My last blog highlighted a new book describing the need for White Space if a business is to implement innovation and grow.  But lots of people still have questions about what White Space is, and how to get it working.

Here's the chart from Create Marketplace Disruption (FT Press, available on Amazon.com) that shows how White Space is positioned to move beyond Defend & Extend Management.:

Most companies spend the vast bulk of their energy trying to Defend sales of current products to current customers.  After expending 80% of the planning time, and company resource, in that cell, they then will try to see "can we sell other products to our current customers?"  Or, "can we sell current products to new customers, such as by moving into a new geography?"  As a result, they do almost nothing in White Space. 

"Adjacent market" analysis is Extend effort.  "Dartboard" approaches which look to grow by moving in concentric circles away from "core" are Extend efforts.  These approaches are based on efficiency notions, that the company will get the biggest "bang" by doing very little differently and hoping to grab a big "win" with a small effort added to the Defend behavior.  They hope to grow a lot by largely defending their "base" and adding a few, low resource commitment products or customers to the mix.

When you adjust for resources, the planning effort looks like this:

If you want to really grow your business, you have to change the planning effort first.  Instead of putting all the resources into multiple rounds of effort about the business you know best, you need to simply do less in this area of planning.  Moving from 90% accuracy on the first round to 95% after months of effort is pretty low yield.  Instead, business should dramatically reduce the effort on known customers and products – and invest considerably more time developing scenarios about future markets leading them to White Space.

Extend markets almost always are disappointing.  While the effort looks simple, that's only a view of "the grass looks greener across the fence."  Reality is that competitors exist in those markets, and when the company tries to extend into them with limited resources they run headlong into very stiff competition.  The company retreats to Defend the "core" and the Extend opportunities produce very low sales and miss profit projections dramatically.  Usually, the leaders start complaining about having taken the venture, feel burned by trying to innovate, and reinforce their desire to focus on maintaining the "base" business.

To get over this, businesses have to start by realizing that entering new businesses takes more planning than the base business – not less.  You have to identify the critical Permission needed to allow the White Space team to operate outside the Lock-ins.  Be clear about the new approach, and the goals.  And identify the resources needed – as well as the source of those resources (people and money.)  This doesn't happen automatically, because it isn't part of the existing planning process.  It takes a lot of effort to develop market scenarios and plans – then follow-up on the experiences to understand what works and keep evolving toward achieving goals.  And that is where the planning effort really needs to focus.

White Space is critical to success.  All businesses MUST evolve to new products and new customers.  The idea that this can happen with little effort is misguided.  Instead of planning the "base" business, success starts by putting more resources into market scenario development, developing insight to know what permissions are needed to succeed and then establishing funding so the White Space project can succeed.  

Think about Apple.  As long as Apple focused planning on the Macintosh the company moved further toward a small provider to niche PC markets.  Only by using market scenarios to understand that growth opportunities were much better in entirely new markets were they able to change resource allocation and move aggressively into the business of iTouch, iPod, iTunes and eventually iPhones.  Apple is outperforming almost everyone in this recession – and a lot of that success is due to using scenario planning to identify new market opportunities, rather than spending all the planning resources understanding previously served, traditional markets.