Momentum: How Companies Become Unstoppable Market Forces
by Ron Ricci and John Volkmann
Digital products and services lose value if the company that provides them is no longer viable. Products cannot be upgraded and services cannot be extended if the company goes under. This is the nature of digital products and services, and, because they are so important to customers, those who buy them want to make their purchases with companies that are in for the long haul. According to marketing and communications experts Ron Ricci and John Volkmann, these market winners have momentum.
The momentum the authors discuss is made up of mass, speed and direction.
- “Mass” is a product’s value proposition and its role in the industry value chain.
- “Speed” is a company’s ability to keep up with the pace of technology change.
- “Direction” is a customer’s process of coming to trust a brand’s ability to know and articulate where it and the market are headed in the future.
The authors write that these elements must combine in a value proposition in which customers believe. To describe the market force of momentum and provide the keys that will help companies put it to use, the authors provide a practical formula that shows companies how they can build and sustain it.
Six forces of digital differentiation
The authors’ formula is rooted in the terminology of physics and draws on their study of 20,000 consumers and corporate buyers. After analysing the numbers and trends, they reveal “the six forces of digital differentiation” that show customers who the market winners are in the digital domain. These six forces are:
- Relevance of value proposition. As part of the “mass” of a brand, this force can be found by asking the question: “How important is the brand’s promise to the personal and professional success of its targets?”
- Ecosystem potential. Also an element of a brand’s mass, this force can be found by asking: “How do the product and its category help other companies make money in a customer solution?”
- Category leadership. This element of a brand’s mass is found by asking: “How dominant is the product’s position in its given category?” and “How important is the category to solving important customer problems?”
- Market agility. This component of a brand’s speed can be found by asking: “Does the company successfully create or manage market transition to its advantage?”
- Brand integrity. The direction of a brand can be found by asking: “Does the company practise what it promises to customers?”, which leads to the question: “Can the company be trusted?”
- Management vision. Also part of a brand’s direction, management vision is found by asking: “In what way will markets be different because of the company and its products?” and “Are the company’s leaders credible evangelists for the vision of the market?” Momentum offers Oracle’s founder and CEO Larry Ellison as an example of a corporate leader who embodies this force.
Build a competitive position
The authors provide many ideas to help managers and marketers measure a brand’s momentum against that of its competitors, diagnose a company’s strength and weaknesses, and develop an action plan for building a competitive position. Their strategies encourage companies to add digital features to traditional products and services by showing how others have done so and profited from their work. By applying these tactics, the authors explain, companies can rise to industry dominance.
To round out their book with a closer look at the timely issues driving digital business, the authors take a stab at describing what went wrong with Enron and the dot-com bust. They offer this immutable wisdom: Trust is earned, and it is also demonstrated. They write that the importance of trust is even more apparent in the digital product model because customers who upgrade over and over will remain loyal to the same brand if the company is trusted by others, is moving quickly enough to keep up, and can be trusted to solve customers’ problems in the future.