The next cohort of The Expertise Incubator begins Jan 13, 2020. If you're interested, let me know.
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The reader question: "Will the market be willing to pay for my new specialty area?"
The recommendation: In the past I have probably wasted some people's time and money by helping them research and explore fringe opportunities that exceeded their risk profile, which I regret. Here's what I've learned.
Most situations should just use David C. Baker's guidance, which is to size the market and make go/no-go decisions about specialization within those guardrails. 10% of effort on the decision, 90% on the implementation. Heck, in a lot of situations, a 1/99 split is probably more appropriate.
Quoting from a book that should already be on your bookshelf, The Business of Expertise:
When you’re testing your positioning with the numbers, aim for 10–200 competitors and 2,000–10,000 prospects. I’ve rounded a little bit to make it easier to remember. When I err on the side of caution, I’d err toward fewer competitors and more prospects, though, primarily because I think there are other ways to differentiate your expertise that aren’t as fatal if you get them wrong, like process, pricing, and intellectual property. What’s more likely to make me skittish, then, is finding fewer than 10 competitors and fewer than 2,000 prospects. There’s a cliff there—and I don’t want to stand too close to it.
You can find a relevant article that is essentially a chapter from David's book here: https://www.davidcbaker.com/how-man-competitors-and-prospects-should-you-have. But also, buy the book. It's really good.
When you take a simple market-sizing approach, which can sometimes be done in an hour or less, you are letting the market -- which has discovered and incorporated a lot of information already -- constrain your option set to ones demonstrated to work. You are benefitting from their previous research and experimentation. You are essentially outsourcing a large part of the research and validation work, which gives you a better ROI on the research.
If your specialization thesis fits within these 2k to 10k prospects/10 to 100 competitors guardrails, then I recommend one additional bit of research that can be executed in a few weeks.
Reach out to and interview your future competitors in order to learn more. About half of them will be willing to speak to you, either to "sniff your butt" or to pay forward the generous hand they feel life has dealt them. Once you've done that additional bit of research I recommend you either shit or get off the pot and move into implementing your specialization decision, which again, is where 90% or more of the work and potential impact is.
This competitor research should inform your answers to some of these mandatory business design questions, especially questions 3 through 5:
- Who will you focus on serving?
- What optimization or transformation will you create for them?
- How will you become visible to them?
- How will you earn their trust?
- How will they take the first paid or unpaid-but-skin-in-the-game action towards working with you?
- How will they decide?
- What are the mechanics of that action?
- How will you monetize your work with them?
- Will they join and/or interact with a larger community/tribe you lead or participate in, either before, after, or during your engagement with them?
There are, however, situations where I would recommend you explore a specialization thesis that does not fit within David's 2k to 10k prospects/10 to 100 competitors guidelines. Several things need to be true for me to be OK with you spending the time, energy, and facing the uncertainty of this path.
First, you need a risk profile above 5. You can calculate your risk profile here: https://pmc-risk-profile.paperform.co. NOTE: This is a beta of a tool I'll be releasing with The Positioning Manual v3, so please bear with any beta-ness of it right now.
I said your risk profile needs to be above 5, but if I was working with you as a client I'd incorporate more factors than just that number. Sometimes there are hard-to-measure factors that increase your risk profile (a common example: your spouse or partner has employer-provided medical insurance which enables greater risk-taking for you).
Second, there are three situations where normal movement within the tech landscape enables specialization opportunities that don't stay within the 2k to 10k prospects/10 to 100 competitors lane:
1) There is a rising star platform that you'll specialize in and you're willing to build an information resource to serve the platform's user community.
2) There is a form of change consulting you are pioneering and you have some evidence you can generate interest/visibility around your PoV. A client of mine is doing this, quite successfully. His whale client is funding it by providing cash, profitability, credibility, and additional access. These all contribute to the work needed to build up his pioneering market position. This also describes the specialization thesis I'm exploring in my business, minus the whale client (I'm funding building up my desired market position with my current services, a productized model, and a portfolio management approach to client selection.)
- There is a horizontal or multidimensional market position you are willing to put in the work to build up AND the position is enabled/powered by new tech or a sea change of some kind. The new tech/sea change gives you an advantage that others may not have laid hold of yet, even if the broader space is really stable or has more powerful competitors.
Two examples here:
- Nick Disabato's Draft Revise leveraged new commodity a/b testing platforms like Visual Website Optimizer to build a multidimensional market position.
- Jonathan Stark leveraged the explosive growth and disruptive nature of mobile computing to quickly build a market position as a mobile consultant.
The caveats: I don't have data (yet) on what percentage of those who want to specialize can also pursue one of these three nonstandard approaches (I call them, with all the affection and respect in the world, "weird businesses". Mine is a weird business too!).
I can generally say most folks should build a "normal" specialized business using the 2k to 10k prospects/10 to 100 competitors guidance. Probably half of my clients are pursuing a weird specialization thesis, but my clients are above average and seek me out for help with these kinds of edge case specialization theses, so my clients represent a biased sample. If you have the risk profile and other needed prerequisites -- the most important of which is the ganas to do something bold and unique with your business -- these weird specialization approaches can yield incredible opportunity.