THE PARETO LAW states that, for many events, roughly 80% of the effects come from 20% of the causes. It is an axiom of business management that «80% of sales come from 20% of clients.» In mature markets, the rule means that no more than three companies will hold 80% of the market.
We can see the application in the public cloud market space where the 80% is held by Amazon, Microsoft and Google or in the Smartphone market space, dominated by Apple, Samsung and Huawei.
Following the Camel Theory this means that you must address their What and Why phase and invest every energy of your being in the WHY-US-FASE; so you can differentiate yourself. But this is very challenging. Do we have a second option? Yes! We can leave them in that space a create something neighbor. To do this, something in the WHAT-phase should change: it could be a benefit (feature) for the same customer set or a new need (mapped by a feature) that set up a new customer segment.
I was hit when I read an article about the Smartphone market and I discovered that 110% of the overall margins held by Apple and Samsung. All the others were losing money and there still were companies that aimed to enter the market. They look like to do so without a clear strategy, just put a product on the market and pray.
The point is the understanding of the qualifying process. Everyone can understand «why should a customer choose our product», but only few can realize the real emotional event behind that decision. Some people want an iPhone just because it’s done by Apple. Nowadays it’s often true. It’s a great compelling event if they feel delighted with the possession, we cannot change or use it as an alibi.
Those aren’t in our customer set unless we were Apple, keep peace with this. How can we identify the suitable 20%?
The innovation adoption curve of Rogers is a model that classifies adopters. We should consider that early Majority, late Majority and Laggards aren’t suitable for our story. They simply don’t care. «They want Apple». We can only try with a better product at a lower price: in the smartphone market, you can study the Samsung strategy first and then Huawei.
To aim a success, we must be interesting for innovators and early adopters.
The technology is not a disruption itself, the real disruption is its adoption. Let’s start with those who are interested even if the interest is in the novelty itself.
I guess that when a technology is used by 80%, innovators are going to search something new. It’s in their nature furthermore the history has shown us no technology to be dominant for an undefined period of time.