Embrace and extend – the optimal strategy

Man-jump-through-the-gap

Over the past 15 years I have worked within two significant software businesses, each of which were leaders in their respective fields and each following a very similar strategy when it comes to determining the product offerings built.

That strategy is really very simple:

  • Assess large enterprise software solutions within the marketplace
  • Find where that technology is already well-defined & thoroughly explored
  • Identify for gaps and/or voids in in said technology
  • Determine how an extension to that solution would be able to successfully fill the gap
  • Ensure the solution significantly increases overall value

Both of the businesses that I refer to during those 15 years selected to strengthen the Windows desktop by significantly enhancing some of the aspects of that platform for enterprise users. These strategies target some of the largest businesses in the world in order to streamline their operations significantly and hence demonstrate significant value propositions to such enterprises.

Such a strategy is relatively well known as the Embrace and Extend strategy – embracing the solution of an existing upstream vendor and then extending it to bring further benefits over those originally found in the solution.

A key part of the strategy mentioned is to engage with the upstream business and be transparent with them around the solution that is being built and just how it is going to add significant value to their existing (and future) customers. Once you’re able to demonstrate to the larger business that not only are you providing a solution that significantly enhances their own existing solution, but that it also does not cause them any negative repercussions, then you can begin to foster a solid relationship where perhaps the upstream business begins to educate about the more intricate parts of their own roadmaps as well as maybe the ultimate golden ticket: inviting you in to their customer meetings to help them (as well as yourself) sell their solution in the first place.

In many ways this is the ultimate place to be because in this case not only are you earning the reputation as trusted advisor but you are also filling a similar role for the upstream software business as they look to you to help them close their own business, knowing that life (for the customer) is better when both they and you are involved. This brings out the “better together” tag line that we often see between business partners in this manner.

There are of course a couple of particularly important aspects that you really must heed however:

  • Always be able to run faster than the upstream business
  • Always look to enhance the existing proposition rather than replacing aspects of it

Your ability to innovate and deliver functionality faster is critical as the upstream business will over time fill the voids that your solution fills today, potentially rendering the need for your offering redundant. Your need to continue to keep your value proposition high will always be there and at times will feel like you are struggling to tread water to stay afloat – this is quite normal although you should use these times to reflect and determine if your solution does still retain sufficient differentiation, acting accordingly. Of course you will likely be always on the lookout for the next void(s).

It is often tempting to replace existing solution features with your own set of purpose built features and significant care and consideration should always be undertaken before committing your business to such an approach. The reasoning is pretty simple, the upstream business:

  • Has already invested significantly more time in research, development and testing than you likely have at your disposal
  • Will not feel good about your decision to abandon some of its hard labored technology
  • Will be unlikely to offer help and support to your replacement features and will expect a customer to remove your stuff should support cases come up
  • Is more likely to take a position of blame towards the smaller business should there be any software issues

The second point is rather important as this is an item that will often be a bone of contention and will likely stall your ability to build a strong business relationship with the upstream vendor, resulting in slower growth patterns for your business and worse still, a lack of partnerships with customers. The customer wants to see a strong relationship between the vendors of the solutions that are being delivered on their systems, should it be apparent that such a relationship is not in place or is fractured in some way, then good luck to you as the smaller player, you are going to need it.

In the situation of software issues arising through technical support, it is most likely (in my experience of the last 15 years) to result in the upstream vendor simply blaming your solution and if your solution cannot just quickly sit back quietly (disabled for example), allowing the upstream solution to function unhindered, then you are in for a world of pain for a little time, while you explain to the customer the implications of your replacement feature set. For example, if your solution were a software distribution tool that replaces the existing (upstream) distribution model, then you need to explain to the customer that ALL software distribution needs to be switched off across the entire business and THEN to need to configure the original upstream solution distribution just to prove that your solution was not at fault. If you had simply embraced and extended the existing distribution model, then at this point you could simply disable your enhanced feature set, allowing the standard system to continue to operate without you – nice and simple and giving the customer the peace of mind that your solution is enhancing their solution rather than replacing it with something potentially unwieldy and leaving them with the risk of having no software distribution at all.

Ultimately, we are here to produce solutions that add significant value to the customer and by embracing what the customer has already invested in, then extending it out is a simple recipe for joint success – both that of the software vendor and that of the customer.

Finally, while this strategy seems (and it is) very simple, it might amaze you just how many vendors go off-piste a little and find themselves in trouble – even terminally so. My conclusion? Let’s work together to make some great technology, filling some critical voids and make life better / easier for the customer who is after all, the very reason we exist in business.

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