Evaluate core from outside
Before you build an offshoot, you must decide which direction to shoot and why. That starts with understanding your company’s core competencies. You may think everyone already knows so you don’t need to analyze it, but it’s worth the extra effort.
“When you’re trying to articulate that in a new vertical, it’s pretty difficult because we’re so close to what we do. We’re almost too familiar with it,” Williamson says. “Sometimes a staff addition or a consulting voice from the outside — even if they haven’t had significant exposure to your new vertical — helps because they don’t have that legacy context problem that they can’t remove themselves.”
She began by bringing in Matthew Holz, a former consultant, to serve as product manager of the new vertical and to balance the two crucial roles: student and expert.
“It can be pretty tricky because we are there to educate ourselves about what we’re trying to do, but you always want to continue to appear the expert because you do want to grow your business, ultimately,” Williamson says.
Holz began educating himself by looking at qualitative data such as key metrics, historic business trends and information about competitors. He watched for upward trends in offerings and markets that would be conducive to future business.
After he saw growth in database building and management, the health care market was a natural choice. Because the American Recovery and Reinvestment Act of 2009 offered incentives for hospitals to invest in advances, many hospitals were already buzzing about electronic medical records. Plus, it was a field with few competitors.
It’s crucial that your competencies are the starting point for locating growth opportunities, rather than vice versa.
“You can’t identify that there’s a problem and design a product around it because that particular strategy might be outside of your core,” Holz says. “What we needed to understand at first was: What do we do well and where are the growth markets?”
Once you identify the prime markets, you can zoom in. Interview customers there — as well as your employees who work with them — to find out what your company does best and how it could do better. Those conversations will also help identify the decision-makers you’ll need to reach.
“You need to understand the hard and soft aspects — both qualitative and quantitative aspects — of that vertical,” Williamson says. “You want to know how they buy and at what level within the organization, who they might be buying from, who the other perceived competitors are of yours. You really have to become familiar with the informal centers of influence within that market.”
Holz compares the interviews to a traditional sales process in that you don’t want to come in with all the answers.
“It was not saying, ‘C.TRAC offers you this,’” he says. “We took a step away from that and said, ‘If we were to start again and we looked at the way that you manage your data, what is important to you as you look to execute?’ The biggest thing was asking them what their biggest challenges were.”
He realized C.TRAC was providing redundant database services for multiple departments within hospitals. It’d save time and money on both sides if C.TRAC extended those services across the enterprise. And the vertical was born.
Your goal through this research is determining the vertical’s feasibility through a combination of financial and strategic planning. That includes setting a profit timeline with return on investment calculations as well as planning resource additions in terms of staff and technology.
But don’t forget about the big picture.
“As we’re benchmarking this new vertical to our core, how is it helping our team to progress to our goals, not only in terms of sales contribution or margin contribution,” Williamson says. “But are we growing our competencies in the areas that we had said are going to lead us to growth?”