Wisdom and Ignorance part 4: The reality of leadership

In the last post I talked about how just about every company, in particular startups, believes they are truly leaders in their field, even though, in reality, they do business in the same way as everyone else; they create products and services that have little differentiation from the rest of the field; and ignore the majority of customers in the market to go after the same 5 to 10 customers everyone else goes after.

There was a book that a lot of people quote, as the basis for marketing practices, called "Crossing the Chasm" by Geoffrey Moore. In it, he rightly states that you need to find a need that no one else is meeting and take leadership in it, but there are two issues that the book's adherents miss. First, Moore's premise only works for disruptive innovation and most startups and even established companies make small advances in standard technology (make it smaller, faster or cheaper). Second, Moore's definition of leadership means the innovation actually has to be seen by the market as leadership while most startups believe that if they say they are a leader in enough press releases then the market will believe it.

Drew Lanza at Morgenthaler stated as much in my interview with him a few weeks ago. And he doesn't seem to think making small advances is a bad thing. The venture community will fund companies that can make money by being competitive. Not every company needs to be a leader. If you can, that's great, but it is not necessary to be successful.

So let's just put it out there. There are rarely leaders in any industry; just groups of companies waiting for someone to choose a direction for them to all go. 99.999 percent of every industry is doing business in the same way everyone else is. The chance that any one company is actually a leader is very small. What you need to do is create the perception that you are doing something valuable. That takes time. That takes relationship. That takes conversation with the market. That takes the ability to be able to listen to the market, not just talk at it. And it takes a decision to not be part of the herd. The question is, how do you do that?

Next Week: Leader? Who says?