Define Your Specialization Road Map
To advance beyond the reactive stage, the single most important factor is executive sponsorship
The appropriate amount and depth of industry focus varies from company to company, and over time. Like any other part of your business, industry alignment requires processes for planning and frameworks for decision making. Create a road map for your industry-specific capabilities that includes criteria for industry selection, metrics and milestones to measure progress, and guidelines for evaluating subsequent investments. Use industry business plans to guide execution and communicate action plans to internal organizations and partners.
The spectrum of maturity in industry specialization begins with reactive tactics in response to individual opportunities. Such isolated activities are often “skunk works” rather than corporate initiatives. To become more proactive, make executive sponsorship the single most important factor. To get that sponsorship, identify executives who themselves have industry expertise in the target market, and prepare a business case that demonstrates the expected impact of specialization on net new sales. Our studies show that even in the first two years of implementing industry-focused activity, 40 percent of companies see notable or significant increases in revenue. After three years, 70 percent see revenue growth; and after five years, almost 80 percent do.
Once there is adequate sponsorship and support for investment in vertical markets, begin with a focus on three or fewer industries. Recruit personnel with industry-specific expertise.
Establish processes for planning, pursuing, and measuring industry growth. At this stage, complex IT changes are unlikely to get funding; so if your current system doesn’t support it, find alternative ways to baseline and track revenue in target verticals. For companies with horizontal products, sales and marketing organizations should be actively engaged in industry efforts; and services, channels, and alliances should at least be aware of likely upcoming changes in customer expectations and partner relationships.
Figure 9: Evolution of Industry Specialization
Companies that are competitive in their industry efforts have this go-to-market strategy as an executive priority. Additional investments in vertical markets will be largely wasted without this leadership. Reaching a competitive level requires that you enlist participation from all relevant organizations and commitment from key partners. Consistently measure the effectiveness of industry strategy, and conduct regular executive reviews. At this stage, companies reorganize parts of the sales organization, build industry-specific product enhancements, and assemble or participate in cross-vendor industry solutions.
The stage of greatest maturity for industry alignment is clear differentiation and market leadership within one or more target verticals. At this stage, industries are managed as lines of business, with executive responsibility for industry P&L. You need not reorganize the company around vertical markets, but do manage verticals as businesses alongside non-industry-aligned divisions. To reach this level, contribute industry thought leadership and establish strong relationships with industry partners, analysts, and press. Invest in processes and systems to enable industry-specific operations.
For many companies, a focused effort concentrated within marketing, sales, and services and targeted at a few industries drives significant growth. You don’t need to reach the most advanced stage of industry specialization to benefit from it. By proactively aligning even parts of your business to your customers’, you can become more relevant and deliver greater value to key markets.