Over the weekend I’ve been reading extracts from Different: Escaping the Competitive Herd. It is one of the very few business books I am definitely buying. Youngme Moon makes a stack of observations that resonate with me. If you’ve seen my Tweetstream from Sunday afternoon then you’ll know what I mean. Here’s a sampling of quotes:
“…true differentiation – sustainable differentiation – is rarely a function of well-roundedness…[it is] a function of lopsidedness” (I’ve used an illustration from this section at the top of this post.)
“When Nintendo introduced the Wii in 2006, the video game console wars where in full swing…Nintendo opted out of this [technology arms] race by giving us a console that was a lot less of the things we were expecting, and a lot more of the things we weren’t. And the result was a revelation. An eye opening, unanticipated revelation. All it takes is for a single firm to come along and alter the evolutionary trajectory of a single category.”
How does this relate to Sage?
I’ve long held the view and one that’s expressed by others that SaaS just isn’t their DNA. That may (or may not) be true. I know it’s not in the DNA of those with which I speak from time to time. In reading extracts from Ms Moon’s book I started to see other possible impediments.
Sage’s brand strength is well known and well understood. It is what the company uses to keep customers loyal. It should help Sage maintain its position well into the future. Sage is not absent from SaaS it just hasn’t captured the imagination of the wider body of users while wrestling with dark clouds of suspicion around security and bloat. The result is that Sage’s brand is not helping it. Attrition among users is combated by attempts at shoring up the maintenance revenue stream or going higher up the food chain into areas where it is not a familiar face. My guess is that Sage is losing customers just as fast if not faster than the SaaS providers are piling them on. At least in the UK. In other words, the dreaded replacement market isn’t more Sage but more SaaS. That’s great for the new breed of SaaS players who are milking perceived weaknesses for all they’re worth.
To give you an idea how far that has spread, during a recent meeting with the SAP Business ByDesign marketing team in Palo Alto, the name that came up most commonly in our discussion? KashFlow. Sage wasn’t mentioned. Hard to believe for a company of KashFlow’s size but there is no denying that company’s persistence in exploiting Sage weakness whether real or imagined. It was even more of a surprise when I explained to the half dozen marketers that for all practical purposes, Kashflow has zero marketing spend.
But it is this notion of ‘less’ that intrigues me more. Last week I made mention of KashFlow’s design makeover. One issue I didn’t explore deeply in the discussion was the potential for radical change. I mentioned it in passing, asking whether the changes were radical enough. Ms Moon cites Google as a terrific example of delivering less on the home page and yet revealing more. In SaaS accounting terms I’ve always been of the opinion that the more complexity is hidden and the more an app automates, the more scope there is for clever and counter intuitive front end design.
I’m aware for example that FreeAgent is obsessive about this aspect not only because one of the founders is a designer but also because its chosen niche of developers and designers expect nothing less. They want smart, bleeding edge design. The same goes to a different extent with Xero. The problem for each of these companies comes in explaining that to accounting types. Accountants want the same as they’ve had for years from, guess who? Sage. However, if these newer vendors (and many others like Blinksale) can convince the accounting types to think like their customers then the market can change very rapidly. In other words, these vendors need to be both obsessed about less while playing as hard as they can to their strengths while at the same time listening to users. It will not be an easy trick to pull off but one that has proven to be highly disruptive in the past.
There is one way they can achieve this: deliver both. Xero is working on something that may help tip sales higher. More of which later.
In the meantime, I find it almost inconceivable that Sage could do the same without massively disrupting its own business model. The Catch-22 is that it is already struggling to maintain momentum in face of what is going on around it. More acquisitions? Maybe, but that just seems to represent the institutionalized drive towards more maintenance. I cannot see that as sustainable.
And finally – Ms Mooon teaches a marketing innovation class at Harvard. Just goes to show that with the right perspective, anyone can grab and hold my attention (lol.)
Endnote: this post was in part inspired by Bob Warfield’s discussion: Escape the Economy of Followers
