posted Washington Business Journal, 16 Dec 2014
By Ray Bjorklund, President, BirchGrove Consulting
Business growth within a constrained market usually means you have to take market share from your competitors. And budget constraints, aggravated by the uncertainty of irregular appropriations, have certainly spawned many cutbacks in federal contract spending. So what do you do?
On the contractor's side of the table, we attempt to follow the money as it shifts from one account to another. When the new funds are discovered in another target account, we sometimes scratch our head in dismay. We don't know the new customer, we don't understand the new requirement for a solution, or we aren't comfortable speaking the new customer's language. Hampered by complacency, many companies find themselves in a deep rut and little ability to steer back onto the more rewarding path.
Three rut-busting strategic approaches can develop new business in this situation: adjacent customers, adjacent solutions, and adjacent domains. While not mutually exclusive, each requires a different mindset and analysis to be successful.
It all requires creativity and critical thinking. Sure, you say. That's about as vague as the word adjacency itself. It's true that the challenges of doing what you do best for your existing customers distracts you from innovation. And sometimes when you do get that innovative spark, it leads you down a less productive rut in the road. But if you step back and critically reflect on how two things are alike, despite their apparent differences, you'll succeed.
What is an adjacent customer? This is a relatively simple adjacency. As a company, you do a good job of supporting your customer agency's financial accounting. Your customer is one of the two dozen agencies required to achieve an unqualified audit of its financial statements. Clearly, there are more potential customers. Take your good past performance and knock on some new doors. Besides developing the relationships with the new customers yourself, another way of getting in the door is to purchase a business or hire a person that can accelerate the development of the new relationship.
What is an adjacent solution? This one is little harder to pull off. It often involves repackaging something you do well, to fulfill a new requirement. One current hot technology is "big data" analytics. Your solution ferrets out health care fraud. Meanwhile, the SEC is looking for solutions to identify fraudulent or suspicious market manipulation. In 2015, SEC plans to increase its contract spending by more than $30 million on new technology and contract services for litigation support and risk and data analysis — about 15% over fiscal 2014. With a little innovation and critical thinking, you can repackage solutions for a growing area.
What is an adjacent domain? This third strategy is by far one of the most challenging for a company. Your company might develop a long-term relationship with a customer and consciously work toward increasing "wallet share" of that customer's budget. But doing business in other parts of the customer's agency may require a big leap away from the functional domain where you are currently performing.
Let's take an example. You are a company that has had years of success in performing technology services for the Patent and Trademark Office within the Commerce Department. You now want to expand your Commerce portfolio (or wallet share) by pursuing a technology services contract with the National Marine and Fisheries Service (which by the way, plans to increase its contract services spending in 2015 by some 30 percent). Same agency, different domain. What do you know about natural resources management?
Companies ask me why domains are so important. My answer is that your new customer expects you to understand the environment they work in: laws, policies, initiatives, oversight, daily functions, performance indicators, terminology, and so on. How do you build credibility in a new domain? Attending events that feature the domain experts and issues, taking a college course, reading trade publications, and hiring subject matter experts are all methods to build the credibility you need to compete and fulfill your new customer's needs.
Any one of the three strategies requires some effort, with innovation and critical thinking at the core. But the effort can pay off in business growth.
©2014 Washington Business Journal. Used by permission.