2. Loving your product too much
Sometimes people love their own services or products so much that they create add-ons irrespective of their customers’ needs. Improvements must add value. Take the functionality of a typical spreadsheet; 99.9% of people use less than 1% of what it can do. If a user won’t pay more for it (because it’s irrelevant to their needs) what’s the point? Often however, there are incremental improvements that seem just too simple to the savvy product designers – say, to put a flag at the top of the sheet to show it’s the top – but that would add value to the customer.
3. Recognising, then ignoring, problems
Smart companies can stumble into this insidious mind trap by thinking, “This problem doesn’t affect us”, or, “Only 2% of our customer base is unsatisfied”. But markets can shift quickly so just because an issue doesn’t seem a threat now, doesn’t mean it won’t be in the future. There are many Accelerated Development Programme participants who say, “We’ve seen the warning signs for years, but we haven’t done anything about them. We didn’t feel the emotional tug, the danger didn’t seem imminent.”
Take the case of a high-quality European producer selling in China. It knew that Chinese producers were selling poorer variations at lower prices but did not see them as direct competitors. It did not adequately recognise the threat. Then with a small adjustment one Chinese supplier increased the value of its offering just enough to create a breakthrough. The European company’s differences were almost worthless. This problem pervades many western, well-established, quality companies. They retreat into adding more bells and whistles but sometimes it’s just not worth it. Firms need to take a genuine look through their customers’ eyes.
4. Failing to understand industry structure
Whenever there’s a new market opportunity people invariably get excited – sometimes without good cause. What they should be asking is, “Will this support a profitable industry?” Or, “Could this end up being a cutthroat battleground where everyone loses money?” People dive straight in. The primacy of size, novelty and revenue growth takes focus away from viable strategies that could make much more money, even if they seem ‘boring’.
So these are some of the strategy traps. What’s the framework to follow?