I once had the good fortune to sit in on a talk given by Ron Sim on the route he took to business success. Ron is the founder of Osim International and is ranked by Forbes as the twenty-first richest man in Singapore with a net worth of $1B. Ron shared many golden nuggets, one of which is this: move your business from meeting supply to creating demand.
As in all businesses, we need to offer a product that is demanded by our target customers. We need to find a unique value proposition that will meet customers' needs much better than our competitors and that will allow us to maintain a healthy market share. Yet, we all know that this is not enough, because if we cannot protect our market share through innovation, some upstart will come along and do just that, and we end up losing our pre-eminent standing. So while we must first meet market demand, supplying what is needed, we must next move to creating demand, as what Osim had done. Osim moved from supplying electrical goods to creating demand for massage chairs, and from there, to health supplements (GNC) and then to luxury teas (TWG). Today Osim is trading at about $650M with about $50M profits a year. Here are the key ingredients he shared for achieving this:
1. Understand your customers intimately
We need to know what exactly they are looking to achieve, even if they don't know it yet. This requires that we dive deeper to look at the jobs they need to get done, the pains and gains that they face in getting them done, and then go out and find the solution for them.
2. Find market whitespace
Look beyond the current market at the white spaces between segments. This is where your unmet (unknown) demand rests. The key is not to go headlong against incumbents in any market as you might be in for a bruising. Instead, when you look for areas where no one is operating in, and needs are unmet, you may find willing customers that might just say, “Where have you been all this time?”
3. Develop a product to meet this new need
It is hard for customers to know what you are saying without putting something in front of them. Yet, it does not have to be perfect as we are in greenfield space. A minimum viable product (MVP) is all that's needed to get them to interact with it. The more your customers love - or hate - it, the better. This will allow you to make it better. So don’t wait for that perfect product, make something and put it out there. Let your customers perfect it for you.
4. Create the desire to own the product
Lastly, you need to make your product desirable. Just as Steve Jobs created the demand for Apple by focusing on design - he famously said that Apple creates an icon that is so delicious that you might want to lick it off the screen - you too must make your product equally desirable.
Some points to note:
Reflecting on Ron's 4 points above, I arrive at these key points to note. You may have others that you might like to share on this blog...
It takes time
Just as Rome was not built in a day, creating demand requires that you plug at it day in, day out. Traction - and the tipping point - comes over continued brand and image building. Your vision, therefore, is paramount in sustaining you over the lean years. Understand why you are doing what you are doing, what exactly you are building, and the how long it takes to be built. If you are looking for short-term gains in such an endeavour, you might cut the project prematurely, and remain on the supply side of the business.
You need to take some risks
You need to put in some personal equity on the line. You need to embrace failure, you need to be able to move on when you are wrong, you need to put down money (sometimes quite a lot of it) and be prepared to lose it all. When creating demand, you need to be in the forefront of taste, and we all know how fickle that is! If you cannot stomach such variability, if you don't know how to pivot at the right moment, if you don't know how to look beyond the sunk costs, this might not be something for you.
You need marketing savvy
Creating demand requires your product to be top of mind. You need to work with brilliant marketers to create the right message, pushing them along the right channels, and interacting with customers in the right manner. Getting all your marketing ducks in a row takes time and effort, some luck and a whole lot of creativity. But it is all worth it when you finally rise to the top, and dominate your market.
You need success stories/testimonials
We all know that you cannot capture the whole market. As with all new product development, the first 15 percent of the market are innovators and early adopters of new products. What they say, how they react, will determine if you get the early majority or not. If you can't go past this first gate, your product will be dead in the water. You therefore NEED to have a strategy to engage with your early adopters so that you can give them a voice in making your product better. The more stake you give them, the more involvement you provide, the more you listen to them, the more success stories and testimonials you will receive. And the better you will be at creating demand.
The road less travelled
Creating demand is an arduous journey, and one that is fraught with uncertainty. It is no wonder that not many people go down this road, since the downside can be high; and even if you were successful initially, but are unable to protect your market after having done so, it might be an exercise in futility. This is surely a road less travelled. But its benefits are huge and if one can master the process, one can master the market, as Osim has done for massage chairs.
Are you willing to walk this path? Ron Sim did, and became fabulously successful at it. Perhaps you too will be the next Ron Sim?