Good News! A Niche-nado Is Coming!
Originally published by Christopher Lochhead, host of the Legends and Losers Podcast, and Heather Clancy, editorial director for GreenBiz.com, in their book, Niche Down: How To Become Legendary By Being Different.
We’re not exactly in the business of making predictions, but as we write this, we’re eagerly comparing notes on where some of tomorrow’s legendary niches will swirl up or storm through the calm complacence of a mature, mild-mannered market segment. We see mega categories and whole industries ready for nichetastic fragmentation! And we’re excited to report that we see oodles of opportunity for those courageous enough to step forward.
“I think that with a lot of things where scale isn’t as important and expertise really, really matters, that’s where [you’ll] see the niche-down opportunities becoming really prominent,” growth-strategy consultant Eddie Yoon (who contributed massively to this book!) observed during our discussion.
We couldn’t agree more.
The sphere of management consulting, which is today a $250 billion industry, is one landscape we’ll be watching closely for legends-in-the-making. Heck, the industry is already ripe with examples of niche-down-success stories.
Here’s just one of them: AlixPartners, founded in 1981 when the United States was floundering through the tail end of a recession. Jay Alix foresaw the niche need for a specialized sort of financial and executive consultant experienced in guiding companies through restructurings or bankruptcies. So, he set out to cultivate that skillset and establish a venture dedicated to that service.
His namesake firm quickly became a highly sought-after ally for tough turnarounds — it was involved in the high-profile reorganizations of General Motors, Enron and Kmart (among others). One of the company’s innovations was a fee structure tied to the success of the engagement — something that has now become a common practice across the industry. Another was AlixPartners’ strategy of embedding a senior manager with decision-making authority into the organization being turned around or sold off. The firm became adept at finding value in “failure.” AlixPartners has become so successful over its almost four decades of existence that every big consulting firm now offers similar services.
That’s because every successful niche-down attracts imitators.
We’d argue that the consulting field is ripe for even more category violence in the months and years ahead, thanks to lower-cost data-visualization technologies, the rise of cloud-computing services that allow individuals to share their ideas more freely, and artificial-intelligence software that helps with gathering an audience.
All of these tools abet individual experts in “unscaling” themselves, as our friend Kevin Maney calls it. You can “go big” without having to crank up some massive-support organization or administrative network.
And they are exactly the tools that were instrumental in the rise of the Stratechery newsletter, which we discussed in Chapter 4. “Modern technology makes it possible to become a personal enterprise again,” observes Yoon.
You want to know another industry wide open for niching down? Banking. Many of the largest players are woefully out of touch with their customer base — even as they scramble to figure out how to use mobile applications and digital services to streamline their own expenses. Yes, it’s all about them, not you.
When was the last time you added up all the fees associated with the banks’ privilege of managing your money? People of all ages are sick of being nickled and dimed for fees by financial institutions, but millennials are especially fed up with this practice.
Gallup data suggests that only 30% of them are “engaged” with a retail bank. And they are 2.5 times more likely as their elders to switch allegiances to an organization that offers more compelling options.
You can also see the niche-down philosophy playing out in real time in the media business. Yes, the stodgy media business is a perfect place for niches.
Ever heard of The Hallmark Channel?
It is hands-down the queen of “feel-good” programming. Hey, why not run holiday specials in the middle of July! It was also the only “non-news” network among the Top-15 networks to realize substantial growth during 2016 and 2017 — and not just among the older women who were its original demographic. Yes, it turns out that even middle-aged guys need a Hallmark fix.
A very similar sort of nostalgia has powered the rise of “Korean dramas” (or K-dramas, for short), a genre of shows that has basically exploded on streaming-video sites such as Netflix and DramaFever (which specializes in programming from other cultures). You can think of a K-drama as a hybrid of a soap opera (because there are plenty of cliffhangers) and a “chick flick” (because there’s always romance involved). If you don’t speak Korean, you have to watch the programs with subtitles. But they have become “strangely addictive” in the United States.
It turns out people of every culture like finding their happy place.
Do you have the courage to stand out? Learn more about category creation in Christopher Lochhead and Heather Clancy’s book: Niche Down: How To Become Legendary By Being Different.
