B2BMX2018

A brand transformation perspective Beyond the Pale Searching for strategically actionable insight 3 This may all seem academic until you place it in the context of Clay Christensen's theory of disruptive innovation. Who are the customers who create an early beachhead and safe haven for a market disruptor? It's precisely those customers who are obscured by the shadow cast by the prototype customer of an incumbent industry leader. 3 This, in our view, builds upon Christensen's theory— adding a new explanation of cause, rooted in human cognition, to a strategic dysfunction that regularly topples market leaders. Now, knowing about a problem (and even what causes it) and dealing with the problem are two different things. So, following this line of thinking we are now prepared to ask: If all customer segmentation is categorization, then what is the difference between segmentation and strategic segmentation, and how do you develop insight that is strategically actionable? From here, we'll tackle these questions in sequence and share our view on how you can develop insight that unlocks the opportunity for innovation in your organization. Beyond the pale The distinction between segmentation and strategic segmentation can be summarized like this: segmentation is a categorization of differences between customers. Strategic segmentation is a categorization of differences that make a difference from a strategic perspective. But how do you recognize these? To develop the distinction, let's return briefly to the Vikings. The origin of the phrase "beyond the pale" might come as a surprise to you. During the dark ages, there was a Viking settlement in the place we know today as Dublin, Ireland. The Vikings protected their families and businesses from the people in the surrounding landscape by means of a tall surrounding wall. This wall was known as The Pale. For the Vikings, the uncivilized behavior of the uncivilized people in the surrounding landscape was behavior that was "beyond the pale." That the Vikings viewed others as uncivilized may seem ironic. But evidently, the Vikings had their own prototypes and categories too! 3 Identifying disruptive footholds means connecting with specific jobs that people—your future customers—are trying to get done in their lives. The problem is that in an attempt to build convincing business cases for new products, managers are compelled to quantify the opportunities they perceive, and the data available to do this are typically cast in terms of product attributes or the demographic and psychographic profiles of a given population of potential consumers. This mismatch between the true needs of consumers and the data that shapes most product development efforts leads most companies to aim their innovations at nonexistent targets. (Raynor, Michael E.; Christensen, Clayton M. (2003-10-09). The Innovator's Solution: Creating and Sustaining Successful Growth (p. 95). Perseus Books Group. Kindle Edition.) The problem Shortfalls in both new product innovation and value creation through customer- experience differenti- ation are widespread. These issues topple market-leading incumbents. Why this happens Cognitive science reveals that we are inherently biased towards "idealized cognitive models." Such broad-stroke generalizations of our customers can obscure certain key customer segments. These unseen "shadow segments" are a hotbed opportunity for innovation, but remain invisible because of current customer segmentation methodologies. The solution We offer a recipe for strategic segmentation that anticipates the influence of idealized cognitive models. This approach hinges on identifying tensions in customer motivations. The result is a distinct view of customers that reveals their unique problems and creates the opportunity for innovative product and customer-experience solutions. PERSPECTIVE IN BRIEF: In search of strategically actionable insight Strategic segmentation is a categorization of differences that make a difference from a strategic perspective.

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