Niche is for losers

Most management theories esp. the “Blue Ocean Strategy” emphasize on staying away from cut-throat competition. The resulting blood-bath only results in depleted margins, huge investments, marketing and management focus with little to show for. Everybody, but the last man standing gets wiped out or quits after cutting their losses. Indian retail (organized brick & mortar as well as e-commerce) are the vivid examples.

Naturally the focus is on Blue Ocean strategy. Carve out a zone for one-self, grow and develop it and reap economic profit (due to little competition, marketing or price wars). Hence I always thought being a niche player is not a bad thing. Niche companies have found their sweet spot and devote all their energy & focus in exploiting the opportunity fully.
Hence today when I looked at the Gartner’s magic quadrant, I was shocked. They rate companies on 2 axis:
1. Completeness of vision
2. Ability to execute
Based on this ranking they classify companies:
1. Leaders: High on both parameters
2. Visionaries: High on completeness of vision
3. Challengers: High on ability to execute
4. Niche: Low on both fronts

Gartner magic quadrant

Magic Quadrant for IT Services for Communications Service Providers

Although this looks very similar to BCG Matrix (axis: growth rate & market share and the quadrants being dogs, stars, cows and question mark) Clearly Niche seemed like a euphemism of dogs (low on both fronts).
Still skeptical, I researched the company profile & annual reports. Naturally almost all companies described them as leader and visionaries. Some start-ups did position themselves as challengers which are disrupting the existing status quo. The only time the company used the word niche was to describe their past. It was only used the highlight the hopeless situation & challenges faced by the new leadership team in its initial days. The 2 situations common in all the description are:
1. The product had limited application & market.
2. Also the total market pie was shrinking (if it is growing then the company would classify itself as a leader in XXX product for XXX industry in XXX market…. Rather than saying that they are a niche player)
As described in Freaknonics,  sometimes people seemingly pleasant looking words to describe the hopelessness of the situation.

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3 thoughts on “Niche is for losers

  1. I was repeatedly asking you to come up with a plan of scaling up to $500k of revenues. for exactly the same reason. BTW I attended a book reading session by Subroto Bagchi on his book The Elephant Catchers: Key Lessons for Breakthrough Growth. If you get a chance read it. it talks a lot about scaling & growing the business

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