August 4, 2017
How Context can Transform Your Product

No product exists in isolation. Every offering is presented to potential customers within a context or a frame of reference, whether we set one deliberately or not. That context helps them understand what it is, who it is for and why they should care. A great product, presented within a context that highlights its strengths is unstoppable. However even a world-class product can be completely undone by a context that does the opposite.

Here’s a simple non-startup example that illustrates what I mean.

Context: An Experiment

In 2007 the Washington Post conducted what they described as an experiment in “context, perception and priorities”. The idea was that they would take a professional musician and have him play in the plaza outside of a busy Washington Metro station and see what would happen.

The musician they chose was Joshua Bell — arguably the best violinist in the world at the time. He was a former child prodigy and regularly sold out concert halls with ticket prices of $100 a pop. A bio of Joshua Bell in Interview magazine stated that his playing “does nothing less than tell human beings why they bother to live.” The morning commuters of Washington were about to be exposed to a potentially life-affirming experience. Would they notice? And can a virtuoso make a decent living as a street performer?

In a word — no. 1070 people passed Joshua while he played in the plaza. 7 paused to listen to him play. He made $32.17.

When I first read about this the result didn’t surprise me too much. Maybe that’s because I take the subway to work and I’m usually running late. Frankly, Bob Dylan could be playing out front and I’d be all like “Sorry Mr Pulitzer Prize winner, I’m late for a meeting, no time for your art this morning.” But it turns out not everyone who heard Joshua play that morning was in a rush. There was a kiosk across the plaza selling lottery tickets and people stood in line for several minutes. There was a shoe shine stand in the Plaza as well and both the owner of the stand and her customers that morning had time to take in the music. Did they notice anything exceptional?

It turns out they didn’t either. One man recalled the numbers he played on his lotto ticket that morning but remembered Joshua as nothing more than “just a guy trying to make a buck.” The man getting his shoes shined remembered the shoe shiner complaining about the noise. The owner of the shoe shine stand admitted she thought about calling the cops to get some peace and quiet. Even folks that weren’t in rush failed to grasp the power of the performance.

Context Can Kill

So if our busy schedule isn’t to blame for Joshua’s lousy tips, what was? In short — he was undermined by his context. Have a look at this photo from the experiment:

He’s wearing a ball cap and a sweatshirt. He’s standing in the grimy plaza. He’s playing beside a garbage can and no crowd has gathered. Everything about his context communicates that he’s a street performer and there is nothing here you should pay particular attention to.

Here’s Joshua Bell in the context of a music hall:

If I gave the shoe shine owner a ticket to see him play there, she would be exposed to his music within a completely different context. She’d see the big camera filming him, the adoring sold-out crowd and the fancy outfits of the orchestra members surrounding him. The program would list his awards and her ticket would tell her this experience is worth $100. In this context she couldn’t help but believe he is a genius.

Context trumps product

Now I’m going to point out the obvious — the PRODUCT in these two situations is EXACTLY THE SAME and isn’t a crappy one either. It’s an exceptional, amazing, world-class product. And even a completely ass-kicking product can be completely defeated by a lousy context.

Interestingly, even though most of us understand context is important, we rarely see it as something we have influence over. We often treat is as a “given” and that we have to make do with our context baggage as best we can. That is a huge mistake.

A Startup Example

Early in my career I worked for a company that sold a CRM platform for enterprises. This was more than a decade ago and Salesforce was still tiny and the giant in the CRM market was a company called Siebel with over $2B in revenue and close to 9000 employees.

Our original positioning set us up to be directly competitive with Siebel. Our chosen context was “CRM for big businesses.” They did CRM for big businesses. We did CRM for big businesses. Our context put us in direct head to head competition with a competitor that was 2,000 times bigger than we were. They had thousands more customers than we did, dozens more features than we did, an incredible amount of brand equity, and a giant brand footprint. Frankly in a head to head comparison we didn’t stack up all that well. But we did have a key thing going for us — one feature that Siebel not only didn’t have but could never have.

Bringing the garbage can into the room with us

Our context (CRM for Enterprise) not only made it hard to highlight that feature, it buried it under the weight of the baggage of what it meant to be a “CRM” platform. Sure we had a cool new thing but what about all the stuff we didn’t have that CRMs were supposed to have? The minute we said we were a CRM, it was like we pulled on our ball cap and dragged the garbage can into the middle of the room. “We are a CRM but we’re special!” we wailed, while our prospects glanced over and decided there was nothing worth paying attention to.

Adjusting the context

We had an epiphany of sorts when we closed a small deal with an investment bank. It became apparent that investment bankers cared a lot about our one special feature. So much so they were willing to ignore the fact that we were small and unknown and were lacking in some general-purpose CRM features. We saw first-hand how our one tiny feature, while not particularly interesting for many types of big businesses, was transformative for investment bankers. We realized that while we were a fairly unremarkable CRM, we were the world’s greatest CRM for investment bankers.

We adjusted our context to be exactly that and everything changed. Within the context of “CRM for Investment Bankers” it didn’t matter if we didn’t have features like call scripting and an integrated knowledge base and automatic issue escalation — bankers didn’t need that stuff. It didn’t matter that we didn’t have as many customers as Siebel did — we only had a couple banking customers but one was Goldman Sachs and every other investment bank wanted to use what Goldman was using, not what call centres or Telcos or Retailers were using. Within the context of CRM for Banking, we weren’t trying to beat Siebel at their own game — the burden was now on them to prove they knew more about banking than we did. And we were had now oriented the entire company on NOTHING BUT banking.

Adjusting the context of our product proved to be transformative to our business. We grew revenue from $2M to $65M in under 2 years and were acquired by Siebel who had given up trying to compete against us.

Figure out what you really are and do it on purpose

It isn’t enough to understand that setting a context for your product is important. You have to do the work of figuring out what the best possible context for your product is. Often that frame of reference isn’t the first one that comes to mind and it often isn’t the default context you were operating with when you originally conceived of the idea of the product. Great positioning is a process of deeply understanding what sets you apart from the other solutions in the market, the value that differentiator brings to customers, and which customers care the most about that value.