How to grow and exploit a niche market?

In a previous post, we wrote about “how to create a niche market?” In the present post, we address the question: “once you find a niche; how can a company make sure it is ready to grow and expand along with it?”, and ideally turn into an international niche market leader (INML).

Spotting a niche does not automatically mean a company is headed for stellar growth: some niches grow slow, others grow fast, and some remain small forever.

In the event that a company “bumps into” a niche that has growth potential -and in order to be meaningful in the business it represents- the company in question needs to keep up with the pace of the market. This implies willingness and capacity to grow on its behalf.

Now, not all companies that find themselves in such a situation are actually willing and/or able to do that. While this may sound counter-intuitive, if new business opportunities are too distant from a company’s core business or if its growth rate crowds out resources required for its ‘cash cow business’; companies may decide to not pursue such high growth business opportunities.

While (high) growth always has a potentially disruptive dimension to it, it does not mean that a company will ‘run riot’ if it bets on high growth.

Rather, this tends to be a question of a company’s ability to assess the magnitude of growth correctly, and to canalize and accommodate it via an adjusted organizational design and a ditto mobilization and structuring of (human and other) resources.

Growth is, therefore, a tricky thing. On the one hand, there are companies that prepare for growth, while the expected growth never takes off, leaving an oversized company structure behind prone for bankruptcy. On the other hand, there are companies that let the train of growth opportunity pass by as they prefer to stick to business as usual. Among the latter, one can find cases where vested interests deny a going after new business opportunities.

In all circumstances; right sizing and a correct organizational design to nurture growth and grow along with demand evolutions is key.

While configuring organizational structures has a lot of facets to it, one commonality that seems to stand out when existing companies run into a niche market opportunity with high growth potential, is that friction may arise between proponents of standing business and those in favour of pursuing new market opportunities. All the more so, if the new opportunity is perceived by the inner circle as only loosely related to the company’s core business c.q. raison d’être.  In discussions over allocation of resources, company priorities, and product-market combinations to be pursued; the powers that be (or a simple majority) may then count with such an overweight that this can imply killing off such new initiatives.

As a consequence, in order to exploit a new business niche, our INML research has uncovered many cases where companies turn to the creation of “skunk works” –detached business units that are granted considerable freedom- or spin-offs. A third way is to acquire a third party and use it as the spearhead to move into new market terrain; to inject vital competences into the acquirer’s organization; and/or to give a strong signal internally that the acquiring company is committed to move into new territory (and that way lowering the resistance against such reorientations).

Similarly, our INML research revealed how quite some international niche market leaders are companies whose leading persons stepped out of larger corporations acting in the same branch as their current ventures. As these persons did not get the room or endorsement to move into new unexploited market space, they decided to set up a business of their own.

Existing companies that want to avoid the latter scenario, should consequently be sensible to intrapreneurship aspirations of growth- and opportunity-oriented staff members. At the same time, they should surveil that stand-alone constructions do not drift off too much or that they do not generate spill-over effects for the remainder of the company.


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Serbitizaziorako gaitasunak: e-liderra eta 4.0 perfilak

Joan den azaroaren 24an, Goierriko Industria Foroaren baitan, ‘4.0 perfilak’ lantaldea jarri zen martxan. Goierri Eskola, Goierri Goi Maila Eskola, Goieki, Orkli, Praxair eta Orkestra enpresetako ordezkariek osatzen duten lantaldea. Bere helburua, eskualdeko enpresek Industria 4.0 esparruan aritzeko behar dituzten pertsonen perfilak eta gaitasun beharrak aztertu eta eskualdeko formazio eskaintza moldatzeko pausoak ematea da.

Helburu horren harira, e-leader delakoaren perfila izan genuen aztergai. Lan-saioan azpimarratu zen moduan, nahiz eta garrantzi askokoa izan, perfil horri pisu gehiegi ematea ez da komeni eta gainera, beste hainbat gaitasun dituzten pertsonak beharko dira e-leaderrarekin batera. Dena den, perfil hori argitze aldera, Industria 4.0ak eta batez ere, industriaren serbitizazioak suposatzen duen paradigma aldaketa kontuan izatea ezinbesteko da.


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Competencias para la servitización: el e-líder y perfiles 4.0

El pasado 24 de noviembre, en el marco del Foro Industrial del Goierri, se dio inicio al grupo de trabajo “Perfiles 4.0”. Este equipo está formado por representantes de Goierri Eskola, Goierri Goi Maila Eskola, Goieki, Orkli, Praxair y Orkestra. El objetivo fundamental es analizar los perfiles y competencias de las personas que necesitarán las empresas de la Comarca en sus proyectos Industria 4.0 y dar pasos para adaptar la oferta formativa de la comarca en consecuencia.

En línea con el objetivo mencionado, en dicha reunión se analizó la figura del e-líder. Tal y como se mencionó en la sesión, aun siendo importante, este perfil de e-líder es complementario con otros perfiles diversos que serán necesarios. En todo caso, para ilustrar las características del perfil, es importante tener en cuenta el cambio de paradigma que pueden suponer los procesos de servitización industrial.


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How to create a (niche) market from scratch?

This post provides insights on how we got the research line around «International Niche Market Leaders» (INMLs) off the ground. Essentially, it is a story of intrapreneurship, finding launching customers and of targeted (but no-budget) PR activities.

In order to give a new impulse to our “internationalization of business” (IB) activities, we decided to brush off an appealing, yet under-exploited, framework for analysis and apply it to the Basque landscape of enterprises: enter INMLs.

The way the work started out resembled very much how intrapreneurs go about. Start experimenting on a small scale, try to proof the concept and its “researchability” through interactions with likely instances, and without making too much noise about it (neither inside or outside the organization until the idea and research tools had “ripened”). Intrapreneurship initiatives require that the “hosting” organization tolerates new ideas and actions and we were lucky to find a fertile environment in Orkestra.


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