I don’t know about you, but from high school through college, I was hooked on the board game known as Risk. The object of risk was to destroy your enemy and conquer the world. A person can learn a lot about business and life while playing Risk. Sure, maybe you could learn more about life by playing the board game known as Life, but my take-away lessons from Risk are numerous.
Thanks to Risk, I know what is a Kamchatka, a strategically located and prized eastern Russian peninsula. I learned that friends or allies can quickly turn to foes when shared goals and aspirations suddenly conflict.
Risk campaigns of territorial conquest provide lessons in market penetration for SaaS providers with long, sophisticated implementations and customizations. In the game of Risk, every time a player conquers a territory, they must leave an army behind. Eventually, you must stop conquering, or else you have no Armies to fight.
In some ways, it replicates the market penetration battles of a complicated SaaS provider. Every time they acquire a client (in Risk terms, conquer territory), a large team of implementation professionals gets deployed (in Risk terms, leave an army behind). This means after so many clients, they need to hire/train and deploy more implementation professionals or wait until they have enough reserves to support new clients (in Risk terms, gain new troops).
Smart startup companies who are new to and just starting to penetrate a market find a way to leave other companies’ troops behind, allowing the startup to keep landing on new beachheads. In growth mode, where margins and growth are paramount priorities, the lower margin and growth-stunting implementation service revenue are sacrificed. The object is to capture as much territory as quickly as possible.
SAP did this by utilizing big accounting firms as implementation and marketing partners. Accenture would recommend SAP to their clients because SAP was so complicated to implement that it would keep their consultants engaged in never-ending billable projects for eternity. SAP benefited from the recommendation and hit-and-run aspect of this sales and implementation shock and awe campaign. SAP didn’t shift the focus from growth through SaaS revenue to growth to lower margin services revenue until they were the dominant accounting system used by the Fortune 500.
All of a sudden, the close alliance of SAP and its implementation partners became competitive. Once a company obtains a certain market penetration, the focus on growth frequently shifts to service revenue.
In the game of Risk, this occurs when two underdog monkeys team up to take down the big monster gorilla. They monkeys strike a deal: once the first monkey attacks and is battered in the brawl, the second one’s supposed to jump in and knock out the top player. But, ya know, plans change. More often than not, that second guy backstabs the first, takes him out, and claims the victory. Classic switcheroo!
The lesson for new entrants in the software market, which consultant has a dominant position in your intended market? Which of those consultants can benefit from the added growth of revenue gained by implementing your product? Make an alliance with them.
The lesson for consultants, remember this ally of yours today will be your competitor tomorrow.