Updated: Oct 28, 2019
In this article, I am going to share with you some key considerations to help you and your XR product grow into the enterprise market.
Some time ago I wrote about how the chasm is an inevitable phase for innovative XR services, and how the different adoption drivers of visionaries and pragmatists require a shift in strategy when communicating and building your XR product. One key takeaway is that, while visionaries can easily imagine and appreciate the benefits of new technologies, pragmatists have a strong sense of practicality and would rather “wait and see”. This means that visionaries are not a good reference for pragmatists and consequently a primary goal of a company on the verge of the chasm should be to breach into a pragmatist mainstream market niche that is referenceable.
The first step is a little self-analysis: Where are you on the curve? Is your message tuned towards tech-driven innovators? What was the driver for your commercial counterparts to purchase your solution? If the strategies that led your company to the initial success with early adopters do not seem as effective as in the past, it is probably a sign that you are on the verge of the chasm.
Geoffrey A. Moore in his book “The Chasm” talks about two main strategies to survive:
Identify a beachhead, a single target market from which to conquer the enterprise market
Develop a whole product, an integrated end-to-end solution that allows the enterprise a seamless experience in adopting your XR solution.
From the remainder of this article, I will focus on the first one and I will leave the other to a later moment.
A good beachhead shows two main characteristics:
Its enterprise customers have a single, compelling, “must-have” reason to buy that connects tightly with the capabilities of your company.
The selected beachhead provides “adjacencies” to enter related, contiguous segments.
The compelling reason to buy boils down to a very simple question that lingers in the pragmatist’s head: is the ROI worth the risk? Adopting your XR solution should radically boost a well-understood critical success factor with no other alternative available to reach the same result. Increasing the reach of a marketing campaign thanks to AR could be an example. Another powerful way to impact the ROI is to visibly, verifiably and significantly reduce total overall operating costs. Reducing travel expenses by providing VR training is a good example of that.
A good beachhead should provide clear opportunities to enter adjacent segments. This means new market segments where your company can sell the existing XR solution or the current segment for which you can develop and sell a new XR product. Regardless of whether you identify subsequent opportunities in terms of new markets or new solutions, adjacent market segments should exhibit two key attributes.
Word of mouth relationship
Similarities in the WHOLE product need
For a pragmatist, there is no stronger reference than a word of mouth recommendation from a peer. Word of mouth communication between pragmatists customers tends to be vertical, or within industry and professional boundaries (rather than horizontal, across industry boundaries, as in the early market). I believe this is a strong argument to reevaluate the approach that many companies are adopting right now.
Many XR companies make the mistake of pursuing too many market segments at the outset. There is a lot of enthusiasm about what XR has to offer to many different enterprises and there is no will to limit the potential market opportunities. Founders also want to hedge their bets against selecting the wrong segment, and so pursue several. However, most companies simply do not have the resources to be effective in multiple segments and end up chasing innovators and visionaries project after project. These kinds of customers are highly demanding and managing and fulfilling their “XR dreams” can drain your resources very rapidly. Another challenge is also learning the industry and customer-specific knowledge and leads to weak communication strategies and poor marketing campaigns. Something as “simple” as making your website turns into a nightmare and often results in a generic “we are great at doing everything for everyone” that the enterprise customer you are after is never going to believe.
These risks of a diffused (horizontal) market approach must be HEAVILY weighed against the larger market volume potentially available. I personally strongly believe that despite vertical segments may appear to have smaller potential, conquering a leadership position within a segment provides strong leverage while scaling up your business.
I really want to share some stories close to my experience that I found inspiring from the latest AWE and that show examples of beachheads in very different enterprise markets such as, Manufacturing, E-commerce, and Real estate.
The first is Goodly Innovations. I was attracted to the booth at AWE by their “somehow familiar look”. Once I approached the CEO Robert Hoffmeister I realized the reason: their solution, OptiworX, was developed from the beginning for the demanding requirements of the pharmaceutical and biotech industry. I worked for several years in the field and being able to deploy an innovative solution in such a regulated environment is absolutely remarkable. Instead of focusing on the general benefits of AR for maintenance and manufacturing, the team went one step further and developed a platform to optimize processes and minimize machines downtimes. This laser focus approach allows them to tune their message and look to the exact client they want to target. Might seem trivial, but the video of an operator with a hair net operating a packaging machine predominantly shown on their home page is EXACTLY what sticks with a pragmatist in search of solutions to improve his processes. It is relatable, tangible and shows that Goodly innovations understands the intricacies of deploying on the shop floor.
The other example is SpatialFirst. The company is at its early stage but is off to a great start and won an Auggie as “Startup to watch” at AWE2019. I have been working with Emily Olman on her pitch and having a clear focus made it possible to tell a clear story that connects with audiences and investors. Their solution, PlaceTime, is not just an AR solution for real estate; it is a platform for commercial real estate agents that struggle to gather and provide their customers with the depth of information needed to close MORE deals FASTER. Communicating about the market size and the opportunities that spatial computing opens up for such a narrow market becomes easy and shows to investors that you are down to earth and you are not after overly optimistic growth projection. Once a beachhead has been established it is not hard to foresee PlaceTime and its spatial computing features being used in commercial buildings for tours, maintenance or getting contextual energy consumption profile at your fingertips.
The last example is Binkies 3D, the world leader in 3D for Telecom e-shops. E-commerce is an incredibly broad market and recently was “flooded” by a 3D explosion. Being able to cope up with the pace and variety of product releases is only possible by compromising quality. Binkies 3D took a different approach and narrowed down the range of products they offer to three types: smartphones, tablets and wearables. This allowed to cover the majority of the catalog of Telcom e-commerce websites and focus on providing a service that seamlessly integrates on the digital sales platform. Binkies 3D is now a profitable company and is establishing new collaborations with Philips and other manufacturers as well as finding new opportunities to leverage 3D in innovative ways to boost sales and engagement on the current platforms.
Let me summarize some key takeaways:
Growing your XR business is going to require a shift in strategy once you approach the chasm
Picking a beachhead will give you access to a referencable enterprise client that will allow you to grow in the segment you picked
A vertical beachhead might sound “scary” but when you want to talk to everyone, in most of cases your message reaches no one.
Feel free to share this article within your network if you found it informative.
Next time I will talk more about the “whole XR product” for the enterprise. Stay tuned and add me to your network to get notified.