From Meeting Supply to Creating Demand - The Road Less Travelled
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 interac