22 Nov 2019
Expert networks reinvented
Confessions of a finance consultant
When I was in business school, I focused on the math-heavy courses. However, during my time in strategy consulting, we applied just as many of the concepts from marketing. I recently revisited a few of them. As it turns out, the best concepts are the simplest, anchored in real life. In particular three marketing concepts are relevant to the expert network industry.
1. Marketing myopia
Firms do better if they concentrate on meeting <u>customers’ needs</u> rather than on selling products. The Myopic cultures would pave the way for a firm to fail, due to the short-sighted mindset and illusion that a firm is in a so-called ‘growth industry’. This belief leads to complacency and a loss of sight of what customers want. These firms focus more on the original product and refuse to adapt directly to the needs of the customers.
A classic example is the Swedish company Facit which in the 1970’s focused on ever-better “räknemaskiner“. Facit eventually got totally whopped by the Japanese pocket calculators, who met the need to calculate stuff better. (The curious should check out this 70-page deck – it’s quite entertaining!)
For years, the largest expert network firms have focused on selling hours on the phone. Still, as a customer I was astonished at how unhelpful many large expert networks were. This included everything from emailing expert profiles to charging for missed calls, extra hours and clunky survey solutions.
Now, the <u>customer need</u> is really getting access to insights. Inex One creates access to insights at low transaction costs.
Because the customer is king.
2. Transaction costs
Of the many academic angles to transaction costs, I prefer the simplest: the friction involved in an exchange. Transaction costs are a hindrance to free exchange and prevent resources from being allocated where they could be most useful. Consequently, lowering transaction costs enables more people to exchange.
A marketplace is the archetype for lowering transaction costs. Both customers and sellers benefit from the transparency that it creates, and the total market size gets bigger.
There are three inherent transaction costs in the traditional expert network model, which we described in this article. Inex One resolves these costs, enabling all parties to transact better. Consequently, Inex One makes the total market pie grow, and makes global knowledge better allocated.
Because the world needs more well-informed decisions.
3. The industry life cycle
Beautiful in its simplicity, this model plots four phases of any industry’s evolution. Initially coined by Mr. Levitt in 1965, it goes like this:
In the early days, volumes and profits are low.
The growth phase sees volumes pick up drastically.
As you reach maturity, both volumes and profits stabilize.
In the eventual decline, both volumes and profits drop, as new industries better meet the needs of customers.
Today, the expert network industry is emerging from a decade-long growth phase, entering maturity. Now, two things could happen: (a) cut-throat competition intensifies until all profits evaporate, or (b) the industry reinvents itself and enters a new growth phase.
Expert networks reinvented
To summarize, let’s take what we know about marketing myopia, transaction costs and industry life cycles. The expert network industry should focus on what the customer needs: access to insights at low transaction costs, to catch the next wave of customer-friendly growth. This might well include reaching new uses and new users, who are currently excluded due to high transaction costs.
Inex One provides the marketplace for a better expert network industry – expert networks reinvented. This is beneficial to both customers and the expert networks that deliver top quality. Consequently, we may see the emergence of a handful generalist expert networks, or multiple specialized ones – whichever solution best meets the customers’ needs.
Contact us to start using the Inex One expert network marketplace and gain smoother access to expert insights.