Specialization + Time -> Reputation/Market Position

Philip Morgan

If The Procter & Gamble Company wants to enter a new market, they can spend their way to a good position in that market.

P&G spent (probably) over $16 million just on Super bowl ads just on the 2018 Super Bowl not to launch the Tide product or buy their way into the minds of a meaningful number of people in the market but just to “shift the conversation from kids (and stupid adults) eating Tide Pods” (source: https://www.thewrap.com/tide-ad-how-much-david-harbour-super-bowl-lii/).

It goes without saying that you and I can’t buy our way into a market with advertising spend.

We, instead, have to earn our market positions.

So what is this whole “market position” thing?

The classical definition is “owning a word in the mind”. That comes from Jack Trout and Al Ries and their classic but dated book Positioning: The Battle for Your Mind.

Here’s a quick way to understand this idea of owning a word in the mind:

  1. What comes to mind when I say “safe car”?
  2. What comes to mind when I say “hassle-free mattress”?
  3. What comes to mind when I say “free classifieds”?

If you’re like a lot of people—perhaps like most people— you’ll answer 1) Volvo 2) Casper 3) Craigslist.

The tricky part is “most people”. Some people will answer something other than Volvo, Casper, or Craigslist, and that’s fine. When enough people think of Volvo when they are looking for a safe car, then Volvo has cultivated a strong market position.

A strong market position is usually a desirable market position, though not always.

  1. What comes to mind what I say “long lines and bad customer service but you have to do it every few years anyway”?

A lot of people are going to answer “the DMV”. The DMV strongly occupies a shitty market position, so you can see not all strong market positions are desirable ones!

Now let’s make this personal.

Think about something you could be known for. Make it something either personally rewarding or lucrative or—ideally—both. Ex: “I’d like to be known for helping clients fix their horrifying AWS bill.” (Thanks to Corey Quinn for this great example.)

Keep imagining with me…. now imagine that you charge absolute top dollar for that thing and clients are mostly happy to pay top dollar. What would each client pay you for access to your expertise? Ex: “They’d pay $20k for a diagnosis and then around $60k for a fix, so let’s say $80k per client.”

Now take your yearly revenue goal and double it. Divide that number by the number you came up with in the previous step. Ex: “I’d like to make $300k/year, so doubling that to $600k and dividing by $80k gets me 7.5.”

So in this example, 7.5 clients would make for a fantastic year.

So if enough people out there are aware they have a horrifying AWS bill and 7.5 of them end up hiring you each year, then we’d say you have a desirable market position where you are well known as a “fixer of horrifying AWS bills”.

In other words, you have a reputation that is going to connect you with enough clients to exceed your revenue goals.

That’s what a powerful market position is.

You can’t buy your way there. You have to earn your way there. The best way is to cultivate economically valuable expertise.

You do that by specializing, and then executing on your specialization for long enough to cultivate the reputation you need.

How long is that?

It depends. I wish I could be more precise, but it really does depend on lots of things.

I’ve seen it start happening in as little as 3 months. A year or three of focused work is the more normal range. And I could imagine it taking even longer, though I work hard with my clients to help them specialize in a way that gets them a reasonably fast ROI on the courage and work they invest in making this change.

In the time between you making the decision to specialize (that happens first) and then later owning a desirable market position (that happens later as your reputation solidifies), two things happen in parallel.

First: you cultivate expertise. You do your work, and because you’re narrowly focused, you get repeated exposure to similar problems.

You penetrate the superficial layer of the problem.

For most forms of expertise, this superficial layer translates to: you know what dumb shit to avoid. The flip side of this is: you possess competence. Not rare expertise, but reliable competence.

I’m sorry, but I have to camp out here a minute. Dumb shit is responsible for so much risk and expense and failure in the world of technology.

How many custom software projects fail due to bad assumptions that could have been addressed with proper research?

How many projects fail because of bad communication, ego, turf wars, or other dumb-shit-human-factors?

The Project Management Institute research suggests things are actually getting better, while other sources like CIO.com report over 50% of companies experiencing some kind of IT project failure in the last year.

So yeah, the superficial layer of expertise is routinely avoiding dumb shit. Let’s call this the “epidermis of expertise”. It's the thinnest and least alive layer of expertise.

To bring this analogy to life (har!) here’s a super-gross illustration of the human skin that looks like it came from an 80's vintage high school biology book:

image of layers of skin

The next deeper layer of expertise would be the “dermis”. It’s thicker, and takes longer to master.

This is understanding leverage points that aren’t visible to others. This is seeing the machine behind the external appearances. It’s systems thinking but applied to a specific market vertical or problem domain.

The "dermis of expertise" is knowing the 20% that matters. It’s seeing patterns and opportunities that others miss because they haven’t looked long enough or carefully enough.

And then there’s the hypodermis, which is the thickest, deepest layer of the human skin and—in this analogy—the deepest layer of expertise.

The "hypodermis of expertise" is where you operate with the apparent ease of an artist within your area. You develop unique-to-you ways of understanding problems based on experience or data or both.

Maybe your experience has forged an intuitive ability that borders on the magical. Or maybe you've gone the other direction and systematized a rich data set into intellectual property that is valuable in its own right with or without you there to help translate it into strategy.

Think for just a moment about the most effective way to penetrate to the hypodermis layer of the human skin. The clue is right there in the name of that layer of skin: hypo. As in hypodermic needle.

You can most quickly cultivate economically valuable expertise by going very narrow in your focus. By specializing in the right area and going narrow like a needle.

Earlier in this email I said, “In the time between you making the decision to specialize and then later owning a desirable market position, two things happen in parallel.” I’ve just told you about how you cultivate expertise. That’s the first thing.

Here’s the other thing that happens in parallel.

If you’re following my framework, you don’t wait until you’ve cultivated this deep, valuable expertise to share it. You share it as you go.

This part is CRITICAL.

You share. it. as. you. go.

This does two things.

First, it helps you more quickly develop the reputation you’re trying to develop. We humans are amazing at ignoring things we deem irrelevant, but repetition—showing up over and over again in a consistent way—helps defeat this human default of “ignore everything we can”. It helps you earn attention.

Second, it accelerates your cultivation of deep expertise.

Ponder this image for a moment, because this is basically what I'm suggesting you do to accelerate your cultivation of expertise:

36th chamber training

That's a scene from The 36th Chamber of Shaolin. A student is training by carrying heavy buckets of water and those little sword things attached to his arms will poke or stab him in the side if he drops his arms too much.

Bear with me here, because this is going to sound a little crazy. I am in fact suggesting that you do the following three things:

  1. Build a small audience you can share with. Make sure it's on a platform with a good feedback mechanism, like an email list.
  2. Share with them on an aggressive schedule; at least 3 times/week. Intentionally work in public at the edge of your expertise. Use their questions and feedback to direct how you deepen your expertise.
  3. Intentionally use the fear created by #2 above to speed up how quickly you cultivate expertise.

When you share your somewhat embryonic expertise with an audience that can give you feedback, you are doing something that will create productive discomfort. This will incentivize you to get better fast.

The stakes are high, but lower than promising a client expertise that you haven't yet cultivated. In other words, you're leaning out over your skis, but not on a client project. Doing that on a client project would be a kind of malpractice, and that's not what I'm suggesting here.

Instead, I'm suggesting you build a small audience (a few hundred or thousand people on an email list will do) and publish to your list frequently about your area of expertise.

At first you'll basically feel like a fraud.

Over time, the questions & feedback you get from your list, and your own fear of being so close to the edge of your expertise will force rapid improvement. If you're in the "epidermis of expertise", you'll quickly move to the dermis.

At the same time as you're cultivating deeper expertise, you'll also be building a reputation--aka a market position--as the go-to person for whatever it is you're talking about 3 or more days a week to your list. The self-critical part of you is saying right now that this can’t happen, but I’m here to tell you that part of you is wrong. I’ve seen it happen too many times to believe your inner critic over my own experience. :)

Your inner critic is saying “nobody would trust or work with an expert who doesn’t have 30 years of experience and doesn’t have all the answers.” And again, your inner critic is wrong.

This is my solution to the "chicken and egg problem" of becoming a self-made expert.

It's not easy, and it's not emotionally comfortable, but it is something I've tested and can tell you works, and it's faster than other methods (formal education, for example).

Alright, that's probably enough about specialization and your positioning in the market.

Tomorrow I'll move on to the topic of sales and pricing power. This plays an important role because real experts can't do stuff like lowering the price to make a sale. But as someone in the process of making yourself into an expert, you'll be tempted to fall back on old sales and pricing behaviors (like lowering price), and in so doing undermine yourself.

We'll talk about that more tomorrow.

Until then,-P

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