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More Eggs, More Baskets: Diversifying Into New Markets

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(Image credit: Sunwoo Jung/Getty Images)

When the world went on lockdown back last March, companies across the globe fought to keep afloat by pivoting their product and service offerings to address the crisis. It was an exercise in rapid-fire business diversification, and, when done right, produced some creative (and often inspiring) results. But this crisis has also reminded us that while specializing in a specific market has its merits, it’s risky to put all your eggs in one basket. As the AV industry continues to grapple with considerable challenges, SCN recently spoke with several business experts to discuss the best practices involved in branching out into diverse markets in an effort to not only survive, but excel. Here is what they had to say …

Have a Vision

Bruce Murchison

Bruce Murchison

Bruce Murchison, consulting principal at Aperture Partners, a business consultancy based in Fair Oaks Ranch, TX, says that the businesses that succeed at diversifying are ones that have broad-minded, visionary leadership. “They’re always looking at the innovations taking place around them to understand if, in fact, there are opportunities being created—particularly in their product or industry niches—that can be utilized and are complementary to what they’re doing,” he said. Those companies that can pivot into a new market quickly, he added, are not only visionary; they are also willing to do a lot of hard work, continuously evaluate their performance, and make adjustments on the fly.

“Any business that diversified successfully, they were able to do that because they had a vision for what they wanted to create,” said Elizabeth Haberberger, president of Dale Carnegie Training of St. Louis. “They had a vision of what they wanted, and so then they were able to very strategically and tactically work backwards from that to put the right steps in place to make it happen.”

Get Feedback

Elizabeth Haberberger

Elizabeth Haberberger

Successful businesspeople know that receiving (and actually listening to) feedback from partners, employees, customers, and suppliers is a best practice no matter the economic landscape. Haberberger underlines that this also applies when considering the launch of a diversification effort. “You’ve got to be getting feedback from all angles so that you can make some of these real-time adjustments, or you can make some of these real-time decisions because change happens quickly,” she said. In today’s climate, companies don’t have the luxury of pursuing new revenue opportunities and entering into new markets on a gradual basis, and the comments business leaders receive from these sources can help them to act fast. “The more feedback that you’re getting from all angles, the more information you’re armed with to make better decisions going forward.”

Brock McGinnis, managing principal at avitaas, an AV/IT consultancy, urges AV integrators to work their network of past clients and business associates to learn about potential opportunities. “Clients don’t always stay in the same industries—they might have been in pharmaceuticals and now they’re in banking, or they might have been in banking and now they’re in artificial intelligence,” he illustrated. “If they know you from your previous specialty and they know you did good work, then you can likely get an opportunity or they’ll give you a lead.” He noted that LinkedIn’s Sales Navigator software is helpful when searching for contacts that one hasn’t been in touch with for a number of years.

Get Tender

Brock McGinnis

Brock McGinnis

One way to enter a new geographic or vertical market is by doing tenders, McGinnis suggests. “Nobody loves doing tenders, you’re not going to make a lot of money doing a tender, but it keeps your people employed and it starts to build a resume for you in a new market,” he said, adding that tenders also provide the opportunity to cultivate strong client relationships. “You can make somebody very happy and they will continue to do business with you for a long time.”

While many AV integrators shy away from doing tenders, McGinnis argues that diversifying into new markets requires business leaders to demonstrate a bit of humility. “This is about acting like a start-up. You might have been king of the hill in your existing market, but in a new market you’re a start-up,” he said.

Don’t Jump at Every Opportunity

One of the traps that some entrepreneurs who are branching out fall into is viewing every potential opportunity as a good one. “The business owner or some key person on the leadership team gets shiny object syndrome, and they get enamored with something that maybe they can tangentially justify as either serving their niche or as some natural extension of their capabilities, but it’s simply not a fit,” Murchison illustrated. Eventually, resources are spread too thin, and business suffers.

Murchison counsels a more calculated approach, and urges business leaders to reexamine their core business strategies, starting with the organization’s mission, values, and (once again) vision. “That needs to be revisited, along with taking a serious evaluation of your KPIs and looking at the health of your business,” he said. “That’s got to [happen] at the beginning [before undertaking] any change in your core business strategy. This isn’t a ‘let’s broaden the field of vision’ [exercise]. We’re talking about very calculated expansions in the field of vision that fit with your core principles and competencies, and working to extend those.”

From Break/Fix to Recurring Revenue

McGinnis recognizes that break/fix service calls are not what most AV integrators dream of doing—which is exactly why they might be a potential opportunity, especially during a period when organizations are spending less on new technology.

“Starting with service is doing work that nobody else wants to do. Service is hard: every time the phone rings there’s a problem, you really don’t know what it is when you get there, and people may be stressed out because systems don’t work,” he said. “But if you can help people keep their existing systems up and running at a time when they can’t afford to buy new ones, you’re a hero. If you do that for six, eight, or 10 months, then when you approach them about a service contract, they will be much more open to it because you’ve already proven that you’re good at delivering exactly what they needed, which is break/fix.”

 

Assemble Your Team

Your diversification effort might be focused on entering a new market, or developing a new service offering, or even selling a new product. Regardless, Haberberger notes, it’s important to think about your team, and whether or not they have the skills and tools required to execute the company’s vision. “It’s always going to be the people that we have that are moving things forward,” she said. “Do you have a team that’s resilient? Do you have a team that is OK with ambiguity, and that can deal with some uncertainty? Do you have a team that feels a strong sense of purpose and connection to what they’re doing? Do you have a team that has strong emotional intelligence so that they can work together effectively?” If you don’t, she says, it’s unlikely that this new venture will succeed. “Without the people there who are really going to be able to take the feedback, make adjustments, and move forward, it’s never going to work.”

Haberberger also advises against having only one decision-maker leading the effort. “One person doesn’t have the knowledge of everyone involved, and they can’t see every single angle of how this is working,” she said. She also encourages cultivating a dynamic that welcomes conflict. “When you’re trying to get into a new market or create some new revenue and everyone’s saying ‘yes’ all the time, you end up putting something out that is not as high quality as it could be because no one is challenging ideas, and you end up with something that’s average versus something that’s great.” If everyone on the team is always in agreement, it’s important to stir up some conflict by encouraging someone to play devil’s advocate and take the opposing side.

As these last few months have reminded us, technology is, indeed, essential. The trick for business leaders in this space is to identify meaningful opportunities and align them with equally worthwhile services and solutions. “This industry in particular is going to continue to evolve, and is going to win because of the value that it’s creating,” Haberberger said. “There will be lots of opportunity for people who are willing to go and find it. It all starts with that vision. You’ve got to have a clear vision of what you want so that you can then put together a plan to make it happen.”

The staff at AVNetwork is comprised of story-tellers focused on the professional audiovisual industry. With expertise in digital signage, audio innovations, and emerging trends, AVNetwork staff is here to keep readers up-to-date with the latest pro AV news.