In our case we focus on teams of 2-5 bootstrappers who are engineers or scientists ; we have done work for public firms and venture backed firms but the vast majority of our work is in this “sweet spot” area because it has allowed us to move down the learning curve on a number of interrelated issues and execute with great skill and high distinction. Also, as you become successful you will attract competitors and I think a narrower focus will minimize competitive overlap and allow you to further differentiate your offering.
Q: But isn’t there a significant value in being a generalist? Isn’t the ability to work across multiple sectors a strength and a value proposition in its own right? Take, for example, a vet vs. a doctor. A doctor is only trained and qualified to work on one animal–humans. A veterinarian knows how to open any animal and say “oh this is the stomach, and that’s the liver over there.” I think that too many people over-value industry specialization and under-value transferable skills especially if you consider:
- Companies in different sectors are more alike than they are different.
- You can bring experience and insights from one industry into another to remove blinders and unlock opportunities.
A: A couple of observations:
- If your experience is that your prospects value the diversity of your experience then you should emphasize it.
- Cross-fertilization and knowledge brokerage are real and valuable but in my experience difficult to sell in the abstract. I have found when I have particular practices or insights I am transplanting from domain A to domain B it’s better to couch them in the specific language of domain B and look for early adopters in B since it’s rare–if A and B are truly different–that members of A and B will reference each others buying decisions or practices. That does not mean that the insights and practices from A are not applicable and even a source of advantage if they can be transplanted to B but that their introduction into a new domain can be tricky.
- Even veterinarians specialize: if you have livestock, or a racehorse, or a family dog or cat you would normally be going to different vets. We had a client who was a practicing vet while he developed interactive applications for surgical rehearsal and medical education and learned that there are a number of specializations.
- I think you are fixating on “industry specialization” which is a narrowing of what I am suggesting. I am not arguing for an industry specialization as much as some kind of specialization (or set of objective identifiable client characteristics or needs) where you can offer premium value. For example I have worked on complex configuration in multiple industries: chip design, board design, network design, and optical system design. The industries are very different but the perspective and many of the rules of thumb are transferable and applicable.
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