Few people look at a thermostat and think, “Now there’s an exciting business opportunity!”
As a device, it’s a boring commodity — a relic of a stagnant, saturated market. So why did the co-founders of Nest decide to build a multimillion-dollar company around the reinvention of the thermostat?
Where others saw an industry that offered no room for new ideas, Tony Fadell and Matt Rogers saw potential. Most of the 10 million thermostats sold every year throughout the U.S. were clunky, inefficient, and impossible to program, but a simple, Wi-Fi-enabled device that could be programmed via a smartphone — that could be a game changer. Fadell and Rogers saw this opportunity, left their jobs at Apple, and got to work.
Within just three years of unveiling the Nest Learning Thermostat, the company has reduced energy usage across the U.S. and Canada by at least 225 million kilowatt-hours. They’ve saved consumers more than $29 million in heating and cooling bills. And earlier this year, Google bought Nest for $3.2 billion in cash.
What gave Fadell and Rogers the confidence to dive into an overcrowded market? They saw room for innovation. Here’s how you can see through the crowd to the opportunity.
How to Vet a Crowded Industry
When a market has a reputation of being fully saturated or crowded, many potential entrants will steer clear without a second thought. But popular perception isn’t always reality. Though it may not be immediately obvious, there’s often room for innovation and more than one player in the most stagnant of industries.
If you’ve got an idea that you think could disrupt a crowded market, it’s critical that you vet the industry before launching.
Do your homework. Who are the key players in the industry? What are their strengths and weaknesses? A comprehensive understanding of the competitive landscape is vital for determining your strategy.
Clarify your value-add. What makes your idea different? Are you cheaper, faster, better, or more innovative than everyone else? You can’t survive in a saturated industry without clearly being different and better.
Know your customer.Are consumers satisfied with the current market? If your product or idea can effectively address unmet needs and pain points, you’ll be able to capture significant market share.
Position yourself as a trailblazer. People aren’t expecting innovation in a stagnant market. Find the gap by researching industry trends, then stake a bold claim as the “next big thing.”
Prepare for scale.When you unveil a great idea on a commodity market, you have to be ready to handle a sudden wave of demand. Had Nest not been able to keep up with the brisk pace of adoption, the company would have tanked. They were prepared, though, and rode the wave all the way to a multibillion-dollar acquisition in a relatively short period of time based on mass adoption by consumers.
Surviving the Changes in Your Industry
Once you’ve made the leap into the market, you need to be proactive to survive your industry’s lifecycle changes. Achieve the following, and you’ll not only keep your head above water — you’ll thrive.
- Stay up to speed on the latest trends and technologies. That way, you can remain nimble and capable of edging out competitors.
- Get the word out. Make sure customers know about you — and know that your solution is superior.
- Make sure you offer the best possible customer experience. You’ll garner loyalty and brand equity, and you’ll reduce the churn factor.
- Optimize key elements: pricing, service, process, and customer satisfaction. Piece these components together in a way that tells a compelling brand story to attract your target audience.
- Always strive to stand out from the crowd through your marketing, products, and customer experience. When you delight your customers, they’ll become brand advocates and stay with you in the long run.
A Matter of Perception
When an industry undergoes a fundamental transformation, many people wrongly assume it’s vanishing forever.
Consider the entertainment industry, for example. Just 15 years ago, film studios, record labels, and media distributors believed that file-sharing technology would ruin their entire livelihood. Those who were stuck in their ways wanted to put an end to the technology.
Savvy, forward-thinking tech entrepreneurs, on the other hand, saw an opportunity to pioneer change. While everyone else was lamenting the death of entertainment, they harnessed the disruptive power of technology to meet market needs.
Now, decision makers in the industry are embracing next-generation distribution technology because it enables them to reach global audiences and create new revenue streams.
It takes a keen eye and a great idea to capitalize on lifecycle changes in a crowded market. The risks, however, are often a matter of perception. By seeing potential where others don’t, you can access a world of opportunity and profits.
A highly sought-after consultant, mentor, speaker, producer, coach, and author, Kelli Richards is the CEO of The All Access Group. She and her team facilitate strategic business opportunities in digital distribution between technology companies, established artists and celebrities, film studios, record labels, and consumer brand companies in order to foster new revenue streams and deliver compelling consumer experiences. Kelli is also the author of the bestselling e-book, “The Magic & Moxie of Apple — An Insider’s View.”
Until next time,
Kelli Richards, President, CEO of the All Access Group, LLC
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