Good Niche Bad Niche
Niches can be lovingly solved or horrifically exploited. We all have little elements of our lives that aren't served by the mass market. These elements often are the things that we identify by or are plagued by. If we're involved with a niche, we often have deep knowledge about the minimal products created for it. Why are niches a business darling? What leads to them being coddled or corrupted?
This week I had the good fortune to attend a Future Commons session at Institute for the Future in Palo Alto and a panel discussion at the "Leading Best Practice in Language and Literacy" conference in Monterey. The discussion at IFTF was largely around the iPhone, telecom spectrum ownership, and rapidly irrelevant business models. The discussion in Monterey was centered around applying emerging technologies to education and assessment.
A common theme: they both centered around niches.
Niche is a rather overused business term, but here I think it crosses several of its definitions. Webster's definition of niche includes:
a : a place, employment, status, or activity for which a person or thing is best fitted <finally found her niche> b : a habitat supplying the factors necessary for the existence of an organism or species c : the ecological role of an organism in a community especially in regard to food consumption d : a specialized market
In Seth Godin's recent book, The Dip, he talks about quitting when you can't be the best at something. His message is that you have to be the best at something in order to really make it because the number of choices customers have is so massive now.
You can never be the best pizza company on earth, so why try? Which, of course, gives you a big hole to poke in the book - no one is really the best at anything. But lucky for him, Seth answers this by basically telling you to have a good, tight definition for your endeavor.
In other words, find a niche. The best organic pizza place in Tiburon. Much more obtainable and focused. When we compare this back to the multi-definition for Niche, we find it could easily satisfy all four now, and not just "a specialized market".
The last few days have brought forth a few things about niches for me:
Niches are nuanced
Areas like telecommunications or education often seem like a market - a unified region of human activity which could be served with total equality. The only seem like that for a second - that second we don't give them a lot of thought. So we get companies like AT&T giving us the same limited choices as Verizon or Sprint or T-Mobile. We get initiatives like No Child Left Behind which seeks unprecedented standardized testing regimens in a world which is increasingly needing and rewarding diversity in problem solving and areas of expertise.
Niches need special (thoughtful) solutions.
They're specialized, aren't they? Of course they need special solutions. The thing is, they often don't get them. Within education and literacy are a jillion nuanced niches that do not get special solutions because of the reversion to rigid standardization.
Special solutions aren't easy to come by either. They need to be thoughtful, insightful. In something like education, the stakes are high. You're only 8 years old once. It's not golf. You can't play the hole over or take a mulligan.
In telecom, the niches are hoarded by companies with an economic interest that trumps the interest of those actually in the niche. This leads to things like spectrum hoarding and defacto price fixing.
Niches are conspicuous
If you are going to enter a niche, you'd better listen to Seth. The more focused a niche, the more likely your clientele is to rank high in the niche-geek spectrum.
Niches have experts, those experts, due to their rarity, are listened to both inside and outside the niche. By sheer need, the smaller the niche, the higher the percentage of experts. They will tell you exactly what your solution does not do.
Niches are also suspicious of newcommers. If a solution comes from outside the Niche, it will likely be quickly examined. From there it will either be adopted, watched, or discarded.
This reaction is important because it usually comes with decreasing levels of trust. Adopted = high trust. Watched = lesser trust. Discarded = distrust. This is very true if the product is discarded because it violates some central belief of the niche's community.
Invasion of a Niche
Do you want to exploit a niche? Sure! We all do!
Walled gardens are usually built around a niche. It's part of how businesses meet Seth's demand that you well define your product. Niches are vulnerable due to the fact that they are often underserved.
In telecom, the ugly invasion of a niche might be exorbitant pre-paid cell phone SIM cards sold in low-income neighborhoods.
Elevation of a Niche
Of course, bad things aren't universal, and niches can be identified and well-served. In Fresno, California, there is a magnet school (fighting for funding) that uses innovative techniques to teach it's massive (over 70%) ESL population English and keep them mainstreamed. These thoughtfully designed niche techniques have resulted in the best performance ever seen in that population.
Killing an Industry to Open the Niches below
Google wants to kill the Telcom industry by buying spectrum and opening it for free use. The current owners of that plethora of niches (who have attached it to and misidentified it as an industry) aren't very happy about this.
Like education, which is a large collection of niches (learning styles, lifestyles, focuses, desires, competencies) misidentified as one thing (are all kids the same?) So too is telecommunications. The current telecommunications network was specifically set up to be a distributed network of independent nodes - yet it is managed as a centralized system.
Centralized systems abhor non-conformity and thus reward thin and easily manageable mega programs. No Child Left Behind and "My 5" cell plans are great examples of mega programs that look like choice but ultimately serve the interest of no one.
In both telecom and education we see a vast array of potential niches that would greatly enhance our most basic needs: to learn and to communicate. The industries around them cannot support this, their very nature of bureaucratic centralization disallows creative problem solving inherent in open networks.
Summing Up
Telecom and education are both in a hard place. Telecom has invested billions of dollars in rapidly antiquated communcations technology, making the US one of the worst places on earth for mobile communications. They need to recoup this investment and can only do it by charging for and centralizing their services. Yet, it is increasingly clear to even those in the industry that this business model no longer serves the need of the users.
Education has a mandate to provide quality and equal instruction for all students regardless of circumstance (economic, mental, physical, geographic). Offering a large range of choice means that kids will receive different types of education. How do you defend yourself against law suits or claims that your particular school didn't live up to its goals? How do you test students for collegiate entrance when their backgrounds are so different?
The obvious response to these issues by the institutions themselves is to largely ignore it. Indeed with pressures from without to expand diversity, the best way to guard is to increase conformity and defend that as the best way for the system to operate.
So, I have a simple plan to fix all this. Okay, no I don't. Of course I don't. This is a hard and painful couple of problems. It's clear the direction both must take. Only through overthrow (Telecom: Google, Education: Vocal Parental Involvement) can either of these institutions start to make the changes necessary for their and our survival.
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