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Market Segmentation

(September 24, 2004) The map is not the territory. The map is not the territory. The map is not the territory. The map is not the territory. The map is not the territory.

Why are these six words worth repeating? As the Electronic Recruiting Marketplace unfolds and expands, the way that we look at it needs to change. Over and over again, we encounter bright eyed, bushy tailed visionary entrepreneurs who are certain that their simplistic picture of the market contains the penultimate answer. Typically, the root of their difficulties building revenues boils down to a flawed view of the dynamics that make our market what it is.

The phrase "the map is not the territory" means that the one assumption you can make is that your assumptions are wrong. Though there are time honored warnings about making assumptions (they make an Ass out of U and Me), it's hard to let the beliefs at the root of a business fall by the wayside to pragmatic experience.

Lots of analysts have tried to describe the Electronic Recruiting Market in simplistic terms. We're certainly guilty of trying to cram everything into a two dimensional picture that fits on a single sheet of paper. Categories of sales activity, near and dear to business plan developers, require slash and burn style assignment of this company to that revenue pile. If you read enough business plans (or subscribe to enough newsletters), you are certain to walk away with a decreasingly useful (but extremely simple to explain) map of our universe.

Take 10 analysts opinions, put them all together and divide by ten. The resulting answer will be simple enough to color with a crayon. It won't, however, be very useful for navigation purposes. It certainly won't be really useful for on-the-fly decision making. If you try to explain it to a customer, you'll lose a good deal of credibility because it won't match his/her experience.

Although it's difficult to explain, we imagine the market as a dynamic set of overlapping spheres of influence. Some observable customers, some observable budgets, some observable regional characteristics, some predictable growth cycles, some technology principles and so on. The integration of the pieces is what makes a sales team really kick into action. The unexpected behavior of customers and candidates is really the operating definition of the way our world works.

The central feature of any company's business prospects in this space (or any, for that matter) is the extent to which they segment off a knowable piece of the universe and map it for themselves. It's no accident that the most profitable (and most likely to survive) operations have cleanly identified the people who are not their customers and the problems that they don't solve. It's a cost effective world view that eliminates wasted time and divorces itself from "save-the-world" theories. Rather than forcing their businesses to absorb too many unknowns, they tightly constrain the world that they serve.

- John Sumser © TwoColorHat. All Rights Reserved.

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Materials written by John Sumser © TwoColorHat. All Rights Reserved.
Mill Valley, CA 94941

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